Because there is extensive cost in time, fees and
red tape involved, obtaining licenses, permits, and tax
requirements may be one of the last steps to take before opening a business. There are different requirements at the city, county, state and federal levels that apply to different aspects of businesses. This information is arranged by level of government. Local concerns pertain to the Little Rock/North Little Rock metro area. Inquire with local municipalities if the business is located outside of this area.
An agency or board specific to a given discipline
regulates many occupations and/or businesses. Make sure that the business or job function you perform is properly licensed by the appropriate regulatory agency. It is impossible to list all legal requirements for any business. This handout offers guidelines only. This is why it is so important to have experience in or knowledge of the particular business. Business research should be thorough and ongoing to keep up with regulatory changes as they occur. Ask a lot of questions.
Getting Started - Local Requirements
Zoning Approval & Building & Sign Permits
Before applying for a business
license, first verify that the type of business & its
physical location complies with local zoning regulations.
Although there is no fee associated with verifying zoning
compliance, permit application fees to change zoning status vary.
-
Zoning laws vary significantly throughout the state. Where zoning laws
apply, they are strictly enforced.
-
Generally, zoning approval is a one-time occurrence.
-
Zoning offices can supply business license applications.
-
If the proposed business site is not in compliance, you must
apply for a permit to change the current zoning.
-
Home-based businesses must apply for a home occupation permit.
Certain limitations apply.
-
Signage for your business requires a sign permit.
-
If you plan to build a new
building or to alter an existing building, apply for a
building permit.
To learn more about signage for your business:
http://www.sba.gov/starting/signage/
Business License (also known as privilege license)
After verifying zoning compliance, the next step is to apply for a
business license. The application fee for obtaining a business license will
vary between $50 to over $1,000 depending on the type of business and amount
and kind of inventory.
-
Some cities and counties do not issue business licenses.
-
Generally, business licenses are renewed annually.
-
Apply for a business license in the city in which the business
is physically located. If located outside of the city limits, contact
the county collector or clerk's office.
-
If the business has a physical location in other cities, inquire
about a business license for these cities.
-
Businesses located outside the city limits may still need a business
license to operate within the city limits.
-
Depending on the type of business, there may be additional
licenses & fees.(Refer to page 5)
To learn more about "Starting a Business in Arkansas":
http://asbdc.ualr.edu/training/start.asp
Registering a Business Name
Doing Business As Certificate (DBA)
Sole proprietors and general partnerships operating their business under
a fictitious or assumed name must apply for a DBA certificate with the
county in which the business is physically located. Contact the local
county courthouse.
-
In Pulaski County, a DBA application fee is $25 and generally, a
one-time occurrence.
-
A business name change, ownership change or business closure, will
require filing an amendment at this office.
-
The county clerk's office will conduct a complimentary name search
for the business.
-
Inquire about a DBA application if a business is incorporated, but
operating under another business name.
-
A DBA does not protect or reserve a business name.
Incorporating Your Business
Contact the AR Secretary of
State's Office to incorporate or register a state trademark. A
business is not required to incorporate. SOS employees will not
give any legal advice regarding the pros and cons of
incorporating.
-
There is a one-time, $50
filing fee to incorporate. Thereafter, a corporation will
pay an annual franchise fee-a minimum of $150.
-
Incorporating a business
offers individuals a safeguard in protecting personal
assets from liability.
-
Incorporating ensures a
business name will not be used by other incorporated
businesses within the state. However, a trademark offers
the best name protection.
-
The Secretary of State's
Office can conduct a complimentary name or trademark
search for the business. (See Internet address to perform
a search.)
Please contact:
Secretary of State's Office
Business/Commercial Services Division
1401 W Capitol Ave, Suite 250
Little Rock, AR 72201
(501)682-3409
http://www.sos.ar.gov/
Determining the Legal Form of Business
Be sure to research and discuss the specific advantages and disadvantages
of each form of ownership with a qualified accountant or attorney before you
finalize your decision.
If incorporating, contact the Arkansas Secretary of State's office.
Incorporating can be done using the Secretary of State's on-line services, as
well as by searching their database of incorporated businesses to see if the
business name is available. (Use the URL address referenced in the
"
Incorporating Your Business" section.) If a business files and never
does business as a corporation, the business is still responsible for annual
franchise taxes. The fee to dissolve a corporation is $50 plus the current
year's franchise taxes.
Business Property Assessment
A business owner must assess the property of
the business (building, equipment and furnishings, but not land).
The deadline for assessing is May 31. Be sure to assess
immediately if purchasing an existing business (to avoid
liability, make sure there are no back taxes before buying a
business). Taxes can be paid the 1st working day of March through
October 10th without a penalty. There is a 10 percent penalty for
missing the assessment deadline.
After having completed a worksheet
listing the business property by category, the assessor will
generate an invoice based on the business' amount, age, and type
of equipment. Don't forget to itemize leased equipment, however
the owner of the equipment is the one taxed.
Federal Requirements
Employer Identification (EIN) Number
Employer Identification
Numbers, also known as Federal Employer Identification Numbers,
are used to report withholding taxes and should be applied for
6-8 weeks prior to hiring. Apply for an EIN application (SS-4) if
hiring employees, incorporating or operating a partnership,
administering a Keogh plan, filing excise, alcohol, tobacco &
firearms tax returns, or opening a bank account in the name of
the business. A web site below is a link to downloading the SS-4
application.
-
The application can be faxed to the IRS, see below.
-
Some vendors or suppliers will ask for a business' EIN.
-
Requesting an EIN will not necessarily trigger an IRS audit or
place scrutiny on the business.
-
Once issued an EIN, the
IRS will forward a booklet and materials for remitting
federal withholding taxes on a monthly or semi-weekly
basis and submitting tax reporting on a quarterly basis.
Please contact:
Internal Revenue Service (IRS)
Tax Payer Education
Federal Building, 1st Floor
700 West Capitol
Little Rock, AR 72201
Phone: (501) 324-5111 OR
Business Speciality Tax Line: (800) 829-4933
http://www.irs.gov
title="Application for Employer Identification Number. Form. SS-4. EIN">
http://www.irs.gov/pub/irs-pdf/fss4.pdf
Federal Labor Laws
Contact the U.S. Dept. of
Labor if the business' sales are over $500,000 and there are
greater than 4 employees. Ask questions about child labor laws,
minimum wage, Occupational Safety & health Administration,
the Americans with Disabilities Act and the Family Medical Leave
Act.
To learn more about OSHA requirements & workplace safety:
title="Occupational Safety & Health Administration">
http://www.osha.gov
To learn more about the ADA:
(800) 514-0301 to receive materials &
publications.
title="Americans with Disabilities Act">
http://www.usdoj.gov/crt/ada/adahom1.htm
Immigration
Employees must complete Form I-9,
"Employment Eligibility Verification Form."
To learn more about immigration:
(800) 375-5283 "Ask Immigration"
http://uscis.gov/
Please contact:
U.S. Department of Labor
10421 West Markham
Little Rock, AR 72205
Phone: (501) 324-5436
Federal Unemployment Tax (FUTA)
FUTA works with state unemployment
systems (see page 4). Currently, the tax rate is 6.2% and is
applied to the first $7,000 in wages paid to each employee during
the year. Employers may take a credit against the FUTA tax for
amounts paid into state unemployment funds. If entitled to the
maximum credit, the FUTA tax rate is .8%. Employers utilizing
independent contractors do not pay FUTA tax on these individuals.
FUTA tax deposits occur quarterly, using Form 940 or 940-EZ.
Please contact:
Arkansas Employment Security Department
Phone: (501)682-3268
State Requirements
State Labor Laws
State labor laws apply to those
employing 4 or more people and gross sales under $500,000. If
sales are over $500,000, the Federal labor laws apply. Phone the
Department of Labor's Little Rock office with questions
concerning minimum wage, overtime, and child labor laws. Also,
use the web site listed below.
Please contact:
Arkansas Department of Labor
10421 West Markham, 1st Floor
Little Rock, AR 72205
Phone: (501) 682-4500
http://www.state.ar.us/labor
State Withholding
If the business has employees
and has already received an Employer Identification Number,
register with the state for a state withholding information
packet. Use Form AR4ER, obtained from the office or web site
below.
-
The EIN issued by the IRS
will be the same number used by Arkansas for the purposes
of state withholding.
-
Upon receipt of the
request, the Department of Finance and Administration
will forward materials to the business for remitting
state income tax on a monthly basis, and submitting tax
reports on a quarterly basis.
Please contact:
Department of Finance and Administration
Ledbetter Revenue Building
7th and Wolfe, Room 225,
P. O. Box 9941
Little Rock, AR 72201
Phone: (501) 682-2212
title="Department of Finance and Administration">
http://www.state.ar.us/dfa
title="Department of Finance and Administration">
/income_tax/tax_wh_forms.html
Sales and Use Tax
To apply for a permit, submit
an application along with a $50 non-refundable fee to the
location referenced below. For more information on sales and use
tax, or to download the booklet "Starting a New Business in
Arkansas"(included in this Guide), log onto the web sites
listed below.
-
This department will issue
a sales & use tax permit number. It is not the same
number as the EIN.
-
All retail businesses,
including e-retailers, and some service businesses should
have a sales and use tax permit. Use Tax is paid on goods
if purchased out of state and the seller does not collect
sales tax.
-
Taxes are paid monthly. If
the business collects $25 or less, taxes are reported
quarterly or semiannually.
-
Check on the status of tax
liability when buying an existing business. Sellers
should provide buyers with a current statement from the
Sales and Use Tax office.
Please contact:
Department of Finance and Administration
Revenue Department
7th & Wolfe Street
Little Rock, AR 72201
Phone: (501) 682-7104 (taxpayer assistance)
title="Tax Guide for Starting a New Business in Arkansas">
http://www.state.ar.us/dfa/excise_tax_v2/st_index.html
tabindex="136" title="Tax Guide for Starting a New Business in Arkansas">
http://www.accessarkansas.org/dfa/income_tax/tax_guide_overview.html
Local Taxes
There are more than 275 local
taxes in Arkansas. Local municipalities (cities & counties)
define their respective tax rates, so it's a good idea to become
familiar with local taxing authorities. To learn more, log onto:
tabindex="138" title="Arkansas business tax guide">
http://www.accessarkansas.org/dfa/income_tax/tax_guide_overview.html
Depending on their location,
restaurants and lodging facilities may be required to collect an
additional sales tax (sometimes referred to as a
"hamburger" tax) that is remitted to local advertising
& promotion commissions.
Insurance Requirements
State Unemployment Insurance
Call the Arkansas Employment
Security Department to register the business' Employer
Identification Number.
Please contact:
Arkansas Employment Security Department
P.O. Box 2981
Little Rock, AR 72203
Phone: (501)682-3102
http://www.state.ar.us/esd
/ForEmployer/ADWS_Foremployer.htm
Worker's Compensation Insurance
Applies to businesses with 3
or more employees, less depending on the type of business.
Proprietors and partners do not count as employees; however, all
members of corporations do count as employees. Contact a
registered insurance agent.
Please contact:
Arkansas Worker's Compensation Commission
Fourth & Spring Streets
P. O. Box 950
Little Rock, AR 72203
Phone: (501)682-3930
http://www.awcc.state.ar.us
Arkansas Special Licenses, Permits and Inspections
Occupational Licenses
To research the regulations that
apply to specific occupations in Arkansas, refer to the Directory
of Licensed Occupations, available at the ASBDC Research Center.
Search a database of Arkansas occupations using the web site
listed below.
Please contact:
Arkansas Employment Security Department
Phone: (501)682-3118
http://www.acinet.org/acinet/lois_start.asp
Restaurant and Food Services
Contact the state or the county
sanitarian, an on-site inspector of restaurants and food
preparation facilities. Anyone in food services, such as food
processing, restaurants, caterers, mobile food units, convenience
stores and bed and breakfasts must have their kitchen plans
approved before establishing these businesses. These rules also
apply to home-based businesses.
Please contact:
Division of Environmental Health Protection
Arkansas Department of Health
4815 West Markham
Little Rock, AR 72205
Phone: (501)661-2171 (state sanitarian)
http://www.healthyarkansas.com
Permit to Serve Alcohol
The Alcoholic Beverages Control
Division (ABC) conducts a 4-hour educational seminar twice
monthly. Applicants are required to attend before a permit is
issued. Plan to attend even if buying a business with an existing
permit. Permit fees range from $40 to $1000, plus a federal
occupational tax of approximately $250.
Please contact:
Arkansas Department of Finance and Administration
Alcoholic Beverages Control Division
100 Main Street, Suite 503
Little Rock, AR 72201
Phone: (501) 682-1105
Permit to Sell Cigarettes, Tobacco, Amusement, and Vending Machines
Call to apply for special permits
to sell these types of goods or to operate amusement or vending
machines.
Please contact:
Miscellaneous Tax Section
Ledbetter Revenue Building
7th & Wolfe
Little Rock, AR 72203
Phone: (501)682-7184
Adult or Senior Day Care
Call to receive packet of regulations.
Please contact:
Arkansas Department of Human Services
Office of Long Term Care
P.O. Box 8059, Slot 408
Little Rock, AR 72203
Phone: (501)682-8430
http://www.state.ar.us/dhs
http://www.medicaid.state.ar.us/general
/units/oltc/index.aspx
Child Care
Call to receive packet of regulations.
Please contact:
Division of Child Care &
Early Childhood Education
P.O. Box 1437
Little Rock, AR 72203
Phone: (501)682-8590
http://www.state.ar.us/childcare/
