How Much Does a Business License Cost in Arkansas?

Ensuring that your business is operating legally is one of the most important steps to take as a new business owner in Arkansas. After all, you want to make sure that once up and running, your business will thrive and not be bogged down in legal hurdles brought on from not getting it licensed properly from the jump. 

Expenditures like licensing, permits and more are all part of the process of starting a business in Arkansas. This process can become a bit more confusing as there is no single statewide Arkansas business license, but instead may require sellers’ permits from the Arkansas Department of Finance and Administration (DFA).

In addition, local city and county businesses within the state might also have to obtain specific licensing to operate legally. Thankfully, we have compiled a pathway through the process and answered some of your most pressing questions from the outset, such as how to know when you need one and how much it costs when starting a new business in the state. 

Do you need a business license in Arkansas?

Generally, most businesses require some type of business license within the state of Arkansas. However, the types of licensing and the requirements for the licensing will vary significantly based on the business type and the city in which a business is operating.

Even if you are planning to open a non-profit, you need to get a local license. You also need to register through the Arkansas Secretary of State to legally form any business. In the vast majority of cases, you will need to file for a general business license, which is also sometimes called a business tax certificate in Arkansas. 

Once you know your business location within the state of Arkansas, then you can contact the local government via their website to learn more about that specific city or county’s individual licensing requirements. These licensing requirements will vary greatly. 

If you are operating an online business in Arkansas, it’s important to know that although the state itself doesn’t have a general state license for online businesses, you likely still need to register with your city or county and get a sales tax permit in order to sell taxable services or goods. 

How much does a business license cost in Arkansas?

In general, your business license cost varies not just at the state level, but within counties and even industries. Since Arkansas does not have a state level business license requirement and each license is based on city and county ordinances and requirements, the price range for a business license within the state is pretty vast. Costs can begin around $25 and move to more than $1,000. 

Arkansas businesses are also legally required to pay an annual franchise tax to the Arkansas Secretary of State to operate legally. These are due each year before May 1st for existing businesses. 

The type of business you open and where your business is located will have a big impact on your overall license costs. In addition, in many instances, you will have to renew your licensing and that is an additional cost going forward. 

Also, if your business within the state of Arkansas operates in different cities within the state, the license cost can vary even between branches of your business. 

Types of business licenses in Arkansas and their cost

There are several types of business licenses within the state. The following are just a few examples:

LLC: This is probably the most common type of business licensing in Arkansas and throughout the nation for small businesses. Because LLCs are relatively easy to form, understanding how to start an LLC in Arkansas can help explain why this structure is such a popular choice. They require minimal maintenance and few corporate formalities, making them ideal for many owners. The average cost is $45 if filed online and $50 if filed by paper. Arkansas also requires LLCs to have a registered agent, which typically costs an additional $100 to $300 per year. Altogether, the total estimated cost to set up an LLC in Arkansas is around $195.

Corporation: This C corporation is a profit corporation and is a more formal structure. Corporations allow stocks, which makes them more appealing to investors. The cost of filing for this is not easily discerned as there is no stated cost listed, meaning it varies. Local cities might also have their own fees associated with starting a corporation, and, of course, annual tax fees are required. 

Nonprofit: There is no state fee associated with registering a nonprofit or charitable business in Arkansas. However, there are fees for incorporation and to get tax-exempt status as well as business permits that vary based on what type of nonprofit is being operated. You have to file the Articles with the Secretary of State’s office, which is $50 by mail and $45 online. After this, you will need to file for tax exemption federally, which ranges from $275 to $600 depending on the type of business you choose. 

Example of different industries and licensing in Arkansas as required by the state

The following are some common industries that require state licensing within Arkansas:

Contracting and Construction: When performing work over $50,000 on commercial projects, a license is required by the Arkansas Contractors Licensing Board. Specific trades like elevator installation, electrical work and HVAC professionals also have their own licensing boards.

Home Inspectors: This industry is licensed through the Home Inspector Registration Board.

Engineers: These professionals, along with Professional Surveyors, are licensed through the State Board of Licensure for Professional Engineers and Professional Surveyors. 

Specialty Trades: For specific jobs including:

• Flooring
• Painting
• Handyman work

Hospitality and Food Service: The Arkansas Department of Health and Alcoholic Beverage Control Board oversees the licensing in this sector. Restaurants and food establishments also have to have a Food Handlers Certificate, Food Service Permit, and Manager Certification. If you plan on selling alcohol, cigarettes or tobacco of any kind, you have to obtain a specific alcohol license within Arkansas. 

Cosmetology: Any individuals who provide cosmetology services must be licensed by the Cosmetology Board of Arkansas. 

Real Estate and Sales: The Real Estate Commission issues licenses for real estate professionals in Arkansas. Property management also falls under the scope of real estate practice and requires a real estate license. 

Retail and Sales: When you sell or lease any tangible property in the state of Arkansas, you are required to register with the Department of Finance and Administration (DFA). You have to obtain a sales tax permit in order to collect sales and use tax. This rule applies to both brick and mortar stores as well as online shops. 

Agriculture and Horticulture: This includes professional landscaping services and businesses like greenhouses and nurseries. Nurseries must have a Nursery Dealer License or Nurseryman Dealer License. 

Child Care Services: Businesses that provide childcare services have to get a specific type of state licensing.

Professional Services: Accountants, teachers, therapists and counselors must have a license for that profession to operate in Arkansas. 

Medical Professionals: Nurses and doctors, along with other healthcare workers must be licensed by the state board to work in Arkansas. 

If you are unsure about what type of licensing your business needs, visit the Arkansas Department of Labor and Licensing for more specifics, along with checking with the local government.

Renewing your business license in Arkansas 

Most renewals are overseen by local government associations. Therefore, check with your local government to determine what you need to renew your business license in Arkansas. In most cases, you will need to complete an application or renewal form, pay a renewal fee based on your business location and your business type and industry. 

Be prepared to show proof of insurance, other business-related information, and tax documents at this time. You can expect to renew your business license on a yearly basis. It’s also worth noting that there are late penalties associated with failing to renew on time. The applicable fees will vary based on the license board and municipality under which you are operating. 

Conclusion

Your business type as well as location within the state will greatly alter your licensing cost and the overall demands associated with the process. Arkansas does not have a set state licensing requirement but does have many regulations locally, along with an annual franchise tax on all businesses that operate in the state. Your overall cost will greatly depend on the industry you are going into and any additional permits or licensing that might be required. 

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