How to start a business in Arkansas in 14 steps (2025 guide)

Starting a business is an exciting venture, filled with the promise of growth, creativity, and the chance to make a meaningful impact. Whether you plan to start a business in Little Rock or you’re settling in Fayetteville, you can find lots to love about the Natural State, from its lower cost of living and favorable business policies to its stunning parks, sparkling lakes, and mild climate. In this guide, we’ll walk you through every step of how to start a business in Arkansas, from choosing an industry to setting up a bank account.

Why start a business in Arkansas in 2025?

A recent Forbes study ranked Arkansas as the third-best state to start a business in 2024, and it's easy to see why. The state offers low startup costs, a strong business survival rate, and plenty of resources for entrepreneurs. You can form an LLC here for just $45, which is one of the lowest fees in the country. That’s a great way to keep costs down right from the start.

Arkansas also supports small businesses with an average of $23,463 in funding through grants and other programs. On top of that, the cost of living is low, which benefits both you and your employees. You’ll also have no trouble finding talent since 64% of the population is of working age.

Here are the topics we’ll cover in this step-by-step guide: 

• 14 steps to starting a business in Arkansas
• Step 1: Decide what type of industry is best for your business
• Step 2: Conduct industry research
• Step 3: Create a business plan
• Step 4: Choose your business entity: Types of business entities in Arkansas
• Step 5: Secure funds: Arkansas small business funding, loans, and grants
• Step 6: Choose your Arkansas business name and Arkansas DBA
• Step 7: Pick a business location in Arkansas
• Step 8: Find a Arkansas registered agent 
• Step 9: Get a Arkansas EIN and file your tax and employer identification documents 
• Step 10: Register as a small business in Arkansas
• Step 11: Register for your business license and permits in Arkansas 
• Sept 12: Secure insurance for your Arkansas small business 
• Step 13: Prepare to pay taxes on your business in Arkansas
• Step 14: Set up your business bank account
• Additional resources to get your business started
• Frequently asked questions 

14 steps to starting a business in Arkansas

Turning your business dream into a reality takes planning, persistence, and a solid understanding of the steps to get started. Whether you're opening a boutique in Bentonville, a cozy cafe in Hot Springs, or a tech startup in Little Rock, Arkansas offers the perfect blend of community support, natural beauty, and small business resources to help your venture thrive. Follow these steps to help get your business off the ground.

Step 1: Decide what type of industry is best for your business 

Identify the industry that aligns with your skills and interests while addressing a niche in your area. Arkansas has many thriving sectors, whether you’re looking to become a caterer, start an agribusiness, a manufacturing facility, or an accounting firm. Research economic trends and demographics, whether you live in a small town like Van Buren or a larger locale. 

Feeling stuck? Explore small business ideas for inspiration.

Step 2: Conduct research in your business industry

Once you’ve narrowed down your industry, start researching. Conduct a competitive analysis to understand your local and statewide competitors and identify any gaps your business could fill. Familiarize yourself with any permitting and licensing requirements you’ll need. Also, be sure to talk to locals and use the Arkansas Small Business and Technology Development Center as a resource.

Step 3: Create a business plan

Outline your vision with a detailed business plan. Your business plan will serve as your one-stop guide for your business concept, financial planning and projections, marketing strategies, target demographics, and monitoring of goals. It’s a key document for securing funding and attracting investors.

Include these sections in your business plan:

• Executive summary: Provide a snapshot of your business and its primary goals.
• Company description: Explain your mission, background, and objectives.
• Market research and potential: Analyze your target market, industry trends, and growth potential.
• Competitive analysis: Conduct a competitive analysis to identify your competitors and unique advantages.
• Products and services: Describe your offerings and how they benefit your customers.
• Marketing and sales: Outline strategies for attracting and retaining customers.
• Business financials: Include financial projections, such as income statements and cash flow forecasts.
• Management and leadership: Detail your team’s expertise and experience.
• Funding request: Specify your funding needs and explain how funds will be used.
• Appendix: Include supporting documents like market research or financial statements.

Carve out time to craft a solid business plan to clarify your goals, attract investors, and set your company on a path to success. Use a free business plan template to help you get started. For no-cost guidance on building your business plan, the Arkansas Small Business and Technology Development Center is a valuable resource.

Step 4: Choose your business entity: Types of business entities in Arkansas

The type of business entity you choose will determine your tax obligations and how you register your small business. Here are the most common business structure types in the state of Arkansas: 

Sole proprietorship

This is the simplest structure that’s ideal for solopreneurs. You have complete control over the business, but there’s no liability protection.

General partnership

All partners share management responsibilities and profits, but each partner is personally liable for the business’s debts and legal obligations.

Limited liability company (LLC) 

An LLC combines the simplicity of a sole proprietorship with liability protection for its owners. Learn more about LLCs.

Limited partnerships (LPs)

An LP is structured with general and limited partners, where general partners manage the business and hold liability, while limited partners contribute financially but have limited liability.

Limited liability partnerships (LLPs)

LLPs provide liability protection to all partners while allowing them to share management duties and avoid being responsible for each other’s actions.

Corporations 

A corporation is a legal entity separate from its owners, with shareholders who have limited liability for the company’s debts and obligations.

Step 5: Secure funds: Arkansas small business funding, loans, and grants 

Determine how you’ll secure capital to get your business up and running. Sources of funding can range from grants and loans to using your personal savings account, depending on the business structure you choose. If you’re choosing to form an LLC, the state’s $45 formation fee is one of the nation’s lowest. However, expenses like local permits, industry-specific licenses, utilities, equipment, and inventory can all add up quickly, possibly reaching tens of thousands of dollars. Use resources from the Small Business Administration (SBA) to help organize and calculate your potential startup costs.

You should also look into state resources for financing your organization, including:

Arkansas Economic Development Commission (AEDC) programs 

AEDC can connect you with the Targeted Business Payroll Program, which offers rebates for hiring employees in the state. AEDC’s tax programs, like the Equity Investment Tax Credit and the Seed Capital Investment Program, help offset startup costs for small businesses in Arkansas. 

Arkansas Small Business and Technology Development Center (ASBTDC) resources 

ASBTDC offers free consulting and marketing research to help you navigate starting a small business in the state. They can also connect you with the OnRamp Fund program, which offers loan guarantees for small businesses. And they’ll recommend financial institutions that can assist you with funding. 

NewRoad Capital Partners 

NewRoad Capital Partners may provide funding if you’re in a high-growth industry, including supply chain and logistics or marketing and retail tech.

Step 6: Choose your Arkansas business name and Arkansas DBA

Choose a name that reflects your company’s identity. Then, conduct a business search on the Arkansas Secretary of State’s website to ensure your entity name is available for use. 

When choosing a name, keep in mind that the state of Arkansas requires you to include your business entity structure in the title. For example, Arkansas Accounting Firm, LLC. 

Reserve your business name

Once you’ve settled on an available name for your business, register your name online or send in the form by mail. Pay a $25 filing fee to reserve it for 120 days.

Filing a fictitious business name (DBA)

Register your fictitious name or DBA if you have one. Short for “Doing Business As,” a DBA enables you to operate under a different name than your business’ legal one. Let’s say you have a small restaurant in Fayetteville, but you also want to open a separate coffee roasting business and sell products online. You’ll basically create a brand with a more descriptive name that reflects the products you’re trying to sell. You can file a Fictitious Name Form online or mail it in with a fee ranging from $15 to $25, depending on your entity structure. Just be sure to search the Arkansas Secretary of State trademark database to make sure your chosen fictitious name is available. 

If you’re a sole proprietorship, you can file a DBA at the county level. Fees can vary depending on which county your business is located.

Step 7: Pick a business location in Arkansas

Determine the location of your Arkansas business, whether it’s on your 1,000-acre farm in the Arkansas River Valley or a downtown restaurant on Fayetteville’s Dickson Street. Your location determines many variables, from local tax rates and zoning regulations to foot traffic and proximity to suppliers. Running a business from home can be a smart way to save on costs, especially if you have an online business or minimal space requirements. But if you’re planning to set up in a larger city like Little Rock or Fayetteville, keep in mind this information:

Little Rock

Home to museums, theaters, and a lively music scene, Little Rock provides a dynamic atmosphere for entertainment-focused businesses. Its wide offering of world-class hospitals, like UAMS Medical Center and Arkansas Children’s, makes the city ideal for healthcare-related businesses. Transportation, logistics, and manufacturing also thrive in the Little Rock area, so consider locating your business here if you need access to infrastructure. If you’re a government contractor or have a business that requires lobbying or other political goals, set up in the state capital. However, you’ll have higher rents and more competitive markets than in other Arkansas locations. 

Fayetteville

Home to the University of Arkansas, Fayetteville offers access to a well-educated talent pool. There’s also a strong entrepreneurial ecosystem in the city, with tech startups and digital consulting firms. While affordable commercial space is at a premium, the vibrant nightlife and college atmosphere make it ideal for bars, restaurants, catering, and other entertainment ventures.

Step 8: Find an Arkansas registered agent

A registered agent is a designated person or service responsible for receiving legal documents on your business's behalf, ensuring you’re officially notified of lawsuits or other legal matters. Your registered agent can be an owner, shareholder, or officer of your corporation, but the registered agent must have a street address (not a P.O. Box) in Arkansas with regular hours of operation. To find a registered agent service in Arkansas, you can search online or consult with business formation companies. You can learn more at the Arkansas Secretary of State’s website.

Step 9: Get an Arkansas EIN and file your tax and employer identification documents

An EIN (Employer Identification Number) is a nine-digit number the IRS uses to identify your business for tax purposes. Although Arkansas doesn't require a state EIN, you'll need one to file payroll taxes and federal tax returns, open a business bank account, and apply for loans. You can apply for a free EIN through the IRS website.

Step 10: Register as a small business in Arkansas

Register your small business with the Arkansas Secretary of State. Take a look at the requirements and fees for common business structures:

Step 11: Register for your business license and permits in Arkansas

Arkansas doesn’t require a general business license to operate in the state but check with your local entities to determine whether you need zoning permits and occupational licenses. If you plan to sell alcoholic beverages, you’ll have to apply for a license through the Alcoholic Beverage Control Division. Contractors must obtain licensing through the Arkansas Contractors Licensing Board. If you have a professional occupation, you’ll likely need to apply for an Occupational License through the Arkansas Department of Workforce Services. 

If you’re starting a business and need help determining what licenses and permits you may need, contact the Arkansas Department of Labor and Licensing.

Step 12: Secure insurance for your Arkansas small business

What happens if someone tries to sue your contracting business or your home office floods due to a burst pipe? Protect your assets, yourself, and employees from unexpected situations with the right insurance coverage.

Types of small business insurance in Arkansas

Here are some common types of Arkansas small business insurance to consider:

Step 13: Prepare to pay taxes on your business in Arkansas 

Taxes can take a big bite out of your profits if you don’t plan accordingly. Determining which Arkansas tax obligations you’ll have to pay is crucial when you formulate your business plan and update financial projections. With more than 300 types of local taxes across the state, you want to familiarize yourself with any local or county requirements. 

State income tax

Arkansas has a graduated state income tax, with rates topping out at 3.9%. The tax brackets are adjusted annually for inflation and vary depending on your income. 

Sales and use tax

If you plan to sell goods or services, Arkansas levies a state sales and use tax of 6.5%. Local taxes can make it higher.

Corporate income tax

If you’re an LLC or a corporation with a C corp designation, you’ll file an Arkansas Corporate Income Tax return. Corporate income rates range from 1% to 4.3%.

Franchise tax

If you’re a corporation or an LLC, you’ll have to pay this franchise tax. It’s basically a tax that gives you the privilege of doing business in Arkansas, and rates range from $150 to $300, depending on your entity. 

Payroll taxes

Payroll taxes include a withholding tax and state unemployment insurance tax. Withholding taxes are wages withheld from employee paychecks, and you can consult the Arkansas Department of Finance and Administration’s table to determine your portion. Employers also collect state unemployment insurance tax. You can file quarterly returns through the Department of Workforce Services. 

Other unique Arkansas tax situations 

The Arkansas pass-through entity tax election allows partnerships, LLCs, and S corps to file a single income tax return on the entity’s behalf while paying income tax on behalf of other owners. 

Tax credits and incentives for Arkansas employers

Arkansas offers a number of tax breaks and incentives for business owners across the state and various industries. New tech businesses that offer employees higher wages may be eligible for an equity investment tax credit. Film production incentives include rebates or credits. Arkansas’ Tax Back program gives businesses breaks on building materials, machinery, and equipment. Learn more about incentives, rebates, and credits by visiting the AEDC website.

Federal taxes

In addition to state and local taxes, all businesses must pay applicable federal taxes, including:

• Federal income tax
• Self-employment tax (for sole proprietors and partners)
• Employment taxes (if you have employees), including the Federal Unemployment Tax Act (FUTA tax)
• Excise taxes (for certain industries)

To ensure you understand your federal tax obligations, check out these IRS resources: Publication 334, Tax Guide for Small Business and Publication 583, Taxpayers Starting a Business and Keeping Records.

Step 14: Set up your business bank account

Now it’s time to manage the finances for your Arkansas small business. Here’s how to get started: 

1. Gather any business registration forms, permits and local licenses so you can open your small business bank account. 
2. Choose a bank that offers features you need, whether loan products or business services. 
3. Begin establishing credit by applying for a credit card and using it for supplies, meetings, and travel. 
4. Find the right accounting software and connect it with your business bank account to track expenses in real time. 
5. Find an accountant or bookkeeper with expertise in local and state regulations and taxes and who can help you navigate your finances. 

Additional resources to get your business started 

There are several state and federal resources that can support your business with guidance, training, potential funding and more. 

State resources

The Arkansas Small Business and Technology Development Center (ASBTDC): ASBTDC is a key resource for entrepreneurs in Arkansas. They offer free business consulting, market research, and help with business planning. If you're looking to sharpen your skills, they provide workshops and training sessions to guide you through the challenges of starting and growing a business.

The Arkansas Economic Development Commission (AEDC): AEDX offers grants, tax incentives, and low-interest loans to support your business financially. Plus, if you're looking to expand or relocate, the AEDC can assist with site selection and workforce development while helping you figure out state regulations.

Arkansas Women’s Business Center (AWBC): AWBC is dedicated to providing training, technical assistance, and access to capital for women entrepreneurs. They also offer one-on-one counseling and workshops that cover everything from business planning to marketing and financial strategies.

Federal resources 

Small Business Administration (SBA): The SBA supports small businesses through various loan programs, including the 7(a) loan, provides resources for government contracting, and offers counseling and training programs to help entrepreneurs start and grow their businesses.

Grants.gov: This centralized platform simplifies the process of searching for and applying for federal grants across various sectors. It also provides grant writing tips and has a Grants Learning Center featuring the basics of grants, eligibility, and more. 

Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR): SBIR and STTR programs provide research and development funding to innovative tech companies. 

SCORE: SCORE is a national nonprofit organization that partners with the U.S. Small Business Administration (SBA) to provide free mentoring and educational resources to entrepreneurs and small business owners. While not a direct federal agency, SCORE is an independent organization with a network of volunteer business mentors across the United States.   

U.S. Department of Agriculture (USDA): The USDA website lists grants, loans, and other programs and resources for farmers and other businesses serving rural America.

Frequently asked questions

How long does it take to start a small business in Arkansas?

The process can take as little as a few weeks or as long as a few months, depending on paperwork, registration, funding, and other factors. 

How much does it cost to start a small business in Arkansas?

It can cost as little as a few hundred dollars to file for all your permits and licenses and up to tens of thousands of dollars, depending on your industry, your overhead, and any necessary equipment and inventory. 

Do I need a local business license if I only operate online in Arkansas?

Yes, even if you operate solely online in Arkansas, you may still need a local business license. Arkansas doesn’t have a statewide business license requirement, but many cities and counties have their own licensing regulations. Check with your local city or county clerk's office to determine the specific requirements for your area.

Disclaimer: 

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