BUSINESS AND COMMERCIAL (UCC) SERVICES

FAQs - BUSINESS SERVICES

Do I have to incorporate my business?

No, there are several forms of operating a business that do not require incorporation.

How does my business obtain an EIN (Employee Identification Number) or “federal ID number” for my corporation?

The Employee Identification Number is obtained from the Internal Revenue Service, www.irs.ustreas.gov. The Corporations Division does not issue, or maintain records of, EINs.

How do I get a “tax number”?

A “tax number” may refer to a sales tax identification number and can be obtained from the Revenue Division of the Department of Finance and Administration. You may contact that division by telephone at 501-682-1895.

Where would I obtain a state business license?

A state board, commission, or association regulates most businesses that require a state license or permit. For example, to sell real estate you must obtain a license from the Real Estate Commission.

What types of entities are on file with the Business and Commercial Services Division of the Secretary of State?

Business corporations, nonprofit corporations, professional corporations, limited partnerships, limited liability partnerships and limited liability companies are formed in Arkansas by filing with the Business Services Division of the Office of Secretary of State. The above entities that form in other states must file with the Arkansas Secretary of State as “foreign” entities in order to transact business in the state.

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Should I incorporate my business?

Individuals must research this question on their own and should consult a lawyer and/or tax professional in making the decision. The factors to be considered include tax issues, liability issues, capital needs and the type of business, among many others. Click here for a brief summary of the most common forms of business. If a decision is made to form a corporation, the staff of the Corporations Division can assist with the process of incorporation.

How do I obtain paper forms for various corporate filings?

Paper forms can be obtained by calling 501-682-3409. Forms can also be downloaded via the Internet by accessing our website www.sos.arkansas.gov .

How long does it take to complete a filing with the Corporations Division?

The Division completes most filings such as articles of incorporation, amendments, mergers or dissolutions within two business days of receipt. If you choose to visit the office in person the filings can often be completed while you wait. In any event, the effective date of a filing is the date it is received by the BCS Division. Obviously if a post-effective date is specified in the document the filing is effective on that date. Franchise tax and annual reports are generally processed in two to three weeks; these can also be filed online and are updated nightly.

What does “A.C.A.” mean?

It stands for “Arkansas Code Annotated” and is often referred to as “the Code.” In short, it is Arkansas state law. Laws regarding corporations, LLCs and partnerships are found in Title 4 of the Code. The BCS Division has established links herein to many of the Code sections that may be relevant to our customers. The link to the Arkansas General Assembly web site, which contains a searchable version of the code, is located at www.arkleg.state.ar.us.

What is the “registered agent” of a corporation?

The registered agent is the “mailbox” for the corporation. He or she is the person or entity designated by the corporation to receive any service of legal action or other official communication on its behalf. The registered agent may or may not be an owner, shareholder or officer of the corporation. Many corporations use their attorney or a professional corporate service company for this service. The registered agent’s address must be a street address in Arkansas, and the agent must be located at that address. Please review A.C.A. 4-27-501 (profit) or 4-33-501 (nonprofit). A post office box or “mail drop” may not be used as the registered agent address.

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How can I change the registered agent of my corporation?

The name of the registered agent and/or the registered office of a corporation is changed by filing a “Statement of Change of Registered agent”. The Statement of Change of Registered agent can also be filed online at www.sos.arkansas.gov.

How do I change an officer(s) of a corporation?

Officer changes can be made when filing an annual franchise tax report. The annual report may be filed, and changes made, online at www.sos.arkansas.gov. If a change needs to be made after the annual tax report has been made, an amendment can be filed.

If my company incorporates, will anyone else be able to use the name?

Issuance of a name by the BCS Division does not necessarily give a person the exclusive right to use of that name. Many businesses do not choose to incorporate. The Office of Secretary of State has no record of these and thus cannot search names of unincorporated businesses. The question of who is the “owner” of a name is a complex one that should be addressed to legal counsel. Many lawyers will advise you that protecting a name is well down the list of reasons to consider incorporation. However the SOS does not allow corporations to file entity names that are the “same” as other corporations on file.

What does issuance of a name by the Secretary of State mean?

The issuance of a corporate name by the Secretary of State means that the name is distinguishable for filing purposes on the records of the Corporations Division. (A.C.A. 4-27-401)

Are fictitious or trade names registered with the Secretary of State?

Yes. No corporation (domestic or foreign) can conduct any business in the state under a fictitious name unless it first files with the Secretary of State, and, in case of a domestic corporation, with the county clerk of the county in which the corporation's registered office is located (unless it is located in Pulaski County). The fee varies depending on entity.

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What must be included in Articles of Incorporation?

Articles of incorporation must include: a) the name of the corporation, b) the number of shares the corporation is authorized to issue, c) the street address of the corporation's initial registered office and the name of its initial registered agent at that office, d) the name and address of each incorporator, and e) the primary purpose or purposes for which the corporation is organized. These are minimum requirements and there are other items that may be included and an incorporator should discuss the matter with legal counsel.

What or who is an incorporator?

An incorporator is the person responsible for filing the articles of incorporation. It may or may not be an officer, shareholder or the registered agent.

How do I change my articles of incorporation?

Filing Articles of Amendment amends a corporation’s articles. Amendment forms are available online. Examples of changes that can be made to the articles include: officer names, corporate name, registered agent, and other provisions in the original articles of incorporations. (A.C.A. 4-27-100)

What is franchise tax?

The franchise tax is a privilege tax imposed on corporations, including banking corporations and limited liability companies that are incorporated in Arkansas. The tax is also imposed on foreign corporations and limited liability companies that transact business in Arkansas. (A.C.A. 26-54-101)

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How can I submit my company’s franchise tax and annual report?

Franchise taxes and reports can be submitted in person, by mail, or on-line.

Why must a corporation pay franchise tax even if it is no longer in business?

All corporations that exist owe franchise tax. A corporation exists until it is properly dissolved in the in the Secretary of State’s Office

What does “assets” refer to on the franchise tax form?

“Assets” refers to the total value of the real and personal property of a corporation.

What is a “domestic filing”?

Any filing related to a business entity that is incorporated or organized under the laws of the state of Arkansas.

What is a “foreign corporation”?

A foreign corporation is any corporation or business entity that is incorporated or organized under the laws of a state or jurisdiction other than the State of Arkansas.

What is a “foreign filing”?

Any filing related to a business entity that is incorporated or organized under the laws of a state or jurisdiction other than the State of Arkansas.

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Is an out-of-state corporation required to file with the Arkansas Secretary of State?

Sometimes. A corporation incorporated in another state, a “foreign” corporation under Arkansas law, should review the provisions of A.C.A. 4-27-1501 (profit) or A.C.A. 4-33-1501 (nonprofit). You will notice that these laws indicate a “A foreign corporation may not transact business in this state until it obtains a certificate of authority from the Secretary of State”.

However, A.C.A. 4-27-1501 lists a number of activities that “do not constitute transacting business.” Thus, if a company’s business in Arkansas falls into one of these categories, it is not required to file with the Secretary of State. The Corporations Division cannot indicate whether or not a particular foreign corporation must qualify. A corporation that is uncertain about this question should consult its legal counsel.

What happens if an out-of-state corporation does not file with the Secretary of State?

A.C.A. 4-27-1501(profit) or A.C.A. 4-33-1501(nonprofit) list the “consequences of transacting business without authority.” Corporations with no certificate of authority cannot file a lawsuit in the State of Arkansas. A profit corporation that begins transacting business in Arkansas without authority may be liable for a civil penalty of not less than $100.00 and not more than $ 5000.00.

How does an out-of-state corporation obtain a certificate of authority and is there a fee?

An “Application for Certificate of Authority” is filed along with an original certificate of existence (“good standing”) from the “home” state. The filing fee is $ 300.00 for business corporations and $ 300.00 for nonprofit corporations and can be filed online.

When a foreign corporation that has obtained a certificate of authority no longer transacts business in Arkansas, is there a filing to be made?

A foreign corporation that ceases its operations in Arkansas should file an Application for Withdrawal pursuant to A.C.A. 4-27-1520 (profit) or A.C.A. 4-33-1520 (nonprofit)

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Where could I find out about a company not on file with the Secretary of State?

Businesses not required to file with the state may file with the circuit clerk in the county where the business is located.

What is “dissolution?”

Corporations that decide to “go out of business” must formally dissolve. Filing articles of dissolution will accomplish this. (A.C.A. 4-27-1401)

When is the name of a revoked corporation available for use?

The name of a revoked entity is not available for 7 years after the date of revocation. Names of entities revoked prior to December 31, 1999 are not available for 15 years.

What does it mean when a corporation is revoked?

Corporations that are in a revoked status endanger their corporate protections and are barred from many corporate activities. Revocation occurs for failure to comply with all franchise tax obligations. The most common reason is the failure to pay its annual franchise tax.

What is a “certificate of good standing?”

A “certificate of good standing” is a statement issued by the Secretary of State noting that a specific entity has the authority to transact business in the state.

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What is a “certificate of existence?”

A “certificate of existence” is a statement issued by the Secretary of state noting basic corporate information and current tax status.

What is a “certified copy”?

A “certified copy” is a true and perfect copy of a document that has been verified and so noted by the Secretary of State.

What must be included in nonprofit Articles of Incorporation?

The articles of incorporation must include: A) a corporate name for the corporation, B) one (1) of the following three statements; 1) this corporation is a public benefit corporation, 2) this corporation is a mutual benefit corporation, or 3) this corporation is a religious corporation; C) the street address of the corporation's initial registered office and the name of its initial registered agent at that office; D) the name and address of each incorporator, E) whether or not the corporation will have members; and F) provisions not inconsistent with law regarding the distribution of assets on dissolution. These are minimum requirements and there are other items that may be included and an incorporator should discuss the matter with legal counsel.

Why do the Articles of Incorporation for a nonprofit corporation require information on the distribution of assets upon dissolution?

Asset distribution information is required by the Internal Revenue Service to determine the tax status of nonprofit corporations.

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How can a nonprofit corporation obtain tax-exempt status?

The Internal Revenue Service determines the taxing status of nonprofit corporations.

Are a corporation’s bylaws filed with the Secretary of State?

No, the corporation maintains bylaws.

Are the shareholders or owners of a corporation listed with the Secretary of State?

No, the corporation maintains that information.

How many officers must a corporation have?

A corporation has officers as described in its bylaws. The same individual may hold more than one office, including that of President and Secretary. (A.C.A. 4-27- 840)

If my business incorporates, can I still be sued personally?

There is no doubt that many people incorporate because they believe their personal assets will be protected in the event of a lawsuit. But this is an extremely complex question for which there is no easy “yes” or “no” answer. Arkansas law imposes many responsibilities upon corporations. These requirements must be strictly followed to assure limited personal liability. Thus, we strongly suggest that questions in this area be addressed to legal counsel. Courts of law sometimes allow individuals within a corporation to be sued personally.

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What does administrative dissolution mean?

If a corporation does not fulfill specific duties as required by law a corporation may be administratively dissolved by the Secretary of State. The most common reason for being administratively dissolved is the failure to pay franchise tax. (A.C.A. 4-27-1420)

What is an “S” or a “C” corporation?

“S” and “C” in this instance refer to federal tax laws that are applicable to a particular corporation. The Secretary of State does not have information that shows whether a corporation is an “S” or a “C”. Questions about the meaning of these designations and the differences in the two types of corporations should be addressed to the Internal Revenue Service, www.irs.ustreas.gov or to an accountant or attorney.

How does a corporation become an “S- Corp?”

The Internal Revenue Service grants the “S-Corp” designation when a corporation elects to be taxed under Subchapter S of the Internal Revenue Tax Code. Being an “S-Corporation is a tax matter only.

Does the Corporations Division have phone numbers for corporations or for their officers or registered agent?

No, only addresses are on file.

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