Starting a Business in Arkansas
A new business in Arkansas is within reach. Have you been wondering: precisely how do I start a business in Arkansas? And more importantly, can I do so no matter what the economic conditions are? Can I start a new business in Arkansas during a recession?
New Business in Arkansas: Advantages and Disadvantages
First of all, Business Insider has named Arkansas as the fourth worst state to start a new business in, and that is for the whole nation. This was according to a 2016 article. It does have a low cost of living. This is a point in the state’s favor. Yet the potential employee education level is near the bottom.
The population’s GDP per capita is $37,644, the sixth lowest in the country. The business tax environment is also unfavorable. This is because there is a poor corporate tax rate.
Recent Slight Improvements?
In 2018, Forbes places Arkansas at number 37. Also in 2018, Fit Small Business clocked in Arkansas at number 41.
So, why the differences? Keep in mind, first of all, that the three sites all have different methodologies.
Forbes praises Arkansas for low business costs and a good regulatory environment. But the economic climate and quality of life are sub-par. And the labor supply and growth prospects are abysmal.
Fit Small Business says Arkansas has the fourth-best cost of living in the country. The cost of starting a business is decent and access to capital is average. But then it all goes off the rails. Startup activity and taxes are both worse than average. And the labor market, a measure of the desirability of an area and the number of people with bachelor’s degrees, is in the bottom ten. But it’s the quality of life which really brings everything down – number 49.
Conditions seem to be improving in Arkansas, but only you can decide whether they have improved enough.
New Business in Arkansas: DBAs
A sole proprietorship or general partnership which intends to use a name other than the owner’s personal name must file for a fictitious name through a process called “Doing Business As”. File a Doing Business under an Assumed Name Certificate at any local county clerk office.
Start a New Business in Arkansas – Corporations
In addition to registering with the county clerk, domestic corporations must also register fictitious names with the Arkansas Secretary of State.
Start a New Business in Arkansas – Arkansas Top Industries
According to the Arkansas Economic Development Commission, the top industries in the state are aerospace and aviation; and paper and timber products. More of the top industries in Arkansas are advance food manufacturing and packaging; and bio sciences.
Yet more Arkansas top industries are data centers and distribution and logistics services. Another set of top industries for Arkansas are regional headquarters (such as Walmart); and firearms and ammunition.
Even more Arkansas top industries are steel production; technical support services; and smart grid technologies (power electronics). Still more top industries in the state of Arkansas are software development and data management services. Finally, Arkansas is also known for sustainable building products and fixtures; transportation equipment manufacturing; and suppliers for Walmart.
Smart business owners should be able to spot opportunities with many of these larger industries. These can come in the form of, for example, trucking for any industry.
There are also opportunities in inventing and distributing new packaging and sustainable fixtures. In addition, new business owners could perform data support for the health care industry.
Here is exactly how to start business in Arkansas.
Start a New Business in Arkansas – Arkansas New Business Secretary of State Requirements
Register a Business Name
A sole proprietorship or general partnership which intends to use a name other than the owner’s personal name will need to file for a fictitious name via a DBA (“Doing Business As”). File a Doing Business under an Assumed Name Certificate at any local county clerk office.
In addition to registering with the county clerk, domestic corporations will also need to register fictitious names with the Arkansas Secretary of State. Check a state database of Arkansas companies online at the Arkansas Secretary of State website.
Note that when incorporating a small business in the state of Arkansas, the corporation’s name must include the word “corporation,” “incorporated,” “company,” or “limited.” However, a company could also use an abbreviation of one of these words in the name of the corporation.
A business owner can submit an application online at ‘Reserve an Arkansas Corporation Name’ at the Arkansas Secretary of State website. The name that they have chosen will then be reserved for a period of 120 days.
Business Permits and Licenses
There is information on the Professional Licensing page on the Arkansas government website. The Arkansas Department of Finance and Administration also keeps a list.
Local Permits and Licenses
The Association of Arkansas Counties keeps a map. It can help locate county office information.
Business Registration
Make sure to go to the Arkansas Secretary of State website for all necessary forms.
Tax Registration
The Department of Finance and Administration is also your go to place for tax registration. It is on their tax page.
Start a New Business in Arkansas – Virtual Offices
Alliance Virtual Offices only has Arkansas virtual business offices in Bentonville. And DaVinci also has Arkansas virtual office space in Bentonville. However, Regus offers virtual Arkansas office space in Arkansas, particularly in Little Rock. For other areas of the state, business owners might want to seek out local entrepreneur. Or they might want to talk to computer user groups to try to find help in this area.
Start a New Business in Arkansas – Build Business Credit
Company credit is credit in a company’s name. It doesn’t link to an owner’s consumer credit, not even if the owner is a sole proprietor and the solitary employee of the small business.
As such, an entrepreneur’s business and individual credit scores can be very different.
Start a New Business in Arkansas – Company Fundability
Establishing small business credit is a process, and it does not occur without effort.
A company must be fundable to loan providers and vendors.
That’s why, a business will need a professional-looking website and e-mail address. And it needs to have website hosting bought from a merchant like GoDaddy.
Also, company phone numbers ought to have a listing via ListYourself.net.
Likewise, the company telephone number should be toll-free (800 exchange or similar).
A business will also need a bank account dedicated only to it, and it must have every one of the licenses essential for operation.
Working with the IRS
Visit the IRS web site and get an EIN for the business. They’re free. Select a business entity such as corporation, LLC, etc.
A company can get started as a sole proprietor. But they should change to a form of corporation or an LLC.
This is in order to lessen risk. And it will optimize tax benefits.
A business entity will matter when it concerns taxes and liability in case of a lawsuit. A sole proprietorship means the business owner is it when it comes to liability and tax obligations. No one else is responsible.
Beginning the Business Credit Reporting Process
Begin at the D&B web site and get a free D-U-N-S number. A D-U-N-S number is how D&B gets a business in their system, to generate a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.
Once in D&B’s system, search Equifax and Experian’s sites for the business. You can do this at www.creditsuite.com/reports. If there is a record with them, check it for correctness and completeness. If there are no records with them, go to the next step in the process.
By doing so, Experian and Equifax will have activity to report on.
Vendor Credit
First you need to build trade lines that report. This is also known as vendor credit. Then you’ll have an established credit profile, and you’ll get a business credit score.
And with an established business credit profile and score you can start to get more credit.
These varieties of accounts have the tendency to be for the things bought all the time. Like marketing materials, shipping boxes, outdoor work wear, ink and toner, and office furniture.
But to start with, what is trade credit? These trade lines are credit issuers who will give you preliminary credit when you have none now. Terms are typically Net 30, rather than revolving.
Hence, if you get approval for $1,000 in vendor credit and use all of it, you need to pay that money back in a set term, such as within 30 days on a Net 30 account.
Start a New Business in Arkansas – Monitor Your Business Credit
Know what is happening with your credit. Make sure it is being reported and address any inaccuracies ASAP. Get in the practice of taking a look at credit reports. Dig into the details, not just the scores.
We can help you monitor business credit at Equifax, Experian and D&B for 90% less.
Update Your Data
Update the information if there are inaccuracies or the information is incomplete.
Start a New Business in Arkansas – Fix Your Business Credit
So, what’s all this monitoring for? It’s to dispute any problems in your records. Errors in your credit report(s) can be fixed. But the CRAs typically want you to dispute in a particular way. Disputing credit report inaccuracies means you precisely spell out any charges you dispute.
Start a New Business in Arkansas – A Word about Business Credit Building
Always use credit smartly! Never borrow more than what you can pay back. Monitor balances and deadlines for payments. Paying on schedule and fully will do more to boost business credit scores than pretty much anything else.
Building business credit pays. Great business credit scores help a small business get loans. Your lender knows the company can pay its debts. They recognize the company is authentic.
The business’s EIN links to high scores and loan providers won’t feel the need to request a personal guarantee.
Business credit is an asset which can help your business in years to come.
Learn more here and get started toward opening a new business in Arkansas.
Want to start a new business someplace else in America? Then check out our handy guide to starting a business in any state in the country.
Arkansas’s Response to COVID-19
Here is Arkansas’s response. On March 11, Governor Asa Hutchinson declared a state of emergency. The Governor put in a request to the SBA for Emergency Disaster Loans. They are also using state funds and grants to provide relief.
