Do Sole Proprietors Pay Franchise Tax in Arkansas? Understanding Arkansas Franchise Tax

Basics of Franchise Tax

In Arkansas, a franchise tax is imposed on businesses granted a Certificate of Authority by the state government. The tax funds various state initiatives, like education and infrastructure. The rate is based on the business’s size and type.

Calculation and Payment

How is it calculated? Take the greater of either the gross assets or net income method.

How to reinstate a business? Contact the Arkansas Department of Finance and Administration or a tax professional to discuss payment options and avoid penalties.

Who Needs to Pay?

Who is subject to Arkansas franchise tax? As per Section 26-54-104 of the Arkansas Corporate Franchise Tax Act, all Arkansas LLCs are required to file an Annual Franchise Tax Report along with a flat-rate tax of $150. The Annual Franchise Tax Report must be filed every year in order to keep your LLC in compliance and in good standing with the state.

All LLCs also must pay the minimum corporation franchise tax of $150.

All franchise and annual reports must be filed with the Arkansas Secretary of State. You’ll find important due dates, filing fees, and answers to any questions you may have along the way. The following instructions will guide you through the process of filing your Arkansas Franchise Tax Report.

Filing Your Arkansas Franchise Tax Report

Arkansas, requires LLCs to file Annual Franchise Tax Reports and pay $150. You must submit payment online or via mail by May 1. Failure to pay can result in the state closing your LLC. Filing online is faster, and the state usually processes the payment within a day. To pay by mail, download the annual franchise tax PDF form. Make a check or money order out to the Arkansas Secretary of State and mail along with your paperwork.

Arkansas has a payment plan for sales tax and businesses can choose to pay monthly or quarterly.

Most accountants will charge $300 per year for a simple tax return, or up to $900 for more detailed filings. We recommend speaking with a few accountants in Arkansas to make sure they can help you meet all of your federal, state, and local tax obligations.

Options for filing and paying your Arkansas sales tax: File online, File by mail or AutoFile. To pay income tax, select “Make Income Tax Payment” under the Income Tax menu at the Arkansas Taxpayer Access Point. From there you will be navigated to make an online payment. For state sales tax File by mail, use Form ET-1.

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