Arkansas Business License

Written by: Mary Gerardine

Last updated:

Arkansas Business License

If you’re planning to establish or expand your business in Arkansas, obtaining the necessary business licenses can be a key step.

Depending on your industry and exact business location, you may need to apply for a variety of different licenses at the local, state, and federal levels.

In this article, we will guide you through everything you need to know to obtain an Arkansas business license, including the factors you’ll need to consider and the costs involved.

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Do I Need a Business License in Arkansas

In Arkansas, businesses are required to obtain various licenses and permits at the local, state, and federal levels. Here’s a general breakdown:

Type of Business

Below, we’ve detailed common ways in which your business type can dictate the licenses you’ll be required to obtain, as well as specific examples of these:

  • Gross Receipts Tax Permit: If your business sells tangible personal property, specified digital products, digital codes, or performs taxable services in Arkansas, you are required to obtain a gross receipts tax permit (Arkansas sales tax license) from the Department of Finance and Administration (DFA)
  • Professional Licenses: Various professionals in Arkansas, such as landscape architects, barbers, pharmacy technicians, athletic trainers, and social workers, need to obtain professional licenses. For example, the State Board of Barber Examiners provides licenses to barbers and barber shops and the Arkansas Contractors Licensing Board regulates the licensing of contractors in the state
  • Environmental Permits: If you have a business in Arkansas involved in activities potentially impacting the environment, you may need to get specific environmental permits from the Arkansas Department of Environmental Quality (ADEQ) to ensure you are in compliance with state regulations

However, this is not the only factor influencing the exact combination of licenses you’ll need — the location of your business within Arkansas plays an important role as well.

Location

In this section, we’ve provided a succinct overview of the potential licenses and permits that your business may need due to local, state, and federal requirements:

  • Local: Local licenses and permits are issued by city or county governments and are often based on the specific location of the business and the nature of its operations. If a business is located within city limits, it may need a city business license to operate legally. Additionally, certain cities may have specific permits for certain types of businesses. For example, the City of North Little Rock has specific permits related to the sale of beer, wine, and liquor
  • State: While Arkansas doesn’t require a statewide general business license, the state requires businesses that sell tangible personal property or taxable services to obtain a gross receipts tax permit. Furthermore, even if your business is based outside Arkansas, this permit applies if you serve clients and customers in the state
  • Federal: Federal licenses and permits are required for businesses that are regulated by a federal agency. These can include businesses involved in activities like the sale of alcohol, tobacco, firearms, commercial fishing, wildlife-related activities, and more

Since the exact permits and licenses your business will need are entirely unique to your situation, you’ll have to conduct thorough research into your own local, state, and federal regulations to smoothly launch your business.

Alternatively, many entrepreneurs opt to leverage the expertise of third-party services to handle this on their behalf.

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How to Get a Business License in Arkansas

In order to get your business license(s) in Arkansas, you will need to complete the following steps:

  • Form Your Business
  • Obtain an Employer Identification Number (EIN)
  • Apply for the Required Licenses and Permits

Let’s take a look at each step in more detail below.

Step 1: Form Your Business

Before setting out to obtain a business license in Arkansas, it’s pivotal that you first choose an appropriate structure for your business. Sole proprietorships, general partnerships, and corporations are all common choices, however it’s often seen as the most advantageous for small businesses in Arkansas to register as a Limited Liability Company (LLC). Here are a few reasons for why:

  • Limited Liability: Members are protected from personal liability for business debts, safeguarding personal assets
  • Tax Benefits: LLCs typically enjoy a pass-through tax treatment, avoiding the double taxation that corporations are subjected to
  • Management Flexibility: LLCs allow for flexibility in management structure, either being member-managed or manager-managed based on the preferences outlined in the certificate of formation
  • Ease of Formation: With the Arkansas Secretary of State providing forms that meet the minimum state law requirements and the option to file online, setting up an LLC is relatively straightforward

Many small business owners opt to avoid the tricky process of forming an LLC by instead leveraging the help of third-party LLC formation services.

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Step 2: Obtain an EIN

The second step you’ll need to complete before applying for your business license is to obtain your EIN. This is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses in the United States so that their financial transactions can be identified and tracked.

An EIN is often necessitated when applying for various permits and licenses as it allows local and state governments to ensure your business is operating within the confines of the law. You can obtain it in a number of ways:

  • Online: You can apply for your EIN on the IRS’s official website by using the EIN Assistant. You should be granted your EIN shortly after completing this application
  • By Fax/Mail: After completing Form SS-4, you can apply for an EIN by submitting it to the IRS via mail or fax
  • By Phone: International applicants and businesses located outside US Territories are required to call the IRS at (267) 941-1099 to obtain their EIN — which they should receive during this call

Note: If you are a sole proprietor, you will be able to use your Social Security Number (SSN) instead (as long as you do not have employees).

Step 3: Get a NAICS Code

Before getting a business license in Arkansas, you will need to secure a North American Industry Classification System (NAICS) code.

 This code categorizes businesses into specific sectors and the state uses it to understand industry trends as well as set tax rules and benefits. Keep in mind that you will be required to choose a full six-digit NAICS code, but your printed business license will only show the two-digit line of business (LOB) part.

According to the Arkansas Department of Finance and Administration, businesses that want to register for a combined business tax must enter the NAICS code that best matches their primary business activity on the Combined Business Tax Registration Form.

For more information, we recommend having a look at our NAICS Code Lookup page.

Step 4: Apply for Licenses and Permits

After settling on the appropriate structure for your business and initiating the application for your EIN, the next step is to focus on securing the necessary licenses and permits to operate legally within your locale and industry.

  • Local Licenses: Arkansas business licenses vary at the local level, and so it’s recommended to contact your county recorder or city clerk to see if you need any local licenses. This is because the steps, requirements, and costs of getting licensed can differ significantly depending on your city or county
  • Statewide Licenses: At the state level, businesses in Arkansas might need to register under the Gross Receipts Tax Law if they sell property or services subject to sales tax. You can apply for the gross receipts tax permit via the Arkansas Taxpayer Access Point (ATAP). If your business is in a field like health, food, construction, finance, education, or alcohol, you can apply for specific professional licenses at the Arkansas Licensed Occupations page
  • Federal Licenses: While the federal government doesn’t mandate licenses for general business operations, if your business falls under any government-regulated category, such as agriculture, fishing, firearms, and alcohol sales, it may be required to obtain additional federal licenses or permits

Note: For more detailed information on municipalities and their respective websites, check out Arkansas’s Local Government Portal.

Step 5: Renewal of Licenses and Permits

In Arkansas, your gross tax receipts permit doesn’t need renewal and lasts as long as you run your business and submit sales tax returns. But, if you change your business entity’s details — such as its name, location, or ownership — you might need to update the permit or obtain a new one.

For local business licenses, the renewal period can vary by city. For example, in Fayetteville, all business licenses expire on October 31 each year.

If you’re uncertain whether you need to renew any of your business’s licenses, make sure to reach out to the agency that issued your business license for clarification.

Alternatively, you can use a third-party service or a professional attorney for this process. This can be a good choice if you want to ensure that you avoid potential fines, as well as if you want to be as time-efficient as possible.

If you’re interested in finding out more about this process, see our article on How to Get a Business License.

How Much is a Business License in Arkansas

In Arkansas, obtaining a gross receipts tax permit requires a non-refundable fee of $50. This fee is paid with the application for the permit.

However, the Arkansas business license cost varies by location. For example, in Fort Smith, the annual business license fee is generally $100. In Little Rock, businesses in the lodging sector are subject to the Advertising and Promotion 4% tax and are required to obtain a business or privilege license.

It’s important to understand that fees can vary based on the type of business and other factors. It’s always a good idea to check directly with the city’s official website or contact their office for the most accurate and up-to-date information. However, many business owners choose to use a third-party service to save time and money when handling this task.

Arkansas Business License FAQ

How do I get a business license in Arkansas?

To obtain an Arkansas business license, you will need to research the specific requirements for your business type, such as obtaining an EIN and NAICS code. Then, you will need to check what local, state, and federal licenses you will need to obtain (if applicable) in accordance with your location and niche. See our Arkansas Business License article for more information.

Does Arkansas require a business license?

It can do. This will ultimately depend on your location and industry; keep in mind that business licensing is not always specific to your state. Depending on your sector and location, you may be required to obtain additional licenses at the local (i.e., city) or federal level. See our How to Get a Business License overview for more information.

What businesses need a business license in Arkansas?

In Arkansas, most businesses need a license or permit. This includes retailers, contractors, and those in specialized professions like health or finance. Keep in mind that local city or county regulations might add additional requirements, and so it’s important to do your research based on your business address and industry in order to ensure you satisfy all requirements.

What do I need to do to start a small business in Arkansas?

To start an Arkansas small business, you must choose a business structure, register your business name, obtain an EIN, and secure necessary local, state, and federal licenses and/or permits. If you need help, you can check out the Arkansas Small Business and Technology Development Center, which provides assistance to small businesses and entrepreneurs in the state.

For all related articles, have a look at our How to Get a Business License page.