The Arkansas limited liability company (LLC) operating agreement is a legal document that regulates the relationship between the members of the company.
The LLC operating agreement, or business operating agreement, includes provisions about the contribution of each member to the LLC as well as their percentage of shares in the company’s interests.
The document also provides details on how the company will be operated and defines the duties of each member of the business entity.
Is an Operating Agreement Required in Arkansas?
No, the operating agreement is not required in Arkansas. However, the parties that want to regulate the operation of a business in detail still choose to draft the operating agreement to prevent any potential misunderstandings and disputes in the future.
4 Main Types of Operating Agreements
Before drafting the operating agreement, parties need to choose the type of document that suits their needs best:
Types of Operating Agreements
Single-member LLC operating agreement: Used for LLCs with only one member. It is usually less complex, as it includes only the provisions about the company’s operation without regulating the relationships between members.
Multi-member LLC operating agreement: Here, the document regulates the rights and duties of LLC members by providing details about their decision-making powers, profit share, details on including new members in the company, and more.
Member-managed LLC operating agreement: This type of operating agreement is used in situations where members want to have a more active role in the decision-making process within the company. The document will define the roles and responsibilities of each member of the LLC.
Manager-managed LLC operating agreement: In situations where members want to have a more passive role in managing the company, they will create a manager-managed LLC operating agreement, where they will delegate the daily company management activities to one or more professional managers.
Laws and Legal Requirements for LLC Operating Agreements in Arkansas
Title 4, Subtitle 3, Chapter 38 of Arkansas’s Business and Commercial Law Code regulates the status of LLCs in Arkansas.
Additionally, the following clauses govern the operating agreement in Arkansas:
Laws and Legal Requirements
§ 4-38-105: Regulates the scope, function, and limitations of the operating agreement.
§ 4-38-106: Effect on limited liability company and person becoming a member; Preformation agreements.
§ 4-38-107: Effect on third parties and relationship to records effective on behalf of limited liability company.
How to Form a Limited Liability Company (LLC) in Arkansas
How to Form a LLC in Arkansas
#1. Choose a Name For Your LLC
First, you should choose your business name. You can check the Secretary of State’s company database to make sure the business name you have chosen is not used by another company.
Optionally, you can reserve a certain business name for a period of 120 days by submitting an Application for Reservation of Entity Name.
#2. Choose the Type of LLC
Depending on the place your company is established, you can choose between a domestic and foreign LLC.
#3. Nominate an Agent
You should also nominate an agent who will accept the documents, court summons, or lawsuits on behalf of the LLC. The agent can be an individual, a lawyer, or a professional agency that provides these types of services.
Here, it is important to choose a trustworthy person or company that has a registered address in Arkansas.
#4. Pay the Required Fee
The filing fees depend on the type of LLC you wish to register:
For domestic LLCs, the filing fee is $45 for online applications and $50 for applications via mail.
For foreign LLCs, the filing fee is $270 for online applications and $300 for applications via mail.
#5. File the Articles of Organization or Certificate of Registration
For foreign LLCs, the applicant must submit the Certificate of Registration and Certificate of Good Standing issued from the initial jurisdiction where the company is formed. The submission can be completed online or by filing Form FL-01.
#6. Create your LLC Operating Agreement
The State of Arkansas doesn’t officially require an operating agreement for the formation of an LLC. However, parties often choose to draft this document as it provides security for all the LLC members and prevents potential disputes between them.
#7. Apply For an Employer Identification Number (EIN)
Finally, you should apply for the EIN, as it enables your company to complete the transactions. Moreover, this number is almost always required when opening a company bank account. You can apply for the EIN on the IRS website or by submitting Form SS-4 via mail.