Franchise Tax

Arkansas Franchise Tax Information

All Corporations, LLCs, Banks, and Insurance Companies registered in Arkansas must pay an "annual franchise tax", which is Arkansas way of describing an annual report for the secretary of state.

In practice, the Corporate franchise tax filing is typically handled by a tax accountant, as it requires detailed financial information. The LLC annual franchise tax filing looks more like a typical annual report, with a flat fee of $150.

Importantly, non-payment of Franchise taxes can cause a company's state registration to be revoked, and Franchise taxes continue to accrue, even for revoked businesses, until the business is dissolved, withdrawn, or merged.

How to file Arkansas Franchise Tax for Corporations

Due: May 1st, every year

Arkansas doesn’t have a separate annual report for Corporations, but Corporations must complete and file a franchise tax filing each year. Domestic and Foreign Corporations use the same form. It can be submitted online. No extensions are allowed.

Like many other franchise taxes, Arkansas uses an approximation of how much business a company does in its state to calculate franchise tax.

The state provides worksheets to calculate tax due, with instructions.

Specifically, here’s how Arkansas Franchise Taxes are calculated:

Corporations without Authorized Stock pay $300. Corporations with Authorized Stock have a more complex calculation.

Corporations with Authorized Stock:

Calculate the percentage of your Assets applicable to Arkansas

  • Divide “Arkansas Real and Personal Property” by “Total Real and Personal Property"
  • In simple terms, this is Assets on the balance sheet attributable to Arkansas, divided by Total Assets

Calculate your Total Capital Stock

  • For each share class, multiply the number of issued shares by the par value of each
  • If you don’t have any par value, Arkansas treats the par value as $25 per share
  • Add all of those together

Calculate your Arkansas Capital Stock

  • Multiply the percentage of your Assets applicable to Arkansas by your Total Capital Stock

Calculate your Annual Franchise Tax

  • Multiply your Arkansas Capital Stock by 0.003
  • Minimum tax is $150

Sometimes it's not clear on the sheet, but if your Tax is late, you need to add Penalties and Interest.

Here’s how you calculate your total franchise tax owed if you’re late:

Take your original Tax owed, that you calculated above, and add a $25 penalty

Calculate your interest

  • Take the sum of your Tax and Penalty, and multiply it by .000274
  • Multiply that number by the number of Days Deficient

Calculate your total Tax due for the year, by adding your Tax, Penalty and Interest together

Want to see Discern?

Want to read some more?