How to Start a Business in Arkansas: Accounting and Tax Checklist

Step by step guide to start-up, accounting, registrations and tax compliance for new Arkansas business owners

A new business is so exciting, but the state and tax requirements can very quickly become daunting if you do not get your accounting and compliance right at the start. This guide is an actionable accounting and tax checklist for entrepreneurs on the path to starting a business in Arkansas. It includes the vital registrations, bookkeeping basics, payroll set up, tax registrations and ongoing deadlines you need to keep an eye on.

Decide on a business structure and know the tax consequences

Decide on a legal structure before you launch: sole proprietorship, partnership, limited liability company or corporation. Options have varied tax implications and record-keeping requirements. For instance, LLCs can provide liability protection along with pass-through treatment (i.e. no double tax at the LLC level), while corporations may be subject to entity-level tax. Knowing the tax implications of your structure will guide how you set up accounting, payroll and pay taxes.

Complete Arkansas business formation steps

Establish your business with the state so that you can operate legally. The basic things are to get us a business ID and file formation documents into the state. A well-formed LLC ensures you can open business bank accounts, get insurance, apply for permits and licenses and separate your personal and business finances (a crucial accounting best practice that protects your personal assets from any lawsuits and hinge expecting tax seasons).

Get a federal employer identification number (EIN)

Federal employer ID number is necessary for tax filing, hiring staff, and opening a business bank account. Request an EIN early to be able to run payroll and signup for hiring process. In multiple instances, with single-owner companies, an EIN is used simply to keep the person’s social security number off business reports.

Enroll in state tax accounts and local licenses

Enroll In mandatory state tax accounts which will include sales and use tax, payroll withholding and unemployment insurance. If you sell taxable products or services, registration for sales tax is essential. Also look into local city or county permit requirements; in some cases, your locality might ask you to obtain a separate business license or related registration. By filing these rebistrations completing these registrations, you will be ensure you are collecting and reporting the proper tax at the appropriate time.

Establish bookkeeping and system of accounting

Select a method of accounting (such as cash or accrual) and establish a chart of accounts that corresponds to your business activities. Good bookkeeping involves keeping tabs on income, expenses, assets, liabilities and equity — which in turn provides accurate information for financial statements and returns to the taxman. Choose bookkeeping frequency—tracking, at least daily if not weekly, can limit mistakes and make month-end reconciliation easier.

Open a business bank account and keep expenses separate from your personal finances.

There are two primary benefits to keeping the finances of your business and personal life separate: liability protection, and ease of bookkeeping. A separate bank account and business credit card for expenses provide a clear path. Reconcile your accounts at least once a month to prevent errors, notes on missed receipts and tax deduction records.

Set up payroll correctly from the beginning

Establish payroll systems if hiring employees, or paying yourself through the system; it should include withholding taxes and making payroll tax deposit, in addition to the reporting you will need as an employer. Properly categorize workers as employees or independent contractors and keep good records. Payroll taxes are a gorilla with tight deposit rules and severe penalties for late deposits, so automate those payments or set up reminders to avoid surprises.

Sales tax due dates and filing frequencies

If you sell taxable items or services, register to collect sales tax and find out your filing frequency. Hold on to sales records and list properly the exempt sales. Collect the right information at the point of sale to apply appropriate tax rate, and keep good sales records to accompany filings.

The quantities of other classes of procedural and nonprocedural work if such would be applicable downturn,Get an estimate and pay estimated taxes where appropriate

Small businesses often owe estimated income taxes every quarter. Calculate your estimated taxable income and plan for quarterly payments to avoid penalties and big tax bills at the end of the year. Monitor income and expenses monthly to fine-tune estimated taxes and make payments based on changes in your business.

Keep records and important documents in order

Maintain copies of formation documents, any contracts entered into, licenses issued, sales records, payroll registers and bank statements or copies of canceled checks as well as expense receipts. Keep suitable records for the required period, depending on the type of documentation; typically three to seven years, and keep them secure. Proper records help you file accurately and make taxes less stressful.

Develop a periodic tax and accounting checklist

Create a calendar, with recurring tasks: daily or weekly bookkeeping, monthly reconciliations, quarterly estimated tax payments and payroll returns, annual filings like income taxes and whatever your state requires. Having a checklist ensures that you don’t miss deadlines and minimizes last-minute scrambling.

Consider professional support when needed

Some founders begin with basic DIY accounting, but seek advice from an accountant or tax adviser when it comes to choosing their corporate entity, dealing with complicated payroll situations, navigating sales tax nexus questions or planning their taxes. Professional advice might pay off in the long run -- by ensuring that you don't make a filing error and not least, by placing your taxes in their best position.

Quick startup checklist summary

• Business structure and state formation complete
• Get federal EIN and state tax filings
• Shop for a business bank account and get books in order
• Collect and remit sales tax if required
• Set up payroll and classify employees the right way
• Keep a record of income and expenses and send estimated tax payments
• Keep a filed but organized records and follow a tax calendar

When forming a business in Arkansas, creators need to be mindful of tax and accounting considerations from the beginning. As long as you have the proper registrations, bookkeeping methods and a good checklist, you can concentrate on growing your firm without running afoul. Start these early to develop a solid financial base and prevent expensive-mistakes-down-the-road.