Arkansas Business Taxes
Business taxes are a major expense for any company. Therefore, it is important to plan ahead and create a thorough tax strategy.
There are several business taxes that small businesses may have to pay in Arkansas, including sales tax, income tax, and payroll tax. Sales tax is charged on goods and services sold in the state and may also be collected by cities and counties. Other common business taxes include payroll tax, withheld from employee paychecks, and property tax, levied on the value of a company’s taxable real or personal property. Business owners who have employees are responsible for paying federal and state withholding taxes, and must file reports and pay these taxes monthly or quarterly.
All businesses that sell taxable goods or services in the state must register for a sales tax permit with the Department of Finance and Administration (DFA). It costs $50 to register, and you will receive a sales tax permit number once registered. Depending on your average monthly sales tax liability, DFA will send you returns and payments monthly or quarterly. Sales tax rates vary by county and city, and some goods are exempt from sales tax. It’s important for business owners to stay up-to-date on legal changes impacting sales tax, and to consult with accounting professionals for guidance.
How to Pay Arkansas Business Taxes?
The state levies business taxes on sales of tangible goods and services. Businesses that are required to pay sales tax must register with the Department of Finance, collect the correct amount per sale, and file returns and remit payments. They must also display their tax ID number at their physical locations and on invoices/receipts. Additionally, they must have a Sales and Use Tax permit and a Withholding Tax permit.
Corporations must file corporate income tax returns and pay business taxes by April 15 each year. They must also have a Gross Receipts Tax (GRT) permit, which is obtained by submitting an application to the Department of Finance and Administration.
Small e-commerce sellers must stay up to date on new laws and rates impacting their sales tax compliance. Using sales tax software that automatically applies rate changes and new legislation can help streamline the process.
| Arkansas Business Tax | Description | Rate | Payment Methods |
|---|---|---|---|
| Corporate Income Tax | Tax on corporate profits | Graduated: 1% – 5.3% | * Online: Arkansas Taxpayer Access Point (ATAP) <br> * Mail: Form ET-1 with check/money order |
| Sales and Use Tax | Tax collected on sales of certain goods and services | 6.5% + local variations | * Online: ATAP <br> * Mail: Form AR1100CT with Form AR1000V and check/money order |
| Franchise Tax | Annual tax on most businesses operating in Arkansas | $100 + filing fee based on net worth | * Online: ATAP |
