Things That Every Arkansas Small Business Should Consider

Choose the right business entity

For most small businesses, LLCs are best because you have more tax options and less formal requirements. You also have more freedom within your operating agreement to design the business structure that you want based on the needs of the business.

Do the Formal Stuff

Depending on the structure that you chose, your business can be a separate entity with its own Employer Identification Number (“EIN”) or it can be an extention of the owner, such as a sole proprietorship. It is important to think carefully about what business structure is best for your business by looking at how the entity will be taxed, how the income and expenses are reported, and the business’s liability exposure. Some corporate structures offer much more protection to the owners than others. For example, a sole proprietorship provides very little protection if the business was sued. In contrast, a corporation or an S corporation offers much more protection. The type of business structure chosen also determines what type of documentation the business is required to keep. For example, a sole proprietorship is not required to keep corporate meeting minutes and is not required to have corporate resolutions. The risk with an informal structure such as a sole proprietorship is that the owner may be personally liable for the actions of the business and its employees. A more formal business structure will provide additional protection to the owner.

Do not co-mingle business and personal finances

A business should have a company credit card and a bank account titled in the name of the business. Use personal bank accounts and credit cards only for personal expenses.