Arkansas Tax Return for 2024: LLC and Sole Proprietor Filing Guide

The 2024 Arkansas tax return includes essential updates for LLCs and sole proprietors operating within the state. This guide helps taxpayers understand how structural differences affect their filing responsibilities. It outlines critical distinctions in how Arkansas treats single-member versus multi-member LLCs. You’ll also learn which forms and schedules apply based on your business classification and residency status.

This resource is designed for individuals, freelancers, small business owners, and entrepreneurs with Arkansas-sourced income. If you operate as a sole proprietor or manage an LLC, this guide is for you. It’s beneficial for those navigating tax season without an accountant. Understanding filing thresholds and new election options will help avoid penalties and missed deductions.

The 2024 updates include a lower top marginal tax rate and the continued availability of the optional Pass-Through Entity (PTE) tax. Eligible LLCs and S Corps may elect a 3.9% flat rate under Arkansas’ PTE framework. Additional credit updates may benefit low-income households, dependents, or certain qualified expenses. These changes can impact your total liability and the forms you must file.

Business tax classifications and your Arkansas tax return for 2024

Understanding how your business is classified is essential when preparing your Arkansas tax return for 2024. Whether a sole proprietor or an LLC (single-member or multi-member), your business structure directly impacts your income tax return, the tax forms you need, and your obligations to the IRS and the Arkansas Department of Finance and Administration. Below is a breakdown of how different business types affect individual taxpayers, federal tax returns, and state tax filing.

Sole Proprietor: Personal Filing Simplicity, Full Responsibility

• Single-layer filing: A sole proprietor doesn’t file a separate business tax return. Instead, business income, expenses, and deductions are reported on Schedule C, which is attached to the individual's federal income tax return and Arkansas tax return for 2024.
  
  
• Direct tax obligations: Because there’s no legal separation between you and your business, you are liable for all taxes, including estimated tax payments, federal tax, and Arkansas individual income tax.
  
  
• Form details: You'll file Form AR1000F (for residents) or AR1000NR (for non-residents), and must ensure all supporting records are complete and accurate to avoid a penalty for failing to report.

Single-Member LLC: Similar Filing, Extra Legal Protection

• Default tax treatment: A single-member LLC is treated the same as a sole proprietorship unless it elects to be taxed as a corporation.
  
  
• Form consistency: Using the appropriate individual income tax form, you'll still report business activity using Schedule C on your federal tax return and mirror that on your Arkansas tax return for 2024.
  
  
• Legal distinction: Though the tax process is similar, the LLC provides limited liability, protecting your assets in legal or financial disputes.

Multi-Member LLC: Partnership by Default, More Complex Filing

• Pass-through treatment: A multi-member LLC is treated as a partnership by default. It must file Form AR1065 in Arkansas and issue Schedule K-1s to each member to report their share of the income.
  
  
• Separate and personal filing: While the LLC files its tax return, each member must also file an individual income tax return, including their portion of the business income from the K-1.
  
  
• Deadlines matter: The due date to submit partnership returns typically falls in March, while individual taxpayers must file by April 15, unless an extension is properly filed.

Corporations (Elected LLCs): Formal Filing, Additional Requirements

• Electing corporate status: An LLC may elect to be taxed as an S Corporation (file AR1120S) or C Corporation (file AR1100CT), which adds corporate-level filing obligations to any individual filings.
  
  
• Double layer vs. pass-through: A C corporation pays federal and Arkansas corporate income taxes on its profits, and owners pay tax again on dividends. An S corporation is a pass-through entity, so profits are taxed only at the individual level.

Pass-Through Taxation in Arkansas: A Strategic Option

• New 2024 benefit: Arkansas now allows qualifying LLCs and S Corps to opt into the Pass-Through Entity (PTE) Tax, letting businesses pay state taxes at the entity level at a flat 3.9% rate to reduce the owner’s federal tax burden under IRS SALT deduction rules.
  
  
• Eligibility and filing: To qualify, businesses must submit an election and use updated tax forms issued by the Arkansas Department of Finance. This option is only beneficial if your federal income tax return itemizes deductions and exceeds the SALT cap.
  
  
• Instructions & access: To opt in, follow the detailed instructions provided by the Arkansas DFA, sign the required election statement, and ensure accurate records are available for audit or amendment requests in the future.

No matter your classification, preparing your tax return correctly means knowing your business structure's impact on your obligations, deductions, and deadlines. Whether you file online, mail your return, or request an extension, always check the latest Arkansas Department forms and consult a tax professional for help.

Do LLCs and sole proprietors need to file an income tax return in Arkansas?

Suppose you're a small business owner, freelancer, or individual taxpayer preparing your Arkansas tax return for 2024. Knowing whether you must file is essential, especially if you operate as an LLC or sole proprietor. Filing obligations vary based on your business structure, your income, and where you live throughout the year. Here’s a clear breakdown of what determines your tax filing requirements in Arkansas.

• Filing Requirement (Sole Proprietors Must File if They Meet Income Thresholds): If you're a sole proprietor and your net earnings exceed Arkansas’s minimum filing threshold, you must file an individual income tax return. This includes submitting Form AR1000F (for full-year residents) or AR1000NR (for non-residents and part-year residents), along with a Schedule C from your federal income tax return. If you earn self-employment income, you must make estimated tax payments throughout the year to avoid a penalty.
  
  
• Residency Status Matters (Different Rules for Full-Year, Part-Year, and Non-Residents): The Arkansas Department of Finance and Administration uses your residency status to determine your tax filing obligations.
  
  
  
  • Full-year residents must report and pay taxes on all income, regardless of where it was earned.
    
    
  • Part-year residents are taxed only on income earned while living in Arkansas, plus any Arkansas-source income after moving.
    
    
  • Non-residents must file if they earned income from Arkansas sources—even if they file federal tax returns elsewhere.
    
    
• LLCs: Filing Depends on Federal Classification: LLCs must follow federal tax treatment rules to determine their Arkansas tax filing obligations:
  
  
  
  • A single-member LLC files as a sole proprietor, reporting business income on the owner’s income tax return.
    
    
  • A multi-member LLC is typically taxed as a partnership, using Form AR1065 in Arkansas, and must also issue Schedule K-1s to members.
    
    
  • LLCs that elect corporate taxation must file either Form AR1120S (for S Corps) or AR1100CT (for C Corps), and follow separate instructions for corporate income tax returns.
    
    
• Filing Deadlines (Mark April 15, 2025, and October if You Request an Extension): The standard due date to submit your Arkansas income tax return is April 15, 2025. If you fail to file by then, you must request an extension using Form AR-1055 or sign and submit your federal extension with your Arkansas return. This pushes your filing date to October, but not your payment deadline—taxpayers still need to pay by April 15 to avoid interest and penalties.

Understanding your Arkansas tax return for 2024 filing responsibilities ensures you stay compliant and avoid costly mistakes. Whether you’re filing as a sole proprietor or through an LLC, always check the most current tax forms, deadlines, and instructions, and contact the Arkansas Department of Finance and Administration if you need help navigating your situation.

Arkansas tax forms for LLCs and sole proprietors

If you're an LLC member or sole proprietor filing taxes in Arkansas for the 2024 tax year, it's essential to understand which tax forms apply to your business structure. Choosing the correct forms ensures compliance and may help you avoid costly errors or delays in processing.

Individual Income Tax Forms: AR1000F and AR1000NR

• Who files them: Arkansas residents and non-residents reporting income
  
  
• Full-year Arkansas residents use AR1000F to file their individual income tax return. Your business income gets reported on this form if you're a sole proprietor.
  
  
• AR1000NR is used by non-residents or part-year residents who earned Arkansas-source income. For example, this is your form if you moved into or out of Arkansas mid-year or operated a remote business that earned Arkansas revenue.

Schedule C for Sole Proprietors

• Sole proprietors must complete Schedule C (Profit or Loss from Business) and attach it to their federal return. Arkansas does not require a state-specific version—your business profit flows from the federal return into your AR1000F or AR1000NR.
  
  
• Schedule C is vital for deducting legitimate business expenses, including home office use, mileage, and startup costs.

Partnerships and Multi-Member LLCs: AR1065

• If your LLC is classified as a partnership for federal tax purposes, you must file Form AR1065 with the Arkansas Department of Finance and Administration.
  
  
• This form reports the business’s total income, deductions, and each member's share, which is passed on to their returns via a Schedule K-1.

S Corporations: AR1120S

• Form AR1120S is required if your business is an S Corporation for federal and Arkansas tax purposes.
  
  
• Like partnerships, income flows through to shareholders using Schedule K-1, but the business files AR1120S separately to report total activity.

C Corporations: AR1100CT

• Use Form AR1100CT if your LLC or business is taxed as a C Corporation. Unlike pass-through entities, C Corps are taxed at the corporate level.
  
  
• This form includes calculating Arkansas corporate income tax and requires filing even if no tax is owed.

Schedule K-1 for Multi-Member LLCs and S Corps

• Every member or shareholder of a multi-member LLC, partnership, or S Corp receives a Schedule K-1, which shows their share of the entity’s income, deductions, and credits.
  
  
• Each member must include the K-1 details on their Arkansas income tax return. K-1s are critical for ensuring proper pass-through reporting and must be attached to AR1000F or AR1000NR where relevant.

Choosing the correct Arkansas tax form depends entirely on your business structure and residency status. Understanding which forms apply—and how they interact—is key to filing accurately and maximizing your tax benefits.

Optional pass-through entity tax for Arkansas businesses in 2024

The optional Pass-Through Entity (PTE) tax election introduced in Arkansas for the 2024 tax year offers a strategic opportunity for certain companies to reduce their federal tax liability by shifting the state tax burden to the business entity. Here’s a breakdown of who benefits, how to opt in, and the filing requirements.

Who Benefits from the Arkansas PTE Election

• High-Income Business Owners: Profitable S corporations and multi-member LLCs taxed as partnerships, subject to the $10,000 federal SALT (State and Local Tax) deduction cap, can benefit. The business bypasses the cap by electing to pay tax at the entity level, effectively allowing owners to deduct more state tax on their federal return.
  
  
• Arkansas-Based Flow-Through Entities: Eligible Arkansas-based entities structured as S corporations or partnerships (including multi-member LLCs taxed as such) stand to gain. Sole proprietors and single-member LLCs taxed as disregarded entities are not eligible.
  
  
• Owners Filing Joint Federal Returns: Joint filers in higher federal tax brackets benefit most, especially those with significant pass-through income from Arkansas businesses. The PTE election can substantially reduce their federal tax liability.

How to Opt Into the PTE Tax

• Entity-Level Election Required Annually: An eligible entity must affirmatively elect to pay Arkansas income tax at the entity level. This is not automatic—it must be chosen each tax year and applies only to that year.
  
  
• Election Made via Form AR3622: For the 2024 tax year, Arkansas businesses must file Form AR3622 (Pass-Through Entity Election Form) with the Arkansas Department of Finance and Administration to make the election.
  
  
• Election Deadline Aligns with Original Tax Filing: The election must be made by the original due date of the entity's tax return (March 15, 2025, for calendar-year S corps and partnerships), not including extensions. Late elections will not be accepted.

Filing Requirements and Forms for the PTE Tax

• File Form AR1100PET: Entities that elect the PTE tax must file Form AR1100PET, the Arkansas Pass-Through Entity Tax Return. This replaces the standard AR1065 or AR1120S return for electing entities.
  
  
• Issue Revised K-1s to Owners: Each member or shareholder must still receive a Schedule K-1 reflecting their share of income, but with annotations noting that the entity paid the state income tax on their behalf.
  
  
• Maintain Proper Recordkeeping: Businesses must retain records showing that the election was made promptly, payments were issued, and the tax was allocated to owners. Improper documentation may lead to compliance issues or loss of election benefits.

The PTE election can deliver meaningful tax savings for qualifying Arkansas businesses and their owners, but only when properly executed. Always confirm eligibility and filing procedures with a qualified tax professional or the Arkansas DFA before opting in.

Step-by-step guide to completing your Arkansas tax return for 2024

Filing your Arkansas tax return for 2024 as a sole proprietor or LLC owner involves more than just filling out forms—it’s about preparing strategically to ensure compliance and avoid penalties. Here's a clear step-by-step breakdown to help you navigate the process with confidence:

1. Organize All Necessary Documents Before You Begin: Gather all your relevant records before touching a single form. This includes income statements (1099s, W-2s, business income), receipts for business expenses, mileage logs, home office details (if applicable), and a copy of your 2023 tax return. Having everything on hand streamlines your calculations and helps avoid missed deductions.
   
   
2. Complete Your Federal Return First—It Sets the Foundation: Your Arkansas tax return is built on the figures in your federal return. Finalising your federal Form 1040 and any associated schedules (like Schedule C or E) ensures accurate adjusted gross income (AGI), business profits, and allowable deductions, which directly carry over to your state return.
   
   
3. Select the Correct Arkansas Tax Forms for Your Business Type
   The form you use depends on your entity structure and residency status:
   
   
   
   1. Sole proprietors use AR1000F (full-year resident) or AR1000NR (non-resident/part-year), along with Schedule C.
      
      
   2. Multi-member LLCs taxed as partnerships file AR1065, and members receive a K-1.
      
      
   3. LLCs taxed as S Corporations use AR1120S.
      
      
   4. C Corporations use AR1100CT.
      Choosing the wrong form can delay processing or trigger penalties.
      
      
4. Apply Deductions Thoughtfully and Use Every Applicable Credit
   Go beyond generic deductions. Consider:
   
   
   
   1. Business-specific expenses like depreciation, office supplies, or contractor payments.
      
      
   2. State-level credits include the child care credit, developmental disability credit, or low-income tax credit.
      
      
   3. New businesses should look for first-year depreciation rules and startup cost deductions.
      Be methodical—incorrectly claimed credits can flag your return for review.
      
      
5. File Promptly and Settle Any Taxes Owed via an Accepted Method. Once your return is complete, file it electronically via the Arkansas Taxpayer Access Point (ATAP) for faster processing. Use ACH bank transfer, debit/credit card, or submit a check with Form AR1000V for payments. If you expect to owe in future quarters, submit estimated taxes with Form AR1000ES. Don't forget—filing late or underpaying triggers penalties and interest.

Completing your Arkansas tax return is more than a compliance checkbox—it’s a chance to optimize your tax position and keep your business finances solid. With this step-by-step process, you’ll file accurately, maximize deductions, and avoid unnecessary stress at tax time.

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Business deductions and tax credits in your Arkansas tax filing

Here’s a detailed breakdown of the business deductions and tax credits available in Arkansas for small business owners and sole proprietors filing their 2024 tax return. These aren’t just line items—they’re powerful tools to reduce your taxable income and keep more of your earnings, but each comes with its own eligibility requirements and documentation needs.

• Home Office Deduction (Claim Your Workspace): If you run your business from home, some of your housing expenses—including rent, utilities, mortgage interest, and insurance—may be deductible. Arkansas follows federal guidelines, but you must use the space exclusively and regularly for business.
  
  
• Vehicle and Mileage Deductions (Track Every Trip): Business owners who use personal vehicles for business-related travel can deduct actual vehicle expenses (fuel, insurance, maintenance) or use the IRS standard mileage rate. For 2024, the IRS rate is 67 cents per mile. Be sure to maintain a logbook; it’s not optional.
  
  
• Startup Costs (First-Year Advantage): If you launched your business in 2024, you may deduct up to $5,000 in qualified startup costs such as market research, legal fees, or accounting services. Costs exceeding $50,000 must be amortized over 15 years, and Arkansas aligns with these federal treatment rules.
  
  
• Self-Employed Health Insurance (Deductible Premiums): If you're not eligible for employer-sponsored health coverage, premiums you pay for medical, dental, and even qualified long-term care insurance may be deductible. This includes coverage for you, your spouse, and dependents.
  
  
• Depreciation and Section 179 (Accelerated Equipment Write-Offs): Arkansas allows Section 179 deductions, letting businesses fully expense qualified purchases like office furniture, computers, and machinery rather than depreciating them over time. However, confirm current state-level conformity with federal limits when filing.

Maximizing deductions and credits isn’t about loopholes—it’s about knowing what you’re legally entitled to and documenting it properly. Arkansas offers a variety of tax-saving options, but it’s up to you (or your tax advisor) to leverage them smartly and keep them in line with the state’s requirements.

FAQs 

Do LLCs need to file a separate income tax return in Arkansas?

It depends on how your LLC is taxed. A single-member LLC files as a sole proprietor using the owner’s return (Form AR1000F and Schedule C). Multi-member LLCs taxed as partnerships must file Form AR1065 and provide K-1s to members. LLCs electing corporate taxation must file AR1120S (S Corp) or AR1100CT (C Corp). Even if no business income is reported, filing may still be required to meet state compliance.

Can I file my Arkansas tax return online if I’m self-employed?

Yes, self-employed individuals, including sole proprietors and single-member LLCs, can file their Arkansas individual income tax return online using the Arkansas Taxpayer Access Point (ATAP) or approved e-file providers. You must complete your federal return first, as the state return references it. E-filing is often faster and helps reduce errors; payment can also be made online. Ensure you include Schedule C and any applicable attachments.

Should my LLC elect the pass-through entity tax?

Electing the pass-through entity (PTE) tax may benefit LLCs or S Corporations whose members are subject to federal limits on state and local tax (SALT) deductions. For 2024, Arkansas allows eligible entities to pay a flat 3.9% tax at the entity level. This may reduce federal taxable income for owners. However, the benefit depends on your income level and federal tax situation, so it's best to consult a tax advisor before opting in.

What tax forms do I need for my LLC or sole proprietorship?

Sole proprietors and single-member LLCs use Form AR1000F (residents) or AR1000NR (non-residents) with a Schedule C to report business income. Multi-member LLCs taxed as partnerships file AR1065 and issue K-1s to members. LLCs electing S Corporation status file AR1120S, and C Corps file AR1100CT. Additional forms may include AR1000ES (estimated payments) and AR1000V (payment voucher). The forms you file depend on your tax classification and income sources.

What if I started or closed my business during the year?

If you started or closed a business in 2024, you must still file a tax return for the portion of the year the company was active. Report all income and expenses during the operational period. Include the exact business start or end date on your return. Sole proprietors report this on Schedule C; LLCs follow their designated structure. If you dissolved an LLC, ensure all final returns and closure steps are properly completed with the state.