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Arkansas Fee Waiver for Low-Income Business Starters: Act 725 of 2021 Waives Initial License and Formation Fees (Not Exam Fees)

Arkansas Fee Waiver for Low-Income Business Starters: Act 725 of 2021 Waives Initial License and Formation Fees (Not Exam Fees)

If you are starting a business in Arkansas on a tight budget, Act 725 of 2021 may cover some of the state fees you would otherwise pay at the start. Searching for an arkansas business license fee waiver turns up a lot of confusion, so this guide explains what the law actually does. Arkansas has no general state business license, so there is no single fee to waive. Instead, the Workforce Expansion Act waives initial filing, permit, and licensing fees tied to forming a business for applicants who meet specific benefit, unemployment, or income tests. It does not cover exam fees, background checks, city fees, or recurring annual reports, and some agencies have not made clear how they apply it. Read on for who qualifies, what is left out, and how to confirm the waiver before you file.

What Act 725 of 2021 Waives

Act 725 is the Workforce Expansion Act. Its fee provisions appear in the Arkansas Code at A.C.A. 17-4-101 et seq. and A.C.A. 4-25-110, and they took effect on January 1, 2022. Under 4-25-110, initial filing, permit, and licensing fees tied to forming a business are waived for applicants who qualify.

The waiver is written for the start-up stage. It applies to the fees a state licensing entity would charge to create the business or obtain its first permit or license. It does not erase the costs of staying in business, such as recurring tax reports, and it does not reach fees that local governments set.

Who Qualifies

Under A.C.A. 17-4-104, a state licensing entity may not require an initial fee if the applicant meets any one of the following tests:

  • The applicant receives Arkansas Medicaid, SNAP, WIC, TANF, or Lifeline.
  • The applicant was approved for unemployment insurance in the last 12 months.
  • The applicant has income up to 200% of the federal poverty guidelines.

The income test is tied to federal poverty guidelines, which are updated each year, and the dollar threshold depends on household size. Confirm the current figure for your household before you rely on it. The Department of Human Services and the Division of Workforce Services can help you check benefit eligibility.

What the Waiver Does Not Cover

This is the part most applicants miss. The title says it for a reason: the waiver stops at the licensing fee, and the following costs still apply:

  • Criminal background check fees.
  • Exam or test fees. If your occupation requires a certification exam, you pay to sit for it.
  • Medical or drug test fees.
  • City and county fees. Cities and counties are not licensing entities under the act, so local fees are not covered.

Budget for these items separately. A waived state filing fee can still leave you with a bill for testing, background checks, and a city license.

Arkansas Has No General Business License

Arkansas has no general statewide business license, and the Secretary of State does not issue business licenses. Counties issue no general business license either. Most of what a new business needs falls into one of three categories.

  • A registration by activity. Sales and use tax and withholding are registered through the Department of Finance and Administration's Arkansas Taxpayer Access Point (ATAP). Unemployment insurance is handled by the Division of Reemployment. Entities are filed with the Secretary of State, and sole proprietor assumed names are recorded with the county clerk.
  • An occupational license from an agency or board. The Contractors Licensing Board, the Electrical Examiners, and the HVAC/R Board sit in the Department of Labor and Licensing. The Department of Health licenses plumbers, cosmetologists, massage therapists, and food establishments. The Alcoholic Beverage Control Division licenses alcohol, the Medical Marijuana Commission handles cannabis, and the State Police license security businesses and investigators.
  • A city license or registry. Arkansas has 75 counties and about 500 municipalities, and many cities charge their own business fees on their own terms.

Fee Overview: What the Waiver May Reach

The table below lists common costs for a new Arkansas business and whether Act 725 may apply. The waiver status column is a starting point, not a final answer. The Secretary of State fee pages do not mention the waiver, so confirm every item with the agency that collects the fee.

ItemWhere You File or ApplyPublished FeeDoes the Waiver Apply?
Certificate of Organization (Form LL-01)Secretary of State$45 online, $50 paperConfirm with the Secretary of State. Its fee pages do not mention the waiver.
Name reservation (120 days)Secretary of State$22.50Confirm with the Secretary of State.
Fictitious name for an entitySecretary of State$22.50 online, $25.00 paperConfirm with the Secretary of State.
Assumed name for a sole proprietorCounty clerkSet by each county. Confirm locally.Confirm with the county clerk.
Sales and use tax permitDepartment of Finance and Administration through ATAP$50Confirm with the Department of Finance and Administration.
Annual LLC Franchise Tax ReportSecretary of State$150, due May 1This is a recurring filing, not an initial fee. Confirm with the Secretary of State.
Occupational licensesThe agency or board for your tradeSet by each board. Check with the board.The Contractors Licensing Board and the Department of Health plumbing rules apply the waiver. Confirm for other boards.

How to Apply the Waiver Step by Step

  1. Confirm your eligibility first. Identify which benefit you receive or whether your household income falls under the 200% threshold. The Department of Human Services and the Division of Workforce Services can help you check.
  2. Ask each agency which documents it accepts. The waiver is applied agency by agency, so a document one office accepts may not satisfy another. Get the answer before you submit.
  3. Ask before you pay. Contact the agency, describe the fee and your eligibility basis, and ask how the waiver applies. Request a written answer if you can.
  4. Check the form. Agencies must post notice of the waiver on their websites and forms. If a form you need is silent on it, that is a reason to ask, not proof that the waiver does not apply.
  5. Plan for the excluded costs. Set money aside for background checks, exams, medical or drug tests, city licenses, and the $150 franchise tax report.
  6. Allow time for processing. The Secretary of State lists anticipated processing of 3 to 5 business days for filings, whether mailed, dropped off, or submitted online. Its Business Services FAQ says most filings such as articles of incorporation, amendments, mergers, or dissolutions are completed within two business days of receipt. In-person drop-offs currently carry a 48-hour turnaround.

Questions to Ask the Secretary of State

For the Certificate of Organization, call or write the Secretary of State's Business and Commercial Services Division and ask a specific question. A clear question gets a clear answer. You might say:

“I am filing a Certificate of Organization (Form LL-01) for a new limited liability company. I qualify for the initial fee waiver under A.C.A. 4-25-110 because [state your eligibility basis]. How is the waiver applied to the $45 online or $50 paper filing fee, and what documentation do you need from me?”

Keep a record of the answer, including the name of the staff member and the date. If the office says the waiver does not apply to the filing fee, ask whether a different process exists.

Common Mistakes to Avoid

  • Assuming the waiver covers everything. It covers initial state licensing and filing fees. It does not cover exams, background checks, medical or drug tests, or city fees.
  • Assuming one benefit letter works everywhere. Each agency decides what it will accept.
  • Skipping the city. Cities differ widely, and a city fee can be the largest bill you pay at the start.
  • Forgetting the recurring costs. The waiver targets start-up fees. The annual LLC franchise tax report is due every year, and its $150 fee is not an initial fee.

City Fees Are Separate

The waiver does not reach city fees, and the rules vary from one city to the next. Little Rock and North Little Rock calculate their business license fees from a base amount plus a charge based on the number of employees. Bentonville runs a free registry. Conway imposes no business license. Check the city where you will operate before you assume any local cost is zero.

Official Resources

Important Note

This article is informational only. It is not legal or tax advice. Eligibility rules, fee amounts, and agency practices change, and the act may apply differently depending on your facts. Information is current as of October 27, 2026, but confirm each figure with the agency that collects it. For a complex situation, such as multiple owners, a regulated trade, or a tax question, talk with a qualified Arkansas attorney or CPA before you file.

Keep exploring: related Arkansas guides