How to Start a Farm in Arkansas: $20 Farmer Sales Tax Exemption Card for Eight Years, What It Covers and What It Does Not

If you are planning to start a farm in Arkansas, one of the most useful early filings is the Farmer Sales Tax Exemption Card from the Arkansas Department of Finance and Administration (DFA). It costs $20 for an initial eight-year term and $10 to renew. With it, you can buy many farm inputs without paying state sales tax on them. The card is narrower than many new farmers expect, though. It covers livestock, chemicals, feed, machinery and seed. It does not cover repairs, fencing, building materials, or vehicles licensed for highway use. This guide walks through the full startup sequence in order, places the card where it belongs in that sequence, and explains where its benefits stop.

Informational content only. This article is not legal or tax advice. Before you make a decision based on it, talk with an Arkansas attorney about your entity choice and land purchases, and with a CPA who works with farm operations about your tax treatment.

What the Farmer Sales Tax Exemption Card Is

The card is a sales tax tool. It is not a business license, a farm registration, or a tax identification number, and it does not prove that your operation is profitable. It is issued only to an eligible farmer under Arkansas Code 26-52-517. That section requires you to be engaged in farming and to show DFA that you have the resources and capacity to produce food, fiber, grass sod or nursery products in commercially marketable quantities. A backyard garden or a few hens will not meet that test. Plan to document your land, your equipment, and a short written production plan before you apply.

You apply through the Arkansas Taxpayer Access Point (ATAP), the online portal DFA uses for tax accounts. Start from the DFA home page at https://www.dfa.arkansas.gov/. A farmer may also give retailers Form ST-403 or Form ST-391 in place of a card. Ask your main suppliers which they accept before you rely on either one.

Materials and Information You Need Before You Start

• Your legal name, Social Security number or federal Employer Identification Number, and a valid Arkansas address for each owner.
• A list of every parcel you farm, whether owned or leased, with the county, acreage, and lease terms if applicable.
• An inventory of equipment and livestock with purchase dates and approximate values.
• A one-page production plan covering what you will grow or raise, expected quantities, and where you will sell. This supports the commercially marketable quantities requirement.
• Access to a computer or phone for ATAP and the Secretary of State's Corporations Online Filing System.
• Budget for the fees covered below: $20 for the exemption card, $45 for a Certificate of Organization if you form an LLC, $22.50 for a name reservation if you want one, and $50 for a sales and use tax permit if you sell taxable goods or services.
• The phone number of your county clerk's office, since sole proprietors record assumed names there and each county sets its own fee.

Step-by-Step: Starting Your Arkansas Farm

Step 1: Choose your business structure

Your structure determines which state office you file with and what recurring costs you carry.

• Sole proprietorship. No Secretary of State formation filing is needed. If you operate under a name other than your own, record an assumed name with your county clerk. Confirm the fee with that office, because the state does not publish county recording fees.
• Limited liability company (LLC). File a Certificate of Organization (Form LL-01) for a $45 filing fee. The LLC then owes an Annual Limited Liability Company Franchise Tax Report of $150, due on or before May 1 each year for the prior calendar year. A late report adds a $25 penalty plus interest.
• Corporation. File Articles of Incorporation for a Domestic For-Profit Corporation (Form DN-01) for a $45 filing fee. The annual Corporation Franchise Tax Report is due on or before May 1. The minimum tax is $150, or 0.3 percent of capital stock if that amount is greater. Corporations without authorized stock pay $300. A late filing adds a $25 penalty plus interest.

Most small farms start as sole proprietorships or LLCs. The right choice depends on your liability exposure, your financing needs, and whether you have partners. That is a question for an attorney and a CPA, not a form.

Step 2: Check your name with the Secretary of State

Search existing business names at the Secretary of State's business search. If you form an LLC, the name must include Limited Liability Company or Limited Company, or the abbreviation L.L.C., L.C., LLC or LC. Limited may be abbreviated as Ltd. and Company as Co. Note that the Secretary of State issues names that are distinguishable on its records, but issuance does not by itself give you an exclusive right to use the name. If you need time to file, you can reserve a name for 120 days for a $22.50 fee through the LLC forms and fees page.

If your LLC or corporation will operate under a trade name, such as a farm stand or brand name, file a fictitious name application with the Secretary of State. The fee is $22.50 online or $25.00 on paper.

Step 3: File your formation documents and appoint a registered agent

Arkansas uses the term registered agent. Every registered entity must appoint and keep a registered agent to accept legal papers and official notices. The agent's address must be a street address in Arkansas, and the agent must be located there. A P.O. Box is not acceptable, and the Secretary of State returns incomplete filings for correction. You can serve as your own agent if you are at that address during business hours, or you can use a commercial registered agent. Changing your agent is filed with the Secretary of State at no fee.

File online through the Corporations Online Filing System or by mail. The Secretary of State currently anticipates processing of 3 to 5 business days for all filings, whether mailed, dropped off, or submitted online. Its Business Services FAQ says most filings, such as articles of incorporation, are completed within two business days of receipt. In-person drop-offs carry a 48-hour turnaround. The agency does not publish an expedite fee, so do not pay for one unless the agency confirms it exists.

Step 4: Register for taxes through ATAP

Any business that sells tangible personal property or taxable services must hold a sales and use tax permit from DFA. The permit costs $50 and is applied for through ATAP. Arkansas's state sales tax rate is 6.5 percent. Local taxes may also apply, so confirm with DFA which of your sales are taxable before you set prices. If you will withhold income tax from employee wages, register for withholding in the same portal.

Step 5: Apply for the Farmer Sales Tax Exemption Card

Apply through ATAP once your tax account exists. The card costs $20 for an eight-year initial term and $10 to renew, so calendar the renewal date when you receive it. Under Arkansas Code 26-52-517, DFA decides whether you qualify. Expect to show your land, your equipment, and your production plan. Keep copies of everything you submit.

Once you have the card, present it to suppliers who accept it. If a supplier does not, you can give Form ST-403 or Form ST-391 instead. Do not assume every retailer will accept the card at the register without questions, and keep copies of exempt receipts for your records.

Step 6: Check city and county requirements

Arkansas has 75 counties and about 500 municipalities. The state has no general business license, and counties issue no general business license. Cities are different. Many impose their own business license, privilege license, or registry, and the basis varies. Little Rock and North Little Rock charge a base fee plus a fee tied to employees. Bentonville maintains a free registry. Conway imposes none. If your farm sits inside city limits, or if you sell at a city market or from a city-based storefront, contact that city clerk or finance office. A rural farm outside city limits may face no local business license, but confirm that with the county clerk before you assume it.

Step 7: Register for unemployment insurance if you hire

If you will have employees, register with the Arkansas Division of Reemployment for unemployment insurance. Registration is separate from your sales and withholding accounts. Confirm your filing obligations and the timing with the Division before your first payroll. Seasonal farm labor can create confusion here, so ask whether your workers are classified as employees or as independent contractors, and get that classification reviewed by a professional before you pay anyone.

Step 8: Check agency licensing for your specific activities

Arkansas licenses most regulated activities through industry-specific agencies and boards, not through a general business license. Match your plans to the right office:

• Food processing and sales. The Department of Health licenses food establishments. If you plan to process, package, or sell prepared food, ask the Department which license applies before you sell.
• Construction or farm building work for others. The Contractors Licensing Board, Electrical Examiners, and HVAC/R Board sit in the Department of Labor and Licensing. Check with them before you build or wire structures for other people.
• Livestock brands and poultry. Check with the Arkansas Livestock and Poultry Commission about brand registration and poultry rules.
• Alcohol. If you plan to sell alcoholic beverages, such as wine made from your fruit, the Alcoholic Beverage Control Division licenses that activity.
• Cannabis. The Medical Marijuana Commission licenses cannabis activity. Do not assume a hemp or cannabis crop is treated like any other crop.

For livestock and crop practices, your county Extension office is the most practical starting point, and it can connect you with local requirements that an agency page will not explain.

Step 9: Line up financing and check land purchases

For farm loans, start with the USDA Farm Service Agency county office. Ask which programs fit your operation and what documents they require. Before you buy land, review Act 636 of 2023 (A.C.A. 18-11-110). It bars a business with 50 percent or more control by a prohibited foreign party from acquiring real property in Arkansas. If any owner, lender, or investor in your structure could be affected, get a legal opinion before you sign a purchase contract.

Step 10: Calendar your recurring obligations

Put these dates on a calendar the day you form the business:

• May 1 each year: LLC Annual Franchise Tax Report ($150) or corporation report, if you formed one.
• Eight years after issue: renew the Farmer Sales Tax Exemption Card ($10).
• Your DFA sales and use tax filing schedule: confirm the frequency with DFA when you receive your permit.

What the Exemption Covers and What It Does Not

Under Arkansas Code 26-52-403, 404, and 405, qualifying farmers may buy certain farm inputs without paying state sales tax. The table below summarizes the main categories. It is a guide, not a complete list. Confirm any specific item with DFA before purchase.

Category	Typically exempt with the card	Typically not exempt
Machinery	Tractors, combines, irrigation equipment	Equipment repairs, lubricants and oil, tires
Inputs	Seed, feed, fertilizer, chemicals	Fencing materials
Livestock	Livestock and livestock vaccinations	Golf carts, lawn mowers
Structures	None listed	Building materials, metal buildings
Vehicles and trailers	None listed	Vehicles licensed for highway use, utility trailers

The most common surprise is the list of exclusions. A new farmer buys a metal barn, a utility trailer, or a set of tires and expects the card to apply. It does not. The card is also not a discount on everything used on a farm. Read the exclusions before you plan a budget.

Expected Results: What the Card Can and Cannot Do

The card is expected to reduce state sales tax on qualifying purchases. It does not guarantee any particular saving, and the result depends on what you buy and whether the item qualifies. As an illustration only: if a qualifying tractor cost $10,000, the 6.5 percent state rate would be $650 in state tax on a taxable purchase. An exempt purchase would avoid that state tax, subject to DFA confirming the item qualifies. Local taxes are not part of this example, and DFA should confirm how any local tax applies to your purchase.

Similarly, the card does not guarantee that a lender, a city, or an agency will approve your operation. Those are separate decisions, and each has its own requirements.

Common Mistakes to Avoid

• Applying before your farm is real. A hobby garden or a handful of animals will not show commercially marketable production. Build the production plan first.
• Assuming everything on the farm is exempt. Check the exclusion list before buying fencing, trailers, or tires.
• Using a P.O. Box for the registered agent. The Secretary of State returns the filing for correction, which delays your start date.
• Operating under a trade name without recording it. Sole proprietors record assumed names with the county clerk. Entities file with the Secretary of State.
• Missing the May 1 deadline. A late LLC or corporation report adds a $25 penalty plus interest.
• Assuming there is no local license. The state and counties issue no general business license, but many cities do. Check the city.
• Buying land before reviewing Act 636. Check the foreign party restriction before you sign, not after closing.
• Treating workers as contractors without review. Classification affects your registrations and your tax obligations.

Tips for a Smoother Startup

• Keep every exemption certificate and exempt receipt in one folder. Auditors and suppliers both ask for them.
• Call the agency before you buy, not after. A five-minute call to DFA can prevent a costly purchase error.
• Use the Arkansas Small Business and Technology Development Center for free planning help on business structure and financing. Visit asbtdc.org.
• Check the SBA's Arkansas district page at sba.gov/district/arkansas for local SBA resources.

Official Resources

• Arkansas Secretary of State, Business and Commercial Services Division: sos.arkansas.gov/business-commercial-services-bcs
• Corporations Online Filing System: ark.org/sos/corpfilings
• Arkansas Department of Finance and Administration: dfa.arkansas.gov
• Sales and use tax registration: DFA sales and use tax account registration

Final Checklist

Choose a structure, check your name, appoint a registered agent street address, file your formation documents, register with DFA through ATAP, apply for the $20 Farmer Sales Tax Exemption Card, check your city and county, register for unemployment insurance if you hire, confirm your agency licenses, and review land purchases under Act 636. Then set your May 1 deadline and your card renewal date. The card is valuable, but only for the items it actually covers.

Disclaimer: This article is informational content, not legal or tax advice. Fees, deadlines, and requirements can change, so verify each one with the named agency before you file. For complex entity, tax, or land decisions, consult a qualified Arkansas attorney and a CPA.