How to Start an HVAC Business in Arkansas: HVACR Licensing Board Classes A, B, D and E, and $250,000 Insurance

If you want to start an HVAC business in Arkansas, the first thing to understand is that the state licenses people, not companies. The HVACR Licensing Board, part of the Arkansas Department of Labor and Licensing, issues the HVAC license under A.C.A. 17-33. Your business entity is a separate filing with the Arkansas Secretary of State, and many cities add their own requirements on top. This guide walks through the order in which to handle each piece, with the fees and figures we can verify today. Anything you cannot confirm from the official source is marked for you to check.

Disclaimer: This article is informational content, not legal or tax advice. Fees, rules and deadlines change. Confirm current figures with the agency named in each step before you file or pay. For a complex situation, such as a multi-owner company or a mix of mechanical and electrical work, talk with a qualified attorney or CPA.

What You Need Before You Start

Gather these items before you begin. Several steps depend on documents you may not have on hand, especially your work history.

• A written work history covering at least 2 years of HVACR experience, with employer letters, pay records or job invoices that show your duties
• A liability insurance policy of $250,000 (or an employer policy that covers you as a licensed employee)
• Funds for the license fee, the exam fee and the business filing fees (see the fee table below)
• A list of three to five business name options to check against the Secretary of State database
• A registered agent with a street address in Arkansas (not a P.O. Box)
• A federal Employer Identification Number from the IRS
• A computer with internet access for the Corporations Online Filing System and the Arkansas Taxpayer Access Point (ATAP)
• A business bank account and a bookkeeping system set up before your first invoice

Step 1: Confirm Your Work Requires the State License

Arkansas exempts a few kinds of work from HVACR licensing. The exemptions include work in your own home or on your own farm, poultry operations, and window units of 36,000 BTUH or less. If your work falls outside those exemptions, you need a license. Do not assume an exemption applies to a customer's property or a commercial job. Check the Board's rule text or call the Board before you take a paid job.

If you plan to do mechanical contractor work, you also need the Mechanical classification from the Arkansas Contractors Licensing Board. The HVACR license alone does not cover that. Contractors who do both should plan for both licenses from the start.

Electrical work is a common gray area. Under Act 746 of 2025, any state HVACR licensee may run line voltage wiring up to 75 feet to an outdoor unit without an electrician's license. Longer runs and other electrical work are outside that allowance, so confirm the scope with the Board and the Electrical Examiners before you wire a job.

Step 2: Choose the Right License Class

The Board's fee schedule is set out in Part 261 of its rules. Verify the adopted schedule at labor.arkansas.gov before you pay, because the rule text and fees have been revised over time.

• Class A: $200 a year. Confirm the full scope of Class A work with the Board before you apply.
• Class B: $150 a year. Under Act 746 of 2025, Class B can perform cooling work up to 25 tons per unit.
• Class C: Repealed by Act 746 of 2025. Existing Class C holders are grandfathered to Class B.
• Class D and Class E: $150 a year each. The scope of each class is set in the Board's rule. Confirm which class covers the work you plan to do.
• Registrant (helper): $25 a year. A registrant works under a licensed supervisor and is not a substitute for a license.

Pick the class that matches the work you will bid on in your first year, not the one you hope to reach later. Paying for a higher class you will not use wastes money, and a class that is too narrow can cost you jobs.

Step 3: Meet the Experience Requirement

A first license requires at least 2 years of HVACR experience. The Board decides what counts, so ask it which documents it accepts before you assemble your file. Good records usually include employer verification on letterhead, dated job logs and a description of the systems you installed or serviced. Keep copies of everything. If your experience is partly out of state, ask the Board how it treats that work.

Step 4: Carry $250,000 in Liability Insurance

The 2025 rule text requires liability insurance of $250,000 per licensee. If you work under an employer's policy, the coverage must be at least $250,000 per licensed employee. Confirm the wording of the requirement and any certificate format with the Board before you buy a policy.

Shop for a policy from an insurer or broker that writes contractor coverage. Ask for a certificate of insurance that names the correct license holder, because a generic certificate may not satisfy the Board. The premium depends on your payroll, job types and claims history, and no published fee applies, so get quotes rather than estimates.

Step 5: Pass the Exam

The exam fee is $100 per class exam. If you are applying for more than one class, plan for one exam fee per class. Check labor.arkansas.gov for the current testing provider, registration steps, study materials and any retake policy. Schedule the exam after you have your experience documents and insurance certificate ready, so you do not pay for a test before you are eligible to apply.

Step 6: Apply, Pay the Annual Fee and Keep Your Continuing Education

Submit your application through the Department of Labor and Licensing with your experience documents, insurance certificate and fee. Licenses renew each year. Confirm your renewal date and payment method when you are approved, and set a calendar reminder for it.

Continuing education is 8 hours per code cycle. Keep certificates for every course. Verify which courses the Board accepts before you enroll, because courses that do not qualify waste both time and money.

Step 7: Form Your Business Entity With the Secretary of State

Most HVAC companies form a limited liability company (LLC). The Arkansas Secretary of State handles entity filings through its Business and Commercial Services Division.

1. Search the name. Use the Secretary of State business search at sos.arkansas.gov/corps/search_all.php. An LLC name must contain Limited Liability Company or Limited Company, or the abbreviation L.L.C., L.C., LLC or LC. The Secretary of State issues names that are distinguishable on its records, but issuing a name does not by itself give you exclusive rights to it. Check your state and federal trademark records too.
2. Reserve the name if needed. A name reservation costs $22.50 and lasts 120 days.
3. Appoint a registered agent. The agent must have a street address in Arkansas, and the agent must be located there. A P.O. Box is not acceptable, and an incomplete filing will be returned. You can serve as your own agent or use a commercial registered agent. Changing the agent later is filed at no fee.
4. File the Certificate of Organization (Form LL-01). The filing fee is $45 online or $50 on paper. File online through the Corporations Online Filing System at ark.org/sos/corpfilings/index.php, or by mail or in-person drop-off. The Secretary of State's new business page lists anticipated processing of 3 to 5 business days for all filings. Its FAQ says most filings are completed within two business days of receipt. In-person drop-offs carry a 48-hour turnaround. The Secretary of State does not publish an expedite fee.

If you operate as a sole proprietor, you do not file with the Secretary of State. You do not need an entity filing, but a business name other than your own legal name must be recorded as an assumed name with your county clerk. The county sets that fee, so confirm the amount with your county clerk. A corporation files Articles of Incorporation for Domestic For-Profit Corporation (Form DN-01) for the same $45 online fee ($50 on paper), but most small HVAC owners choose the LLC because of its simpler annual reporting.

Step 8: Register for Taxes and Employer Accounts

Arkansas registers most tax accounts through the Department of Finance and Administration's ATAP portal, while unemployment insurance is handled by the Division of Reemployment. Register these accounts as you need them.

• Sales and use tax permit: $50, applied for through ATAP. Any business selling tangible personal property or taxable services must have one. The state sales tax rate is 6.5%. Equipment sales are taxable, and the taxability of specific service charges depends on how you invoice them, so confirm with the Department of Finance and Administration before you quote a job.
• Withholding: Register through ATAP before your first payroll if you will have employees.
• Unemployment insurance: Register with the Division of Reemployment when you hire your first employee.
• Annual franchise tax report: An LLC pays a flat $150 annual franchise tax with its report, due on or before May 1 each year for the year ending December 31 of the prior year. A late filing adds a $25 penalty plus interest. Put this date on your calendar on day one.

Your LLC is generally taxed through its owners' personal returns unless it elects otherwise. The personal income tax top rate is 3.7% for tax years beginning on or after January 1, 2026. Ask a CPA how the election and the income tax rules apply to your situation.

Step 9: Check Your City License Requirements

Arkansas has no general statewide business license, and counties do not issue general business licenses. Cities are another matter. Arkansas has roughly 500 municipalities, and each sets its own rules. Little Rock and North Little Rock charge a business license fee based on a base amount plus the number of employees. Bentonville has a free business registry. Conway does not require a general business license. Contact your city clerk or finance office to confirm what applies where you will work and where you will be based. Many HVAC companies work across city lines, so check each city you serve.

Tips and Common Mistakes to Avoid

• Doing paid work before the license is issued. The license is personal to the person who holds it. Do not let an unlicensed employee or helper run a job under your name.
• Confusing the personal license with the business filing. The Board license follows you. The LLC is filed separately with the Secretary of State and does not replace the license.
• Using a P.O. Box as the registered agent address. This is one of the most common reasons a filing is returned.
• Assuming Arkansas has a statewide business license. It does not. Your city and your industry board or agency are where the license requirements sit.
• Missing the May 1 franchise tax report. The $25 late penalty is small, but interest and a bad compliance record are not worth it.
• Relying on old fee tables. The Board's rule has changed, and Act 746 of 2025 repealed Class C. Check the adopted schedule at labor.arkansas.gov before you pay.
• Skipping the mechanical classification. If you do mechanical contractor work, the Contractors Licensing Board requires its own classification.
• Buying a policy that does not match the rule. Get the policy wording and certificate format confirmed in writing before you rely on it.
• Confusing Arkansas with Kansas. Rules, agencies and filing names differ. Use only Arkansas sources for your filings.

Fee Summary

The table below lists the fees published by the agency as of October 2026. Confirm each figure on the agency page before you pay, because fees can change.

Item	Fee	Agency	How often
HVACR Class A license	$200	HVACR Licensing Board	Annual
HVACR Class B, D or E license	$150 each	HVACR Licensing Board	Annual
Registrant (helper)	$25	HVACR Licensing Board	Annual
Exam	$100 per class exam	HVACR Licensing Board	Per exam
LLC Certificate of Organization (Form LL-01)	$45 online, $50 paper	Secretary of State	One time
Name reservation	$22.50 (120 days)	Secretary of State	One time
Annual LLC Franchise Tax Report	$150 (due May 1)	Secretary of State	Annual
Sales and use tax permit	$50	Department of Finance and Administration	One time
Liability insurance	Premium varies, no published fee	Private insurer	Annual

What Results to Expect

Completing these steps may put you in a position to bid on licensed HVAC work in Arkansas. A licensed business can typically take service calls, sign contracts and carry the insurance that customers and general contractors often ask for. Results depend on your experience, the class you hold, your local market and your own follow-through, so no outcome is guaranteed.

Timing also varies. Plan for several weeks to a few months from application to a working license, depending on the exam schedule, the Board's processing time and how complete your file is. The Secretary of State's filing timelines are short by comparison, but your license should come first, because it controls what work you can legally perform.

Next Steps

1. Confirm your work is covered by the license and whether you need the Contractors Board Mechanical classification.
2. Choose your class and confirm its scope with the Board.
3. Assemble your experience records and get your insurance certificate.
4. Schedule your exam and apply for your license.
5. File your LLC with the Secretary of State, then register your sales tax permit and any payroll accounts.
6. Check your city's license rules and calendar your May 1 franchise tax report.

Because the license, insurance and entity decisions affect your liability and taxes for years, talk with a qualified attorney and a CPA before you sign leases, contracts or insurance applications.