The rules where you work $17
A first 30 days checklist, everyday forms, licenses, workers’ comp and taxes for Arkansas, with a yearly calendar. Instant PDF download.
Buy the packet: $17Digital product, all sales final. Informational only, not legal, financial, tax or business advice.
What Arkansas expects from a new trade business
Arkansas licenses home work at more than $2,000 and most other work at $50,000. In building or repair, comp can start at two people, and the state's form counts the owner. Homes of four units or fewer require a notice to the owner before work starts, or the contractor has no lien.
$2,000 on a house, $50,000 commercial
The Contractors Licensing Board and its Residential Contractors Committee cover both sides. On a single family home, up to four units, a license is needed over $2,000, labor and materials: a builder license for new homes, a remodeler license for structural work and additions, and a home improvement license for one specialty, like painting or flooring. Splitting a job doesn't get you under it. A sub to a committee-licensed contractor is exempt from the residential license.
Roofers register separately, with a $15,000 bond.
Commercial means anything but a single family home. You need a license at $50,000 or more. A sub to a properly licensed contractor can use a registration certificate instead.
Electrical, plumbing and HVACR have their own licenses.
Working unlicensed on a home is a class A misdemeanor, each day a separate offense, and you can't sue on the contract or for the value of the work. On commercial, you can't sue on the contract, but you may recover the value of the work if you pay any fines and apply for a license. Unlicensed HVACR work gets no lien. A construction attorney can tell you which license fits.
Source: Arkansas Residential Contractors Licensing Law, rev. 04/2026 · Arkansas Commercial Contractors Licensing Law, rev. 04/2026 · Contractors Licensing Board: which license to apply for · HVACR statutes, 2025 · Board of Electrical Examiners statutes, 2025 · Plumbing law
Who to call: an attorney near you
In building and repair, comp starts sooner, and you count
The Workers' Compensation Commission says the general rule is three or more employees. Construction has lower lines:
- Two or more in building or building repair work.
- One or more if you're a contractor who subs out any part of a contract.
- One or more if you're a subcontractor.
The Commission's form counts an owner, sole proprietor, full-time partner, part-time worker and volunteer. So you and a part-time helper can already be two.
A sole proprietor, partner or LLC member may be able to get a Certificate of Non-Coverage for $50, with a notarized affidavit. It's a felony to force a sub to get one. The form limits how owners use it, so ask the Commission's Legal Advisor Division whether it fits you.
A 2023 Commission decision quotes the law making the prime contractor liable for an uninsured sub's employees, unless an intermediate sub has coverage. Licensed contractors required to carry comp have to show proof, and a lapse can cost the license. An insurance agent who writes contractors can price it.
Source: Commission Form AR-A, rev. 1-1-2024 · Certificates of Non-Coverage · Commission: Basic Facts · Commission decision H201552 (2023), quoting 11-9-402 · Arkansas Residential Contractors Licensing Law, rev. 04/2026
Who to call: an insurance agent near you
Getting paid: the notice before you start
Arkansas lien rights depend on notices, some before you swing a hammer:
- Homes of four units or fewer: the owner has to receive the statutory notice before work starts, by personal delivery or certified mail. A contractor who skips it has no lien and can be fined up to $1,000. Others can give it, but no one gets a lien unless the owner received at least one copy. A performance and payment bond or a true direct sale is the exception.
- Commercial: subs, suppliers, laborers and service providers notify the owner and contractor in writing before 75 days pass from supplying the labor or materials.
- Ten days before filing: everyone gives the owner notice of the claim and the amount.
- File with the circuit clerk within 120 days after furnishing materials or labor. A street address isn't a valid property description, and the clerk has to refuse an account without the required affidavits.
- Sue within 15 months of filing, and file a lis pendens.
If someone files a protest, you have 5 days to object, not counting Sundays and legal holidays. A construction attorney can help with your first filing.
Source: A.C.A. 18-44-114 (2025) · A.C.A. 18-44-115 (2025) · A.C.A. 18-44-117 (2025) · A.C.A. 18-44-118 (2025) · A.C.A. 18-44-119 (2025) · Contractors Licensing Board: Important Notice to Owner
Who to call: an attorney near you
Sales tax: you pay on materials, and some labor is taxable
Under Arkansas's rules, contractors are the consumers of materials, supplies and equipment. You pay tax when you buy, or when you pull it from stock for the job. You can't use a customer's direct pay permit to avoid it. The state rate is 6.5%, plus local tax.
Work on passive parts of a building, such as walls, doors, windows, roofs, wiring, pipes and fences, generally isn't a taxable service. First-time installation of mechanical or electrical equipment, carpet or flooring in a new or substantially modified building isn't either. The same first install in an existing building is taxable. So is repairing or replacing items like water heaters, HVAC units and ceiling fans.
If you hold a sales tax permit, the rule says to buy materials for resale, collect tax on taxable work, and pay tax yourself on materials pulled for nontaxable work. A CPA who works with contractors can go over your line of work.
Source: 26 CAR 30-1003, contractors · DFA Sales and Use Tax FAQs
Who to call: a CPA or tax pro near you
LLC: $45 online, then $150 a year
Forming an LLC with the Arkansas Secretary of State costs $45 online, or $50 on paper. After that, the $150 annual franchise tax report is due May 1. A late filing adds a $25 penalty plus interest, and franchise tax keeps accruing until the LLC is formally dissolved.
Profit usually lands on your personal return. Arkansas lowered its income tax in a 2026 special session, and the top rate is 3.7%, starting with tax year 2026. When an S-corp election helps is a numbers question for a CPA who works with contractors.
Source: Secretary of State: LLC forms and fees · Secretary of State: LLC filing fees · 2026 LLC franchise tax report · Secretary of State: franchise tax forms · Arkansas 2026 special session Act 2 (SB1)
Who to call: a CPA or tax pro near you
Education, not legal or tax advice. Rules change. Confirm anything here with a licensed pro in Arkansas before you rely on it. Last updated November 2026.