Easily manage employment in Arkansas

Payroll management in Arkansas

Arkansas has a growing economy driven by industries such as agriculture, manufacturing, retail, and healthcare. As a state with a relatively low cost of living and business-friendly policies, Arkansas offers advantages for employers. However, businesses must navigate specific payroll regulations, tax requirements, and compliance obligations to ensure proper payroll operations. Understanding Arkansas’s payroll system is crucial for avoiding penalties and maintaining compliance.

Payroll breakdown in Arkansas

Employers in Arkansas must adhere to both federal and state payroll regulations when processing employee wages, taxes, and benefits. Below is an overview of the key payroll components:

Minimum wage and overtime

• Minimum Wage: Arkansas’s minimum wage is $11.00 per hour.
• Overtime Rules: Arkansas follows federal overtime laws, requiring employers to pay 1.5 times an employee’s regular rate for hours worked beyond 40 hours in a workweek.

State income tax

• Arkansas has a graduated income tax system, with rates ranging from 2.0% to 4.7% depending on income levels.
• Employers are responsible for withholding Arkansas state income tax from employee wages and remitting it to the Arkansas Department of Finance and Administration (DFA).

Unemployment insurance (UI) tax

• Employers must pay Arkansas unemployment insurance (UI) tax to the Arkansas Division of Workforce Services (DWS).
• The wage base for UI tax in Arkansas is $7,000.
• New employer UI tax rates generally start at 2.9%, but rates vary based on an employer’s experience rating.

Workers’ compensation

• Arkansas law requires most employers with three or more employees to carry workers’ compensation insurance to cover medical expenses and lost wages for employees injured on the job.

Payroll tax filing and payment deadlines

• Employers must register for an Arkansas Withholding Tax Account Number with the Arkansas Department of Finance and Administration for state withholding tax.
• State withholding tax returns are filed monthly, quarterly, or annually, depending on employer classification.
• UI tax reports must be submitted quarterly to the Arkansas DWS.
• Payroll tax payments can be made electronically through Arkansas Taxpayer Access Point (ATAP).

Quick facts: Important considerations for employers

• State Minimum Wage Compliance: Arkansas’s minimum wage is higher than the federal minimum wage, and employers must ensure compliance.
• Final Paycheck Rules: When an employee is terminated, employers must provide the final paycheck within seven days. If an employee quits, the final paycheck must be issued by the next scheduled payday.
• New Hire Reporting: Employers must report new hires to the Arkansas New Hire Reporting Center within 20 days of the hire date to assist with child support enforcement.
• Payroll Recordkeeping: Employers must maintain payroll records for at least three years to comply with state and federal laws.
• Right-to-Work State: Arkansas is a right-to-work state, meaning employees cannot be required to join or pay dues to a labor union as a condition of employment.

Run payroll in Arkansas with Remote

Managing payroll in Arkansas requires compliance with state-specific tax and wage regulations. Employers must stay informed about tax rates, wage laws, and reporting requirements to ensure smooth payroll processing and avoid penalties.

For businesses looking to simplify payroll management, Remote’s payroll solutions provide automated payroll processing, tax filing, and compliance support tailored to Arkansas’s requirements. With Remote, employers can focus on business growth while ensuring accurate and hassle-free payroll operations.

To see just how easy global payroll can be, book a demo today.