Learn the Benefits of an LLC in Alaska

For most folks looking to register an LLC in AK, the best type of company to form is what’s known as a Limited Liability Company (LLC). An LLC in Alaska can come with several benefits, as listed below.

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Launch and Run a Business Easily

Forming an LLC in Alaska is easy and its cost will hardly pose a financial challenge. The online application takes 10-15 minutes and it can take the state 3-4 weeks to process the application.

The initial paperwork is light and the process is simple to handle without the need for special skills.

However, it’s a good idea to get legal services and consult with an accountant before getting started with your business.

Hold Assets (Such as Office Equipment/Real Estate)

An LLC in Alaska or any other state holds limited liability and is a separate legal entity.

This means the business can hold assets that cannot be used to pay off members’ personal debts. In the same way, creditors cannot use members’ personal assets to collect business debts.

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Open a Business Bank Account

Opening a business bank account is a requirement when creating an LLC in Alaska. It makes running the business easier, including things like easier payment of business bills, convenience when depositing customer payments, and accurate bookkeeping.

A separate business bank account also keeps members from mixing personal and business finances, which can happen with Sole Proprietorships.

Enter into Contracts

An LLC in Alaska has the legal authority to get into a contract related to the business’s operations.

An LLC also tends to be a bit more credible than a Sole Proprietorship or a Partnership. This means that other entities would feel more secure entering into a contract with your business.

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Get Tax Benefits

An Alaska LLC is a pass-through business entity, unless the members opt otherwise.

It means profits are not necessarily subject to federal corporate income tax (tax at the company level). Members can choose to pay taxes on business profits through their individual federal income taxes. It prevents double taxation.

Get Management Flexibility

An LLC in Alaska gives members the flexibility to manage the business themselves and get involved in decision-making or hire professional managers. Professional managers can be non-members.

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Steps for Starting an LLC in Alaska

Here are the steps required to start an LLC in Alaska.

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Pick a Name for Your LLC

Next step for creating an LLC in Alaska is choosing a name. The LLC name must contain the words “Limited Liability Company” or its abbreviations, such as “LLC”, “L.L.C., limited abbreviated as “Ltd.”, or company abbreviated as “Co.”

The business legal name should be unique and easy to distinguish from other businesses already registered in Alaska.

You can search for business name availability on the Corporations database.

Here are a few other naming guidelines for an LLC in Alaska:

  • The business name you choose shouldn’t contain words that imply the LLC in Alaska is a government unit, such as “city,” “borough,” or “village”.
  • You shouldn’t use words that name a government agency, such as Treasury or FBI.
  • If you use restricted words, such as “Attorney”, you’ll need additional paperwork, and a lawyer must be a part of your LLC in Alaska.
  • The business name shouldn’t contain words that imply your Alaska LLC has a different business structure, such as “limited partnership” or “corp.”

It’s also wise to check if your business name is also available as a domain name, as you’ll need that for your business website.

Once you have a suitable name that you’ll use in your Articles of Organization, you can fill out a business name reservation for your LLC in Alaska at a filing fee of $25. The business name reservation is valid for 120 days.

Assign Member Roles

One of the steps of your Alaska LLC formation is deciding whether you will run this business on your own or with another member’s or organization’s assistance, how small or large you intend for your team to be, and which duties each member will have.

An LLC can be manager-managed or member-managed.

Unless the LLC is manager-managed, members of the LLC play an active role in its management. A member is basically anyone with an ownership interest in the LLC.

An LLC that’s manager-managed has a member of the LLC, a group of members known as “managing members”, or a third party in charge of its management.

Whether the LLC is manager-managed or member-managed, you can appoint LLC officers. They are charged with various day-to-day operations of the LLC. These positions can include a chairperson, secretary, and treasurer, along with their assistants.

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Choose a Registered Agent Service in Alaska

Next, figure out who the Alaska Registered Agent for the LLC should be. The State of Alaska requires every LLC in the state to have one.

A registered agent is the official point of contact for your LLC in Alaska. Appointment of a registered agent service enables the state to ensure the delivery of legal mail, government correspondence, and tax forms. It also ensures that court documents can be tracked appropriately.

Before designation, the registered agent service must be willing to receive legal documents on behalf of the LLC.

The registered agent must be an individual resident of Alaska or authorized to operate a business in Alaska.

The registered agent’s address (physical) must be in Alaska and the agent should be available to receive documents during regular business hours at that address.

If you have trouble finding one, the State of Alaska official website has a list of companies that can provide registered agent service for your LLC in Alaska.

You can also be your own registered agent as long as you’re able to receive state and legal correspondence during business hours.

Get Your North American Industry Classification System(NAICS) Code

The NAICS is a six-digit code that shows the type of business activities your LLC in Alaska is performing. NAICS categorizes and classifies businesses based on the similarity in the processes they use to produce goods or services.

You can select your LLC’s NAICS code on the Alaska NAICS Codes page. Here is what you can expect.

You’ll need it when filing the articles of organization for your Alaska LLC formation.

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Submit Your Articles of Organization

While forming an LLC in Alaska, you will also need to register your business by submitting a form called the Articles of Organization to the State of Alaska Division of Corporations, Business and Professional Licensing.

Filing the Articles of Organization for an LLC in Alaska establishes your business officially. The filing fee is $250.

Information that should be in the Alaska LLC Articles of Organization includes:

  • Business name
  • The purpose of the Alaska LLC
  • Name and address of the registered agent of the LLC in Alaska
  • Method of management. Will it be managed by a member or a manager
  • The organizer’s name and signature
  • The duration that the Alaska LLC will be in existence. If it will not end on a specific date, you can register it as perpetual
  • NAICS code of your LLC in Alaska
  • Optional provisions, such as the restriction on the authority of the managers
  • Contact name and phone number

Keep in mind the information you provide when you file your articles or organization will be public record.

You can file online through the Division of Corporations of the State of Alaska. If you want an expedited and hassl-free filing experience use GovDocFiling’s LLC formation services. After all, online filing is more convenient.

Once the secretary of state reviews and approves the filing, you’ll officially have a legal LLC in Alaska.

Obtain an IRS Employer Identification Number

A part of the Alaska LLC formation process is getting a federal tax identification number. Your LLC in Alaska will need to file with the IRS for an Employer Identification Number(EIN). It’s a nine-digit number assigned to businesses for tax filing and reporting purposes that allows the IRS to identify the taxpayer.

An EIN number will help your business:

  • File and manage its taxes at the state and federal level
  • Hire employees
  • Open a business bank account for your LLC in Alaska

As long as you have a multi-member LLC in Alaska, an EIN is mandatory, even with no employees.

If you have a single-member LLC in Alaska but you have employees or have chosen to have it taxed as a Corporation instead of a Sole Proprietorship, you’ll also need the EIN number.

You can make a tax ID application in a few steps using GovDocFiling at no extra cost, as it comes free with the LLC formation package.

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Create an Alaska LLC Operating Agreement

Once you’ve decided on member roles within your LLC in Alaska, it is time to create a business contract that holds members to their assigned responsibilities.

An LLC Operating Agreement in Alaska is a legal document that determines the financial and working relationships among business owners, members, and managers.

Although an operating agreement is not a requirement when establishing Alaska LLCs, it’s advisable to have one.

An operating agreement sets out the rights and responsibilities of the LLC’s members and managers and makes it easy to avoid and settle disputes or other forms of litigation. Without it, an Alaska LLC will have to operate according to the state’s LLC law.

The operating agreement can include details, such as:

  • Basic details like the registered name, principal address of the LLC in Alaska, and name and address of the registered agent
  • Details about the Articles of Organization
  • Purpose of the LLC in Alaska and its duration
  • Division of profits and losses
  • How new members and outgoing members will be treated
  • Names of members and their contribution
  • Management structure
  • Indemnification and liability clause
  • Duties, powers, obligations, and responsibilities of members
  • Strategies for dealing with conflict

These are just a few items that great operating agreements for Alaska LLCs have. It’s best to create a comprehensive LLC operating agreement that suits your business.

Obtain the State’s Taxes and Business Licenses Requirements

Income from pass-through entities such as limited liability companies (LLCs) and S corporations “passes through” the business to the LLC owners, who are required to report this information on their personal tax returns.

Besides taxes, you are required to get an Alaska LLC business license from the state’s official website. You can apply for a business license online or through postal mail.

You are required to renew your Alaska business license every year. It expires on December 31st.

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File an Initial Report and Biennial Report

One of the State of Alaska LLC requirements is having to file an Initial Report within the first six months of creating your LLC. Its purpose is to update your records and remain in good standing with the local government.

You have the option of filing online or sending the paperwork by postal mail to the Division of Corporations. There is no charge for filing an Initial Report in Alaska.

An LLC in Alaska is also required to file a Biennial Report with a filing fee of $100.

An Alaska LLC biennial report is due on January 2 of the filing year and late filing attracts penalties.

Raise Funds for Your LLC in Alaska

You can’t start a business with zero capital. There are legal fees, the Alaska LLC filing fee, federal taxes, employees to pay (if you have more than one member), as well as the general cost of operating a business and scaling the business.

There are plenty of ways you can raise capital for your LLC in Alaska:

  • Personal assets. You can liquidate your assets or use them as collateral to obtain loans. You can also tap into your personal cash savings or retirement account.
  • Informal loans. Get loans from family members and your social circle.
  • Additional members. Adding more members to your Alaska LLC means more funding.
  • Credit cards. Credit cards can be a life-saver for quick, short-term funding.
  • Bank loans and credit union loans. Most institutional lenders will be open to funding businesses that show great potential.
  • Peer-to-peer (P2P) lending sites. Websites like Lending Club and Funding Circle create a platform for creditworthy business owners to get funding from individual and institutional investors.
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Create a Business Website

Creating a website for your business is not one of the Alaska LLC requirements, but it is recommended for any business operating in the modern world.

A website provides a platform to provide valuable information about your LLC in Alaska to your prospective customers.

By optimizing your site for SEO, you can attract organic traffic to your website, which will create brand awareness and generate leads for your LLC in Alaska. This leads to business survival and growth, and avoids business failure.

You can use a simple website builder like Wix or WordPress to build your website or hire the services of a web developer.

Make your website SEO-friendly by applying the following tips:

  • Make your site fast. Reduce the size of your JavaScript, HTML, and CSS files. Use dedicated or VPS hosting, and reduce image sizes.
  • Insert keywords strategically throughout your website, including within your content, headers and subheaders, image files, and meta description tags.
  • Publish valuable content that meets search intent. Publish regularly.
  • Develop a strategy to get trustworthy websites to link to your website.

Use simple and readable URL structures.

Begin Operating Your LLC in Alaska

Once you’re finished getting an LLC in Alaska, make sure you conduct business legally and keep your LLC in Alaska compliant. Remember all important dates and make all necessary payments on time.

We’ve mentioned some of these requirements, but here’s a summary of what is required to keep your LLC in good standing:

  • Renew your business license on December 31st of every year. There’s the option to renew it online.
  • Alaska doesn’t charge a statewide sales tax. But some municipal governments in Alaska charge their own sales tax. If a sales tax is required in your locality, collect it from buyers and pay to the local authority.
  • Pay federal taxes. As an LLC in Alaska, you’ll not owe state income tax on the company’s earnings. However, members still need to pay self-employment tax and federal income tax.

Pay employer taxes. If you have employees, you’re liable to pay employer taxes to the IRS.

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