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. 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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LLC Services Review

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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LLC Services Review

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

The first step for creating an LLC in Alaska is choosing a name. Here are some tips to get you started:

  • Add “Limited Liability Company” or its abbreviations in your name.
  • Choose a business legal name that’s unique and distinct from other businesses.
  • You can search for business name availability on the Corporations database.
  • Avoid words that imply that your LLC in Alaska is a government unit.
  • Don’t use words that name a government agency, such as Treasury or FBI.
  • Use restricted words like “Attorney” only if a lawyer is part of your LLC.
  • Don’t use words that imply a different business structure other than an LLC.

Check if your business name is available as a domain name, as you’ll need that for your business website. 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

The next step for forming an LLC in Alaska is to decide what kind of an LLC you want and assign member roles. Here are some tips:

  • Decide if the members of the LLC will play an active role in its management.
  • If yes, identify the managing members.
  • If not, assign a third-party manager to manage the LLC.
  • Assign LLC officers that take care of the day-to-day operations.
  • Common designations include a treasurer, chairperson, secretary, etc.

This basically determines whether you’ll run this business on your own or with third-party assistance, how small or large you want your team to be, and which duties each member will have.

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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 should be:

  • Willing to receive legal documents on behalf of your LLC.
  • A resident of Alaska or authorized to operate a business in Alaska.
  • Available to receive documents during regular business hours at the given address.
  • The official point of contact for your LLC in Alaska

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 if you can 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. It helps you or the government to:

  • Categorize your business based on the products or services offered.
  • Identify your target customers by industry or niche.
  • Determine if your business qualifies for certain tax benefits.
  • Perform accurate statistical analysis by industry.

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

Filing the Articles of Organization for an LLC in Alaska establishes your business officially. The filing fee is $250. Information that should be included is as follows:

  • Business name
  • The purpose of the Alaska LLC
  • Name and address of the registered agent of the LLC in Alaska
  • Method of management—member or manager
  • The organizer’s name and signature
  • The duration that the Alaska LLC will be in existence.
  • NAICS code of your LLC in Alaska
  • Optional provisions, such as the restriction on the authority of the managers
  • Contact name and phone number

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.

Obtain an IRS Employer Identification Number

A part of the Alaska LLC formation process is getting a federal tax identification number. It’s a nine-digit number 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

You’ll need an EIN if:

  • You have a multi-member LLC in Alaska, even with no employees.
  • You have a single-member LLC in Alaska but you have employees.
  • You have chosen to have it taxed as a Corporation instead of a Sole Proprietorship.

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

An LLC Operating Agreement in Alaska is a legal document that determines the financial and working relationships among business owners, members, and managers. The operating agreement can include details, such as:

  • The registered name and address of the LLC in Alaska
  • The 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

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.

Obtain the Business Licenses Required by the State of Alaska

Get an Alaska LLC business license from the state’s official website. You are required to renew your Alaska business license every year. It expires on December 31st.

Also, find out the other business licenses you may need like:

  • Industry permits
  • Municipal business licenses
  • Safety permits
  • Environmental permits

The business licenses that you need will vary depending on the type of business and municipality, so find the requirements and obtain the necessary permits.

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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. It’s free to file.

You can:

  • File online via the Division of Corporations website
  • Or send it via postal mail to the Division of Corporations

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, 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: Liquidate your assets or use them as collateral to obtain loans.
  • Informal loans: Get loans from family members and friends.
  • Additional members: Add more members to your Alaska LLC for more funding.
  • Credit cards: Credit cards can be a lifesaver for quick, short-term funding.
  • Bank loans and credit union loans: Get loans from institutional lenders.
  • Peer-to-peer (P2P) lending sites: Using websites like Lending Club and Funding Circle.

Choose your preferred method and obtain funding for your LLC in Alaska.

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Create a Business Website

A website provides valuable information about your LLC in Alaska to your prospective customers. By optimizing it for SEO, you can attract organic traffic and generate leads for your LLC in Alaska. This leads to business survival and avoids business failure.

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

  • Make your site fast by reducing image size, using dedicated hosting, etc.
  • Use keyword optimization throughout your web content and meta 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.

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

Begin Operating Your 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. Here are some tips to get you started:

  • Renew your business license on December 31st of every year.
  • If a sales tax is required in your locality, collect it from buyers and pay it.
  • Pay the federal income taxes on time.
  • Pay employer taxes, if you have employees.

Stay in good standing with the state of Alaska and follow all the guidelines for a smooth business operation.

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Frequently Asked Questions

Here is the step-by-step guide to forming an LLC in Alaska:

  • Pick a name
  • Assign member roles
  • Choose a registered agent
  • Get your NAICS classification code
  • Submit articles of organization
  • Obtain an EIN number
  • Create an LLC Operating Agreement
  • Obtain the necessary licences and permits
  • File an initial report and a biennial report
  • Raise funds for your LLC in Alaska
  • Create a website
  • Begin operations

A federal Tax ID Number is an identification number used by the Internal Revenue Service (IRS) department to monitor and enforce tax laws. This number is issued either by the IRS or Social Security Administration (SSA). A business Tax ID number is required on tax return forms.

An Employer Identification Number is a nine-digit number that identifies your business. It works much the same way your social security number does. If your company has employees, is a corporation or partnership, has a Keogh Plan, or fits one of several other situations, it must have its own EIN. Learn how to get your EIN application here.

As a business owner, you probably know your company needs an EIN (or Tax ID Number) issued by the IRS for tax purposes. But what if you own multiple businesses or operate different divisions of the same entity? There is no limit to the number of tax ID numbers you can have for the multiple businesses you launch, as long as you’re not a Sole Proprietor.

Your business is going to need to file income taxes. The Internal Revenue Service uses Tax Identification Numbers to distinguish between individuals, business, and nonprofit organizations. But your business tax ID numbers should be distinct from your personal federal tax ID number.

For the IRS to conduct its business, it must have an easy way to identify each individual and business. To do this, they require each individual and business to have a tax ID number.

A social security number (SSN) is a tax code used by an individual, while a tax ID is a nine-digit tax code for a business entity. For a business entity, a tax ID is usually called an EIN.