TRUE Cost to Start an Alaska LLC (Don’t Overspend!)

Overall Alaska LLC Formation Costs

LLC Name Reservation Fee

If you’ve found a great name for your LLC, but you’re worried that someone else might take it, your first move could be to reserve it with the Alaska Department of Commerce, Community, and Economic Development. This is an optional step, but a useful one in some circumstances. You can reserve a business name online or by mail for $25, which will prevent any other Alaska business from using it for 120 days. Before your reservation ends, you can renew it for 120 more days by paying another $25 fee.

To clarify, most states don’t require name reservations, and they’re rarely necessary. If you’re concerned about someone else registering the name you want, you could opt to simply form your LLC instead of reserving the name.

Whether you reserve your business name or not, you should always perform an Alaska business name search to make sure the name you want is available.

Articles of Organization Fee

This is the big one, the most important (and most expensive) form that you’ll file to start your Alaska LLC. Filing the Articles of Organization officially registers your business with the state and locks in your LLC name (whether you’ve reserved it or not). The Department of Commerce, Community, and Economic Development offers online and paper forms, which both cost $250 to file. The good news is that as long as your Articles of Organization are accepted, this is a one-time fee.

The Articles of Organization isn’t a complicated document, but it does require some vital information about your business, including your LLC’s official business name, the purpose of your business, your six-digit NAICS Industry Grouping Code, your registered agent’s name and address, an indication that your business is either managed by its members or by a manager, your name, your signature, and the date.

Business License Fee

You’ve filed your Articles of Organization, but you can’t begin doing business just yet. First, Alaska mandates that you acquire a business license. Apply for your business license online or by submitting a paper application for a $50 fee. A $25 discounted rate is available for senior citizens and veterans.

You should also take a look at the Alaska Department of Commerce website to see if any other licenses apply to your LLC. What are some of the most commonly required business licenses for Alaska LLCs? If your business operates in a regulated industry, you will probably need some sort of professional license to operate in compliance with state law. On the municipal level, things like alarm permits, building permits, and zoning permits are all very common.

LLC Formation Service

Starting an LLC in Alaska can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC setup website. These services take care of the registration process for you, so you don’t have to spend time on research, paperwork, and filings.

Most of these services (which are often frequently used LegalZoom LLC alternatives) offer registration services like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like employer identification numbers, operating agreements, and expedited filing.

Registered Agent Service

Appointing an Alaska registered agent is an important part of your LLC formation process. Your registered agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with Alaska business law. In short, you need an agent you can trust.

While you can be the registered agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A registered agent service ensures that your annual reports and other forms are filed efficiently, saving you from the penalties of delinquent filings and the stress of having to do it yourself.

If you need to change Alaska registered agents or resign as an Alaska registered agent, read our full guides on these topics.

Attorney Fees

If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.

Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2,000.

Cost variations depend on the experience and location of the lawyer. Sites like Avvo compile lists of Alaska business attorneys so you can find the right fit for you and reach out to schedule an appointment.

If you don’t want to go digging for your own attorney, we compiled the following list of highly rated business lawyers in Alaska. These attorneys are primarily focused on the business world, they all receive five-star ratings from clients, and they all have excellent Avvo ratings.

• Clayton Walker
• Lea McDermid
• Andrew Mitton
• Gregory Heritage

Foreign Qualification Fee

This only applies if your LLC was formed in another state and is now expanding into Alaska. If you register a foreign LLC with the state of Alaska, you don’t need to file the Articles of Organization — it’s one or the other.

All foreign business entities are required to foreign qualify in Alaska, or they could incur some pretty severe penalties. On the Division of Corporations Forms & Fees page, you can find the “Registration of Foreign LLC” form (formally called the “Certificate of Registration”) available for online or paper filing. Either option costs $350. Like the Articles of Organization, this is a one-time fee as long as your filing is accepted.

LLC Biennial Fees

While some states use annual reports to maintain up-to-date business information, Alaska uses biennial reports instead, required once every two years. If you start your LLC during an odd-numbered year, your biennial report will be due by January 2nd of every subsequent odd-numbered year. The same goes for even-numbered years.

You must also file an initial report within six months of starting your LLC, although this filing is free. Like some other Alaska forms, you can file the biennial report online or download a hard copy. This filing will cost $100 for domestic LLCs and $200 for foreign ones.

You’ll also need to renew your Alaska business license in order to continue conducting business in the state. You can choose to renew your license annually for $50 or biennially for $100.

Your biennial report requires your LLC’s entity number, your LLC’s business address, the names of your LLC members, the name and address of your registered agent, your name, and your phone number.

For more info on biennial reports for Alaska LLCs, check out our full article on this topic!

Taxes

By default, Alaska LLCs are pass-through tax entities, meaning the business itself doesn’t need to file a separate tax return — only its individual members do. Some states impose a “franchise tax” or “privilege tax” on their LLCs, but Alaska does not. So, unless you deliberately change the tax structure of your LLC, you likely won’t owe specific business taxes.

If you establish your LLC to be taxed like an S corporation or C corporation, you will need to pay as much as 9.4% tax on your income, depending on how much your business makes. See the Alaska Department of Revenue website for more details.

What if I Don’t Pay?

Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.

Miss a biennial report, business license renewal, registered agent update, or other important filing and the state of Alaska will deem your LLC “non-compliant.” This makes you unable to obtain a “Certificate of Compliance,” which is necessary for expanding your business to most other states. The biennial report also has a $37.50 penalty for late filings.

If you don’t keep up with your filings and fees, the state may also revoke your authority to transact business, or, in the worst-case scenario, dissolve your LLC completely. Read over this document on your compliance responsibilities for more information. But generally, staying ahead of your required forms and fees will save you a bunch of trouble in the future.

Planning Your Expenses

By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Alaska.

Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business, and earning profits. As you do, make sure to keep up with the few recurring fees — like biennial reports and business licensing — so your business doesn’t fall out of good standing.

Key Steps for Starting an Alaska LLC

1. The first step to forming an Alaska LLC is to come up with a good name for your business. You’ll want to make sure the name you want is still available and hasn’t already been claimed by another business, so you’ll need to search the state’s business database to verify its availability.
2. Next, you’ll need to choose your registered agent. While you can legally serve as your own registered agent in Alaska, this role can actually be more of a hassle than you might expect. That’s why we always recommend hiring a reputable registered agent service that can handle the responsibility of this position on your behalf.
3. The third step involves the preparation and filing of your Articles of Organization. You’ll need to fill out the paperwork and pay a $250 fee. Once the state processes this document, your LLC will be officially open for business!
4. That’s not the end of the road for the startup process though, as you’ll also need to create an operating agreement for your LLC. There is no legal requirement for Alaska LLCs to have written operating agreements, but it’s still an extremely important element of any LLC. The operating agreement is an internal document that outlines how your LLC will operate, and there are several aspects of this document that can prevent messy ownership disputes down the line.
5. You will also need to acquire a federal tax ID number (also known as an EIN, or employer identification number). This is essentially a Social Security number for your business, as it is a nine-digit code used to file taxes, hire employees, open business banking accounts, and more.
6. Next, you’ll need to register for any relevant taxes with the Alaska Department of Revenue, and also obtain all licenses and permits that apply to your business type. Keep in mind that, depending on the nature of your business, you might require licenses from the federal, state, county, and municipal governments.

Once you’ve finished all of these steps, you’re ready to operate a compliant business entity with the state of Alaska!

Key Steps for Maintaining an Alaska LLC

After you’ve completed all of the items in the previous section, you’ll need to focus on maintaining your LLC. The first step in this process is to open a business bank account. This will help you keep your business and personal expenses entirely separate, and it will also help immensely with your accounting and taxation responsibilities.

You should also keep detailed records of every financial transaction that takes place with your LLC. This means maintaining a file of invoices for every purchase and sale you make, along with information regarding your employees or contractors and the work they perform for your business.

As we already mentioned, biennial reports are a key component of LLC maintenance in this state, and there are harsh financial penalties for delinquent reports. Additionally, you might want to hold an annual meeting to discuss goals and priorities for your LLC, although this is an optional step.