Starting a business in Alaska can be an exciting time. Before selling your product or service though, the nuts and bolts of licenses, registrations, and taxes must be completed.
The guide below will show you the DIY process of forming an LLC in Alaska. However, you can also use an online LLC service handle the paperwork for you. We reviewed and ranked the 7 best available.
The Top 2 Worth Considering:
- Northwest Registered Agent is a great option if you are looking for premium customer support.
- IncFile is ideal if you are looking for the best pricing with excellent features.
Step 1: Name Your LLC
Selecting a name for your Alaska LLC is a first step, yet a very important one. A name that is unique and easy to remember is helpful in finding potential clients or retaining customers.
The name should indicate the product or service. It should also follow guidelines set forth by the state of Alaska.
The name of an LLC will likely appear on business cards and stationary, marketing materials, a website, legal contracts, business bank accounts, invoices and/or a building directory.
Alaska law requires that the business name includes the words, “Limited Liability Company,” “LLC,” or “L.L.C.” It must be different than other names already registered. Distinguishing features include the following:
- A key word is different.
- The same keywords are used but not in the same order or with a unique spelling.
- If the key words are numbers, they are communicated differently: as numerals, Roman numerals, or written words.
- Key words are differentiated by singular, plural, or possessive.
Let’s imagine that someone is considering opening a flower shop in Juneau, Alaska. The name she is considering, Flowers by Fanny, is already in use. Instead, she decides to legally name her business Fanny’s Florals, LLC.
Determine the Name is Available
Following the selection of a name but before filing the Articles of Organization, check to ensure that your name is unique on the Corporations Database of the Alaska Department of Commerce, Community and Economic website. Searching in other places, such as online, is also a good idea.
After you have determined that your chosen name is “distinguishable,” the name can be registered in order that you have exclusive rights for five years. To register a name, a current Business License is first needed.
Optional: Name Reservation
Sometimes a situation may arise where an individual wants a particular name but needs time to organize his/her company before filing paperwork to create an LLC. In this case, a name can be reserved for 120 days in the state of Alaska.
The downside is that it does cost $25 for the reservation and is not refundable. A Business Name Reservation Application can be filed either online, which will process immediately, or by mail, which will take 10 to 15 business days after receipt of the application to process.
Step 2: Choose a Registered Agent
Every LLC in Alaska is required to have a registered agent. This agent can be an individual or a company.
The role of the registered agent is that of a contact person between the LLC and the state. As stated on the State of Alaska website, the registered agent “may be served processes, notices, or demands required by law to be served upon the corporation.”
Simply put, the process agent receives communications or documents from the state involving such things as taxes or lawsuits and communicates them to the LLC.
Some may wonder why an Alaska registered agent is necessary. The importance of the agent is to ensure that someone is always available to receive important documents even if the business owner leaves the office, goes on vacation, or is otherwise away. Also, having a registered agent is especially important if a physical office does not exist in Alaska.
The owner of the LLC can designate a registered agent on the Articles of Organization application.
Individual as Registered Agent
Most importantly, the individual must be a resident of the state of Alaska. An LLC cannot act as its own registered agent. Using a third party ensures that nothing falls through the cracks. The third party can be an accountant, an attorney, or even a friend. The agent must have a physical and mailing address in Alaska.
Registered Agent Service
If using a service, the registered agent must be a business or professional. We recommend either using an LLC formation service (like Incfile or Northwest Registered Agent) which gives you a free registered agent or ordering a registered agent service by yourself if you choose to DIY your Alaska LLC formation.
Step 3: File the Formation Documents with State
Let’s assume that fictional Fanny has selected both the name for her LLC and the registered agent. She is ready to complete the paperwork (called the Articles of Organization) that actually creates Fanny’s Florals, LLC in Alaska.
This step can be completed either online or by mailing a hard copy through USPS. The filing cost is $250. When you are ready, it is important to note a few details about each method to ensure that your application is fully completed in the time frame in which you need it.
Also, avoid sending a completed and printed online application with your payment through the mail. If completing an online application, you must also pay online, or it will not be accepted. Finally, online filings are non-refundable. A benefit of applying online is quick processing followed by immediate posting on the web.
Hard Copy Filing
Applications and payments can be sent to the following address:
PO Box 110806
Juneau, AK 99811
Processing times vary. You can expect standard processing of 10 to 15 days between March and September. Between October and February, processing can run more than 15 days.
Step 4: Create an Operating Agreement
An operating agreement in the state of Alaska is recommended though not required. The agreement is a contract that defines the operations of the LLC, includes terms and conditions, states the responsibilities of its members, and ensures legal protections of its members.
All owners of the LLC must be in agreement of the terms in the agreement and sign before a notary public.
The operating agreement is useful for both multi-member and single-owner LLCs. In both cases, the agreement provides protections.
For example, in the case of the multi-owner LLC, the terms can stipulate what should happen if a death or divorce occurs among one of its members. In the case of the single-owner LLC, the agreement could be used in court as evidence that the LLC is separate from the individual owner.
The operating agreement can be created in two ways. Some individuals may choose to write the agreement on their own, using an online template. In this case, forms are available that are specific to state. Be sure to use the correct multi-member or single-member form.
The alternative is hiring an attorney to create the document. The benefits of using an attorney are ensuring the document doesn’t exclude any important information, adheres to state law, and invalidates default provisions that may not be what you wish.
Step 5: Get an EIN
An EIN is an Employer Identification Number. Anyone who runs their business as a corporation or partnership must file for this 9-digit number in order to identify the tax accounts of a business. The number can be applied for in one of the following three ways:
Applying online is the quickest method. The process can be completed between 7 a.m. and 10 p.m. EST, Monday through Friday. When the form is completed, the information will be immediately validated and a number issued while you are still online. In order to apply online, a valid individual taxpayer number, such as a Social Security number, is required.
Form SS-4 can be downloaded, completed and faxed to 855-641-6935, twenty-four hours, seven days per week. The EIN will be provided within four business days.
If either of the above methods are unavailable, Form SS-4 can be mailed, though processing will take approximately four weeks. The form can be mailed to the following address:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
Think you’re ready to open up shop now? Guess again!
Step 6: Taxes, Licensing & Income Reporting
Businesses like Fanny’s Florals, LLC may be official after completing the above steps, but it is important not to overlook a few critical details.
On the federal level, most LLCs do not pay taxes directly to the government. Instead, they report income and losses on the owner’s personal 1040 tax returns. Schedule C is often used for reporting. Unless the LLC chooses to be taxed as a corporation, a single-member LLC is taxed as a Sole Proprietorship and a multi-member LLC is taxed as a Partnership.
Alaska does not collect personal income or sales tax. An LLC may need to file and pay a local tax to a city or municipality.
A business license and in some cases, a professional license are needed before a business can begin operations. If a professional license is needed, it should be obtained before the business license.
The State of Alaska Entity Professional License is required by a number of occupations, all of which are listed online, on the State of Alaska Professional Licensing page. Requirements and fees vary according to the license.
When applying for a business license, you will be asked for an entity number from the Articles of Organization and a professional license number if applicable. The applicant has the option of choosing a one-year or two-year license. All licenses expire on December 31 regardless of when it was purchased. The license costs $50, and discounts are available for seniors or veterans. The application can be filed online or through the mail at the following address:
PO Box 110806
Juneau, AK 99811
After an LLC is formed, an initial report must be filed with the state of Alaska within six months of the date of organization.
A biennial report needs to be filed every two years and must be filed before January 2 of the filing year. Although there is no cost for the initial report, the biennial report costs $100. The reports can be filed online or can be sent through the mail to the following address:
PO Box 110806
Juneau, AK 99811
The same rules that apply to filing for the Articles of Organization online also apply to filing reports online.
When all of the mechanics of setting up an LLC in Alaska have been completed, someone like Fanny can get down to the business of setting up a website, creating a logo…or purchasing flowers!
Need Help Creating Your LLC?
We recommend LLC formation services because it allows you to knock off an important thing off your checklist so you can focus all your energy on actually starting a business.
Can you do it yourself? Absolutely.
However, a service that forms an LLC for you will help with ongoing maintenance and keep you notified of any requirements you should adhere to.
As we mentioned earlier, IncFile and Northwest Registered Agent are the top LLC services available. If you’re not familiar with them, as a point-of-reference many of our readers like to compare them to the most well known LLC service, LegalZoom.