A limited liability company (LLC) is an attractive option for business owners because of its tax benefits and protection from personal liability. It provides limited liability protection to LLC owners, who are called members, so they can be held liable only for their own actions and not those taken by other members. And as with every other state, there are specific requirements and procedures for forming an Alaska LLC.
You can start an Alaska LLC relatively quickly and at a reasonable cost. This guide reviews how to form an LLC in Alaska, including information on fees, required documents, and other legal requirements.
An LLC is a type of business entity that combines the benefits of a corporation with the simplicity and flexibility of a partnership. Any business owner can start an LLC. It provides limited liability protection to LLC owners, who are called members, so they can be held liable only for their own actions and not those taken by other members.
Furthermore, LLCs provide tax advantages since profits are treated as pass-through income on personal tax returns instead of being taxed twice like corporations. This means that LLC members do not need to pay corporate taxes on their profits or losses; rather, these items pass through to each member’s personal income tax return.
The LLC business structure process in Alaska involves filing Articles of Organization with the Alaska Department of Commerce, Community, and Economic Development (DCCED).
Read More: Best LLC Formation Services in Alaska 2024
The total Alaska LLC cost will vary, depending on the LLC’s type, size, and purpose. In general, however, the cost of forming an Alaska LLC is relatively low compared to other states. Below is an overview of the fees to pay when forming an Alaska LLC.
To register as an Alaska LLC, you will need to send your Articles of Organization to the DCCED’s Alaska Division of Corporations, Business, and Professional Licensing. We can refer to it as the Alaska Division of Corporations for short. The filing fee is $250, and the process can be done online or through postal mail.
The Alaska Division of Corporations requires all Alaska LLCs to file a Biennial Report. It is due through online filing on January 2 every other year. The filing fee for the report is $100.
Prior to biennial reports, you will also need to file an Initial Report, which is due within 6 months of forming your LLC. Fortunately, there is no fee for this.
Every LLC in Alaska must have its own registered agent. The registered agent is a professional service that is responsible for receiving important legal documents, such as service of process and tax notices. You can either choose an individual or business to provide a registered agent service, but they must be located in the state of Alaska.
The cost of an Alaska-registered agent will vary depending on the company you choose to use. Some companies charge flat fees, while others charge annual fees that range from $50 – $300 per year.
Filing paperwork for a foreign Alaska limited liability company is a bit more expensive in Alaska. The filing fee for Alaska Articles for a foreign LLC is $350, while the Biennial Reports fee is $200.
All Alaska LLCs are required to obtain an Alaska business license from the Alaska Department of Commerce, Community, and Economic Development. A business license is a type of permit that allows the business owner(s) or sole proprietor(s) to do business within the jurisdiction of that state’s government. The cost of business license renewal annually is $50.
There is no state income tax in Alaska. However, if your LLC is taxed as a C-Corp, you will be required to pay corporate income tax on business income, which can range from 2% to 9.4%. Alaska also does not have a sales tax or franchise tax.
If you are taxed as a sole proprietorship or LLC, you will mostly be concerned with personal taxes.
All employers in Alaska have to pay the Unemployment Insurance Tax (UI), a payroll tax that funds the state’s unemployment insurance fund. For new LLCs, the tax rate will range from 1.99% to 2.44%.
The costs above are just regular state filing fees to take note of. Other fees may apply depending on the nature or purpose of your business. Make sure you research or enlist help from an agency regarding these fees so that you won’t accumulate business debts in the future.
Here are some fees to review:
Any business owner can start an LLC. As an LLC, you are tasked to register your official business name too. You can reserve an LLC name for 120 days prior to the LLC formation. Alaska is rather lenient on business names since it allows business name registrations that are similar. The filing fee for this is $25. The name is valid for 5 years, which means you will need to renew it at the same cost.
In case you want to operate under a different name than the one registered, you can register a “Doing Business As” (DBA) name or fictitious business name. The filing fee is $25 and it is valid for 5 years only.
An LLC will need to register a website domain name too. The cost of domains varies depending on the registrar, but you can generally expect to pay between $10-20 per year for a .com domain.
You’ll also need to purchase hosting services and web design software, which can range in price from free (for open source options) up to several hundred dollars or more for premium plans.
The Alaska government agency will charge a $10 non-refundable fee for each document request. On the other hand, the fee is $30 for all documents contained in one entity’s file up to 50 pages and $1 per page for each additional page above 50. If you’re requesting a certified copy, you will be charged $5 in addition to the copy request fee.
You will also need a Certificate of Good Standing, which is a document that proves that your LLC complies with the state’s regulations. The filing fee for this certificate is $10.
Some states charge an additional fee for LLC articles, but Alaska does not. All you have to do is submit the document and pay the corresponding filing fee of $250. You will also need to file an Initial Report, which is due within 6 months of forming your LLC.
If you decide to hire a lawyer, the attorney fees in Alaska may vary depending on the complexity of your LLC. The average cost for an attorney is about $2,000 – $3,000 but can be more or less depending on the professional service provided.
An Employer Identification Number (EIN) is a federal tax identification number issued by the Internal Revenue Service that is used to identify your business for taxation purposes. The cost of an EIN is free, though you may need to hire an accountant or lawyer if you’d like help with the process. An EIN is required for LLCs to open business bank accounts.
You must choose a business name that is distinguishable from any other existing business in the state. The name should include either “Limited Liability Company” or its abbreviations (LLC).
If you want to reserve your name before filing the formation documents, you may do so by filing for New Business Name Registration with the Alaska Division of Corporations. This will reserve your chosen name for up to 120 days.
You must select a registered agent in Alaska who is responsible for receiving legal documents on behalf of your LLC. The registered agent can be an individual or business entity located in Alaska. Just make sure the registered agent’s address is a valid Alaska address.
The paperwork you need to file to register your chosen business structure with the state of Alaska is called Articles of Organization. This form requires basic information about your business, such as its name, registered agent and address, members’ names and addresses, and other details.
Once your Articles of Organization have been approved and filed, the Alaska Division of Corporations will issue you a Certificate of Formation. This certificate proves that your LLC exists as a legal entity.
An operating agreement is not required by the state of Alaska, but it’s highly recommended for any LLC owners. An operating agreement is a legally binding document that outlines how your business will be managed and operated, especially if it has more than one member.
Operating agreements include details about ownership, voting rights, profits/losses distribution, and other important information. The operating agreement will also determine how succession works within the confines of your business, how members can sell shares, and how new members may buy into the business.
An IRS Employer Identification Number is essential for filing taxes and hiring employees. You can apply for an EIN online through the IRS website or let your registered agent handle it.
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ZenBusiness is another popular LLC formation service in Alaska because of its affordability. They provide all the services you need to get your LLC up and running, including filing your Articles of Organization, providing registered agent service, and more. Their basic package includes extra features like expense and deduction tracking and Google Ads credit.
Northwest Registered Agent is one of the top LLC formation services in Alaska. Their services include filing your Articles of Organization, helping you pick a business name, providing registered agent service, and more. They also offer an expedited same-day filing option for businesses that need to get their LLCs set up as soon as possible.
Read More: Best LLC Services 2024
Economic development is important in every state; new businesses help the economy remain stable and grow so states look favorably on new business formations. Any business owner can start an LLC. Forming an Alaska LLC can be a smart move for business owners looking to grow their businesses. By following the steps outlined above, you’ll be able to form your LLC quickly and smoothly.
However, it is always recommended that you consult with an attorney or accountant before you start an Alaska LLC. That way, you can ensure that all the necessary documents are filed correctly and your new business is set up properly from the beginning.
To achieve your LLC’s legal status, you must file your Articles of Organization with the Alaska Corporations section of DCCED. Additionally, you are required to apply for a general business license and several business permits depending on the type of business you are running. The Alaska Division of Corporations requires all Alaska LLCs to file a Biennial Report. It is due through online filing on January 2 every other year. The filing fee for the report is $100. An LLC operating agreement is not mandatory, but many experts believe operating agreements are beneficial to businesses. You will also need to file an Initial Report, which is due within 6 months of forming your LLC.
The Alaska Division of Corporations, Business, and Professional Licensing is the professional licensing office for businesses in Alaska. This Alaska department is responsible for registering business entities, issuing state business licenses and permits to professionals, and maintaining records.
Alaska LLCs are subject to federal income taxes, as well as self-employment and Social Security taxes. Additionally, certain types of businesses may be required to pay a variety of other taxes, such as excise tax or payroll tax. But there is no state income tax and sales tax in Alaska, so you may be able to save money in this area.
A Single Member LLC is owned by one person (sole proprietorship), while a multi-member LLC is owned by two or more people. The main difference between the two types of LLCs is that with the former, the owner has full control over the company and uses a portion of their personal assets for business purposes. With a multi-member, each member will have an equal say in the decision-making and management of the company.
Registered agents are required for LLCs in Alaska, so make sure you are ready to accept professional service from one before forming an LLC. The cost of this service varies depending on the provider you choose, but it typically ranges from $50 to $150 per year.
Yes, you can open a business bank account without an EIN, especially if you’re a Single Member LLC. However, it is recommended that you obtain an Employer Identification Number (EIN) as soon as possible when forming your Alaska LLC. An EIN will make it easier to manage your business finances, and most banks will require one before they allow you to open a bank account.
Operating agreements include details about ownership, voting rights, profits/losses distribution, and other important information. The operating agreement will determine how succession works within the confines of your business, and how members can sell shares, and the operating agreement will determine how new members may buy into the business.
