Forming a corporation can be exciting, but it also requires following the appropriate steps. While the process can certainly be done on your own, many business owners partner with a trusted resource, like ZenBusiness, to offer guidance and assistance during the corporation setup process.
In this guide, we’ll walk you through everything you need to know about forming an Alaska corporation, offering key insights and tips along the way.
Steps to Incorporate in Alaska
- Name Your Corporation
- Appoint Directors
- Choose an Alaska Registered Agent
- File the Alaska Articles of Incorporation
- Create Corporate Bylaws
- Draft a Shareholder Agreement
- Issue Shares of Stock
- Apply for Necessary Alaska Business Permits or Licenses
- File for an EIN and Review Tax Requirements
- Submit Your Corporation’s First Report
To start a corporation in Alaska, you must file the Articles of Incorporation with your state’s Secretary of State office. To simplify the process of forming a corporation in Alaska, we’ve put together 10 easy steps for you to form your business:
Step 1: Name Your Corporation
Naming your corporation is the first step you’ll take to form your company officially. You might have a name in mind or several ideas swirling around in your head. We recommend writing down any names you or your partners are interested in pursuing, so you can run them through the next step.
Once you have your list, it’s time to see if your business name options are available. In Alaska, your corporation name should be distinguishable from other corporations. This means you’ll want to perform a quick search to ensure no other Alaska company has already secured your name.
You can do this by searching the Alaska Department of Commerce, Community, and Economic Development corporation database. Keep in mind that corporations in Alaska cannot contain certain words such as “city,” “village,” or “borough” and should not contain offensive words according to Alaska Corporation Statutes and Regulations.
After you find an available name that you and your partners have agreed upon, it’s time to add a corporation designator to the end of your name. This designator can be “Corporation,” “Incorporated,” “Company,” or “Limited.” You can also opt for abbreviations of these four words. For example, “Last Frontier Fishing” could become “Last Frontier Fishing, Corp.” or “Last Frontier Fishing, Incorporated.”
Now that you have your official corporation name chosen, you can reserve it if you wish, so no one else takes it before you’re ready to register officially. You’ll visit the Alaska Division of Corporations, Business, and Professional Licensing website to reserve your name. You can reserve your corporation name directly online for $25. Once reserved, your corporation name will be held for 120 days. If you need to extend this reservation, you can do so twice, for an additional $25 per renewal.
Here are some other factors to consider once you have your corporation name:
- DBA: If you intend to do business under another name, you may want to secure a DBA (“doing business as”) name, often referred to as a trade name or assumed name. You can easily handle this online with the Alaska Secretary of State’s website by filing for a new business license for your trade name. We’ll cover business license questions later in this guide, so stay tuned if you have questions.
- Trademarks: Next, you’ll want to consider trademarking your name. For broader protection — especially if you plan on doing business outside of Alaska — you can register any trademarks on the federal level, but you’ll need to conduct a quick search using the U.S. Patent and Trademark Office (USPTO) database to see if your name is already federally trademarked. It’s often easier and quicker to file for a trademark on the state level. If no trademarks exist for your business name, you can register a state trademark for $50 through the Alaska Division of Corporations, Business, and Professional Licensing. You’ll need to file a hard copy to:
State Office Building
333 Willoughby Avenue, 9th Floor
P.O. Box 110806
Juneau, AK 99811-0806
Step 2: Appoint Directors
The next step you’ll take is appointing directors to your corporation. You’ll need to specify at least one director (by Alaska law) to oversee your corporation’s interests. Your director(s) will help manage the corporation and must act in the best interest of the company and the shareholders.
Some states have requirements on who can serve as a director, but Alaska does not have any restrictions. You’ll need to have at least one director selected before you can file your Articles of Incorporation, although you do not have to specify your director(s).
You’ll also need to specify an incorporator, who will serve as the person to sign the Articles of Incorporation. An incorporator can also be a director in Alaska but does not have to be. An owner in the company will typically serve as the incorporator.
Step 3: Choose an Alaska Registered Agent
Now that you have a corporation name, an incorporator, and directors, you’re ready to select an Alaska registered agent. Your registered agent will serve as a third party between your corporation and the Alaska Secretary of State’s office, receiving important paperwork and communications on your behalf. You must designate a registered agent to register your corporation with the state of Alaska.
The registered agent must be an individual resident of Alaska or a corporation authorized to transact business in Alaska. To become a registered agent in Alaska, you must have a primary operating address within the state and be available between the hours of 9 a.m. and 5 p.m. to receive sensitive documents in person. You cannot use a P.O. box as your registered agent’s operating address.
While you (or a director in your corporation) can act as your company’s registered agent, you might want to work with an outside party. Although it’s legal to serve as your own registered agent, partnering with an outside agent service has its benefits. A few to consider include:
- Keeping your personal information private. When serving as your own registered agent in Alaska, some private information will become public record.
- Setting your own working hours. By Alaska law, your registered agent will need to be available and at their primary office in Alaska between 9 a.m. and 5 p.m. Acting as your own agent may leave you tied to a location or specific working hours.
- Protecting you from public subpoenas. Since legal documents can be delivered to your registered agent, having an outside party ensures these documents will be served to your agent on your behalf. If you act as your own agent, you could be served paperwork in front of clients or prospective investors, which could hurt your business deals and relationships.
Step 4: File the Alabama Certificate of Incorporation
Once you’ve done all of the groundwork of selecting and reserving a name, choosing a registered agent, and appointing directors, you are ready to file your Certificate of Incorporation.
Note that different states have different names for this document. While it is called the Certificate of Incorporation in Alabama, it may be called the Articles of Incorporation in other places. These are the same thing.
This document officially registers and establishes your business with the state. In this document, you will need to include:
- The name of your business
- A copy of your name reservation certificate
- The street address of your principal office (and mailing address if it differs)
- The name of your registered agent or registered agent service, along with their street and mailing address
- Your business’s purpose
- The amount of stock your corporation is authorized to issue; a tax or legal professional can help you determine what’s best for your particular needs
- The names of incorporators, along with street and mailing addresses for each
- Signatures of incorporators
You then send the completed form, one copy, a self-addressed stamped envelope, and a $100 filing fee to the Alabama Secretary of State’s office.
Secretary of State
P.O. Box 5616
Montgomery, Alabama 36103-5616
If you are filing the Certificate of Incorporation for a nonprofit, you must file with the probate judge in the county where you will be doing business, include an additional copy of the form, and may need to include an additional fee for the county.
Step 5: Create Corporate Bylaws
Before you get up and running, you will also need to establish corporate bylaws. The bylaws establish all of the rules and day-to-day activities of your business. Not only is this a good idea, but also it is required by the state of Alabama for all corporations. Your corporate bylaws should include:
- A clear statement of your business purpose
- A list of officers and the rights, responsibilities, and qualifications of each
- A list of the board of directors and the rights, responsibilities, and qualifications of each
- Details of your management structure and the duties of each officer
- Annual meeting scheduling and goals for directors, shareholders, and officers
- How ownership and shares are distributed and how the stock is sold or transferred
- How changes are made or voted on
- Details of any committees and their responsibilities
- How conflicts of interest are to be handled
Since the bylaws are a legally binding document, it is a good idea to seek assistance when creating them. You can, however, find templates online to get yourself started. While you are not required to file your bylaws anywhere, you are required to keep them in a safe place with any other corporate records. It’s often a good idea when starting to set up a corporate records book where you can keep all of your corporation’s important papers, including bylaws, minutes from meetings, and stock certificates.
Step 6: Draft a Shareholder Agreement
Another important document to draft is a shareholder or stockholder agreement. This document outlines the rights and responsibilities of all shareholders and should include:
- The names of all shareholders and their contact information (addresses, phone numbers, etc.)
- Shareholder responsibilities, including rules about how officers are appointed and any actions that shareholders are allowed to take on behalf of the business
- Shareholder voting rights, including whether a simple majority or higher percentage may be required for certain decisions
- How changes to the original shareholder agreement may be made
- How stock can be sold or transferred
- The financial obligation and time commitment for each shareholder
- A clear outline of how dividends are distributed
- A plan for the distribution of assets should the business close
Again, this agreement can be drafted from a template, but you may want to utilize professional assistance. Your shareholder agreement should be kept with your other important corporate records.
Step 7: Issue Shares of Stock
One of the requirements for starting a corporation is issuing stock. When you filed your Certificate of Incorporation, you stated the number of stock shares that were authorized. The number of shares you issue should always be less than or equal to this number.
To get your company off the ground, you need funds. This is called capital. It’s a good idea to determine how much capital you need and then divide this value among stock shares that you can issue to your shareholders. Note that when initially issuing shares, some may be issued as compensation for helping start the business. As a result, the shareholder they are issued to does not contribute monetary capital for them.
Each share is only issued once. However, after being issued, they can be traded and sold. All issued shares must be documented in the company’s annual report.
Stock may be issued publicly or privately. Privately issued stock is usually issued to the founders, managers, employees, or a private group of investors. A public corporation makes a portion of its stock shares available for public purchase.
Companies that issue public stock need to file quarterly statements with the Securities and Exchange Commission (SEC). They must also track how many shares are issued and to whom. You should also check with the Alabama Securities Commission to see what is required at the state level.
Step 8: Apply for Necessary Business Permits or Licenses
The next step in the process is making sure all business permits and licenses are obtained.
You must obtain a business privilege license from the probate judge in every county where you will do business in Alabama. Annual licenses are valid from Oct. 1 through Sept. 30 each year. Fees vary by county. You may need to check with your local city to see if any permits or licenses are required at the city level.
If you will be administering any professional services — such as law or medicine — you will need to maintain licensure from the appropriate agency. Unfortunately, there is no one-stop-shop for licenses and permits, so you will need to be diligent and do a careful search specific to your county, city, and the type of business you are running.
Step 9: File for an EIN and Review Tax Requirements
Since corporations are treated as unique entities separate from the people involved in them, they require an Employer Identification Number (EIN). This number acts like the corporation’s Social Security number for tax purposes.
Remember that corporations must pay their own taxes separate from any taxes paid on shareholder earnings. This must be done at the federal and state levels by submitting the appropriate return each year. In Alabama, all corporations additionally pay a privilege tax with their annual report.
Step 10: Submit Your Corporation’s First Report
By April 15 each year, corporations must submit form CPT, the Alabama Business Privilege Tax Return and Annual Report for the appropriate tax year. This form specifies the privilege tax that the corporation must pay the state and provides a place for annual report details. The first of these reports, the initial privilege tax return, is due two and a half months after the corporation is formed. Instructions for filing are here.
You will be assessed an additional $10 for the report portion in addition to paying the relevant tax. This form and associated fees are sent to the Alabama Department of Revenue.
How much does it cost to start a corporation in Alaska?
The administrative cost to form a corporation in Alaska can vary depending on how you file, whether you’re working with a business partner or consultant to process all paperwork, and how quickly you need your paperwork filed.
Here’s a quick look at the typical costs to create a corporation in Alaska:
- Reserve a name (optional): $25
- Register a trademark (optional): $50
- File your Articles of Incorporation: $250
- Apply for a business license: $50
This means you should expect to pay a minimum of $300 when forming your corporation, just to establish your company. This does not include the $100 biennial report filing fee you’ll need to pay two years after establishing your corporation or business license renewal fees, which vary by industry.
By partnering with ZenBusiness, you can receive help processing the above paperwork, avoiding headaches and frustrating, costly errors. With our affordable plans, we can file your paperwork with the state, serve as your registered agent, and provide a customizable template for creating your corporate bylaws.
What are the benefits of a corporation in Alaska?
When forming a company, you’ll want to be sure you choose the right company type. Forming a corporation has many benefits that can offer protection and options to increase your company’s earnings.
Some of the main benefits include:
- Protection from personal liabilities. When you form a corporation, your personal finances are separated from corporate finances, offering you full separation and protection. Even if your business went bankrupt, your personal finances would be secured.
- Creating an official business. Many clients and investors will feel more secure working with you once you’re recognized as an official corporation versus an independent contractor or consultant.
- Ability to issue stocks. Corporations allow you to have unlimited owners, which makes it easier to sell more stocks over time. This can help you raise the capital you need to get started initially and offers the ability to grow and expand over time.
- Recognition outside of the country. If you’re interested in doing business globally, forming a corporation is your best option since it allows you to operate outside of the United States.
Some disadvantages to forming a corporation include:
- Double taxation. Whenever your company earns a profit, you must pay corporate taxes on this profit. Any amount of profit distributed to shareholders will also be taxed on the individual level, resulting in double taxation.
- Comprehensive reporting and record keeping. It’s essential that you stay on top of business reporting requirements with a corporation and may even need to hire a full-time accounting company or outside partner like ZenBusiness to handle all filings required to keep you compliant. One important bookkeeping regulation regards shareholder meetings. Under section 10.06.430 of the Alaska Corporation Statutes and Regulations, all minutes, names, and records from shareholders meetings must be kept on file.
- Strict management structure. Whenever your company earns a profit, you must pay corporate taxes on this profit. Any amount of profit distributed to shareholders will also be taxed on the individual level, resulting in double taxation.
How is an Alaska corporation taxed?
The way your corporation is taxed in Alaska varies based on your corporation type. There are three main types of corporations: C corporations, S corporations, and nonprofit corporations. By default, you’ll be registered as a C corporation and can switch to an S corporation.
A C corporation is taxed as a separate entity, meaning the company is required to fill out a corporate tax return. Typically, this would mean all incorporators and shareholders are also required to file individual tax returns for their corporate profits, essentially being taxed twice. However, there is no personal income tax in Alaska, so business owners would only pay corporate taxes.
An S corporation is also called a “pass-through entity,” which means no corporate taxes are due — profits pass through to incorporators and shareholders, who claim them on their individual tax returns. Since there is no personal income tax in Alaska, S corporation owners would not pay taxes on their profits.
Lastly, if your corporation is a nonprofit, and you adhere to nonprofit regulations, you will be exempt from paying corporate taxes. Any individuals who earn a salary from the corporation will report their earnings on their individual taxes. In Alaska, this means nonprofit corporation owners would be exempt from corporate and personal taxes.
Although Alaska has no statewide sales tax, some municipal governments do. You’ll need to check with your local government to see what, if any sales tax exists in your area.
Alaska Corporation FAQs
- What are the Alaska Native Corporations?
The Alaska Native Claims Settlement Act of 1971 created Alaska Native Corporations. These corporations are intended to allow Alaska Natives to economically benefit from Alaska’s natural resources and have become a very large and important part of the Alaskan economy.
- Does running a corporation in Alaska involve more paperwork than running other types of businesses?
Corporations require filing more paperwork than other company types, such as LLCs. There are more reporting requirements (an Initial Report and Biennial Reports) and bookkeeping requirements, as well as more upfront paperwork (shareholder agreement, incorporators’ agreement, etc.).
- What is the difference between an LLC and a corporation in Alaska?
An LLC is a limited liability company, which is viewed as a pass-through entity with one or more partners. LLCs have a more flexible operational structure and do not issue shares, unlike corporations.
- How do I get an Alaska entity number?
When you file your Articles of Incorporation with the state of Alaska, you’ll be assigned an entity number.