How to Start an Alaska LLC

Steps to Start an LLC in Alaska

There are six steps to forming an LLC in Alaska:

1. Name your Alaska LLC
2. Appoint a registered agent in Alaska
3. File Alaska Articles of Organization
4. Create an operating agreement
5. Apply for an EIN
6. Get the licenses and permits your business needs

✓ Step 1: Name your Alaska LLC

Choose a name for your LLC in Alaska. This is a major step since naming your LLC gives it its identity. Your name can be anything you’d like as long as it falls in line with the rules the state has established. Come up with a list and make sure each has marketability value while being catchy.

Alaska Business Name Checklist

If you’re looking to create a perfect business name for your Alaska LLC, here are the steps you’ll need to complete. 

• Check that your name is unique and available.
  • Run an Alaska business name search
  • Run a trademark search with the USPTO
  • Check that there is an available domain name for your name (optional, but highly recommended for building a business website)
• Include and exclude certain words and phrases
  • Include a designator like “LLC” or “limited liability company” and their abbreviations
  • Exclude designators of other business types (Inc., Corporation, etc.), along with the words “city,” “borough,” “village,” or terms that imply the business is a municipality

If you meet these requirements, you’ll be well on your way to creating a compliant business name.

Reserving an LLC Business Name

If you’ve found a name you like but you’re not quite ready to start your business, don’t worry. Alaska allows you to reserve your business name. To do so, you’ll need to file the Business Name Reservation form with the Division of Corporations. There is a $25 filing fee. Filing a name reservation will give you 120 days of protection for your name (and you can renew the reservation up to two times). For more detailed information about this process, check out the Alaska Department of Commerce website.

LLC Alaska: Getting an Assumed Name

Some businesses adopt an “assumed name” if they wish to operate under a name that differs from their legal name. This name is also known as a “doing business as” name. You’ll need to request one with the Division of Corporations. In order to do this, you’ll need to first obtain a corresponding Alaska Business License. Once you’ve done that, you’ll fill out and submit a Name Change form for a small filing fee.

✓ Step 2: Appoint a registered agent in Alaska

In Alaska, all LLCs must have a registered agent (Alaska Statute 10.50.055). In other states, this person or entity is sometimes referred to as a resident agent, statutory agent, or agent for service of process. 

What is an Alaska registered agent?

A registered agent can be either a resident of Alaska or a domestic or foreign corporation authorized to do business in the state. Their responsibilities include receiving legal notices (such as notices of lawsuits) and certain government correspondence on behalf of the business. In order to remain in good standing with the state, you must always have a registered agent for the business.

Alaska Registered Agent Requirements

Alaska has pretty straightforward legal requirements for who can serve as registered agent for a limited liability company. According to Alaska law, the registered agent must: 

• Be an individual resident of the state who is 18 years old or older OR a corporation with authority to do business in the state (other business structures are not permitted)
• Have a physical address in the state (no P.O. boxes)
• Be present at that address during all regular business hours
• Not be the LLC itself

Anyone who meets those requirements can serve as a registered agent. As a result, many business owners choose between serving as their own agent, having a friend or family member fill the role, or hiring a third-party registered agent service. 

✓ Step 3: File Alaska Articles of Organization

Fill out and file your Articles of Organization with the Alaska Division of Corporations. When this formation document is approved, your LLC becomes official. This is a crucial document, so make sure that all of the information on it is truthful and correct.

Information Needed for Your Articles of Organization

The Articles of Organization requires specific information in order to be approved. Here are a few details you’ll need to include in your State of Alaska LLC application:

• The LLC’s name. It must fit the rules we went over in Step 1.
• The purpose for which the company is being formed and the North American Industry Classification System (NAICS) code. You can find your appropriate code on the Division of Corporations “Line of Business/Alaska NAICS Code” webpage.
• The registered agent’s name, physical address, and mailing address.
• If the LLC will be member-managed or manager-managed.
• The signature of the LLC’s organizer.
• Attach any needed statements. In addition to the basic required information, you may also choose to include optional provisions with your Articles of Organization filing. To do so, you can simply attach additional pages to your filing with your desired optional provisions and other articles as authorized under Alaska law.

Bear in mind that this information will become public record once your LLC is approved.

How to File Your Articles of Organization in Alaska

When you’re ready to file your Alaska Articles of Organization, you can do so in two ways. To file online, you’ll go to the Division of Corporations “Filing by Entity Type” webpage and choose the LLC structure. Choose the Articles of Organization online option and follow the instructions. The good news is that you won’t need to create an account to do so.

For a mail filing, you’ll go to that same webpage and choose the Articles of Organization (PDF) option. You can print the document, fill it out, and mail it to the Division of Corporations. Both methods have a filing fee of $250. The processing time is around 10-15 business days.

After filing the Articles, you must submit an Initial Report within six months. You don’t need to pay a fee with the Initial Report.

Member-Managed or Manager-Managed?

In your Articles of Organization, you’ll be asked if you want a member-managed LLC or a manager-managed LLC. The former sees the business managed by the members, and the latter sees it managed by managers.

If you decide to have a manager-managed LLC, then you and any other members must name a person (either one of the members or an outside party) to be a manager. An LLC can also have multiple managers.

Whichever management structure you choose, you’ll make this designation in the Articles of Organization and can also list it in your operating agreement.

How do I remove a member from an LLC in Alaska?

Follow the rules for removing a member established in your operating agreement. If you don’t have an operating agreement or you still have questions, consult an attorney.

✓ Step 4: Create an operating agreement

Draft an Alaska LLC operating agreement. This document sets the internal rules and policies of the business. You can establish these regulations however you’d like as long as you don’t violate any laws. An Alaska operating agreement isn’t legally required for Alaska LLC registration. However, drafting one can serve your business’s best interests.

There’s no official comprehensive operating agreement guide to follow, so you’ll have some freedom in creating yours. 

Alaska Operating Agreement Benefits

We mentioned above that LLCs aren’t legally required to have an operating agreement. The benefits of having one may convince you to do so. They include:

• Establishing how the LLC will run. In the absence of this agreement, the business will be subject to the state’s default LLC laws.
• Preventing and settling disputes between members by establishing in writing each member’s responsibilities, powers, and privileges.
• Establishing whether the business will be member-managed or manager-managed. You’ll first choose a structure in your Articles of Organization, but you can also include it in your agreement.
• Further establishing the LLC’s liability protection. The LLC business model already does this by default, but with an operating agreement, you can reinforce that point in the eyes of the courts should anyone ever question it.
• Detailing how members will be added or removed from the business. You can detail the reasons for removal and what will happen to that member’s ownership portion. You can also establish requirements for people to join the business.
• Creating a succession plan if a member dies, leaves, retires, or is removed. Going off the previous point, explain what will happen to this person’s ownership portion. Will it be sold to another party or absorbed by the current members? A succession plan can really be useful if you’re the only owner of the LLC.

What should I include in my Alaska LLC’s operating agreement?

You’re free to create the operating agreement however you want and include whatever you feel is important to help your business run smoothly. If you’ve never put one together before and aren’t sure what to add, here are some options:

• Establish ownership portions: You can split the LLC into ownership percentages among the members. For example, if there are three members, one can own 50% while the other two own 25% each. It’s entirely up to you and the other members.
• Assign member responsibilities: Which member is responsible for making business deals? Who will oversee the LLC’s finances? You can list each member’s responsibilities in the operating agreement. You can also establish the voting powers of each to settle business decisions.

• Create rules for member removal and additions: For removals, be sure to detail why a member would be removed and what will happen to their ownership portion. For additions, set requirements for joining the LLC.
• Steps to dissolve the LLC: Establish reasons why the LLC would close down. You should detail what will happen to its assets. You’ll also need to file Articles of Dissolution with the Division of Corporations.

Do I need an operating agreement if I’m the only owner?

A solid operating agreement helps the members of an LLC lay out the business’s rules and policies. If you plan to be the business’s only owner, then you might think that this document isn’t needed. After all, no one else will need to know the LLC’s rules but you, right? Consider drafting one anyway, though, since this agreement can benefit you in other ways.

One includes creating a plan of succession, as we mentioned above. As the only owner, if something happens to you, what will become of the business? Do you want it handed over to someone else, or would you prefer it be dissolved? An operating agreement can clarify your wishes.

Another reason to create an operating agreement is that it can come in handy if you ever need to convince investors or lenders to help your business. The operating agreement can show that you’ve planned your business well and have things covered. It also provides further evidence that you and the business are separate entities if someone ever tries to prove otherwise in court.

✓ Step 5: Apply for an EIN

Apply for an Employer Identification Number (EIN) with the Internal Revenue Service (IRS). An EIN, also known as a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number, is like a Social Security number for your company. It identifies your business when the time comes to file taxes. An EIN is required if you have multiple owners, hire employees, or meet any of the IRS’s other conditions. Most banks also require an EIN to open a business bank account.

State of Alaska LLC Taxes

Alaska has a few unique tax nuances you’ll want to be aware of. For starters, Alaska doesn’t have a personal income tax rate, so LLCs that maintain their default tax status won’t owe income taxes at the state level. But if you opt to be taxed as a corporation, you’ll make state income tax payments, too. 

Alaska also doesn’t impose a statewide sales tax, but there’s a chance your city or county might. You’ll need to check with your local revenue department for full details about local sales taxes. Beyond that, Alaska charges a few industry-specific taxes, especially for alcoholic beverages. 

For more information about business taxes, check out the Alaska Department of Revenue’s website. It’s also highly recommended to chat with an Alaska tax attorney to get customized guidance for your unique business situation.

Federal Taxes

By default, if your LLC consists of one person, it’s taxed as a “disregarded entity” at the federal level, meaning it’s taxed as a sole proprietorship. This means that profits aren’t taxed at the business level, but only when they “pass through” to become your income.

If your LLC has more than one member, it’s taxed as a partnership by default, which also means the business income is taxed at the individual owner level and not the business’s. This avoids the “double taxation” that corporations pay, in which profits are taxed at the corporate level and again when they’re paid out to the owners (“shareholders”).

Single-member LLCs don’t have to file a separate federal return for their LLC; they report the LLC income on their personal income tax return (Tax Form 1040). But LLCs with multiple members must file a separate informational federal return for the LLC, Form 1065. Then each LLC member reports their share of the profits on Schedule K-1 and attaches it to their own personal federal tax return.

Members of LLCs can also elect to be taxed as corporations. Some LLC members choose to classify their businesses as an S corporation or a C corporation, which can be advantageous in some cases. In particular, many LLCs elect to be taxed as S corporations because it can lower the amount of taxes they pay for Social Security and Medicare.

Can filing as an S corp lower my taxes?

LLCs are known for being flexible in their management, but did you know that they’re also quite flexible with their tax obligations? By default, a single-member LLC is taxed as a sole proprietorship, while multi-member LLCs are taxed as partnerships. This avoids “double taxation,” in which profits are taxed at both the business level and the individual owner level. But an LLC can also elect to be taxed as a C corporation or S corporation.

A C corp designation comes with double taxation. Although this can be a drawback, some LLCs may find the benefits of a C corp election worth the double taxation. For example, C corps come with the most tax deductions.

An LLC with an S corp designation retains pass-through taxation, but it also has the potential to save money on self-employment taxes. This happens when the members become “employee-owners,” allowing you to split your income between your salary and the company’s profits. That way, you only pay the taxes earmarked for Social Security and Medicare on your salary, not on your other profits. You may have other tax liabilities regarding your profits, however.

An S corp election does have a couple of drawbacks. The IRS tends to keep a closer eye on LLCs with this election, meaning the likelihood of an audit is higher. An S corp designation is also harder to qualify for. Speak with a tax professional about your LLC’s tax liabilities.

What tax structure should I choose for my Alaska LLC?

Alaska LLCs are taxed as pass-through entities by default. This means that the LLC itself doesn’t pay federal income taxes, but each member must pay their own income taxes on profits received from the company on their personal tax returns. This is unlike most corporations, in which profits are taxed twice, first at the business level and again at the individual shareholder level.

In some instances, it might be preferable to have an LLC taxed as a C corporation to take advantage of more tax deductions. Some LLCs elect to be taxed as an S corporation if it will save them money on self-employment taxes. These are both more complicated tax filings and should be discussed with a tax expert beforehand.

✓ Step 6: Get the licenses and permits your business needs

Your Alaska LLC will need at least one license or permit to operate compliantly, but it could need even more than that. Unfortunately, this step isn’t quite as simple as saying, “File this form with the Department of Commerce.” For this step, you’ll need to dig in and do some research.

For starters, some LLCs need to get federal licenses. For example, suppose you want to start your own craft brewery. In that case, you’d need to get a license from the Alcohol and Tobacco Tax and Trade Bureau since you’d be manufacturing and selling alcohol. Meanwhile, aviation businesses would need to get a license from the Federal Aviation Administration. If your LLC involves a heavily regulated activity, there’s a good chance you’ll need a federal license, but it’s your responsibility to research and know for sure. 

Next, you’ll need to address state-level licenses. Alaska is one of the few states that requires a general business license at the state level. You’ll get this license directly from the Division of Corporations, Business, and Professional Licensing. You will not, however, need to get a sales tax permit; Alaska doesn’t levy a sales tax.

Local licenses are another important licensing category to address. Alaska municipalities get to set their own licensing requirements, such as general business licenses or industry-specific permits. For example, Anchorage doesn’t require a municipal general license, but it does require licenses for specific industries, such as adult establishments, circuses, performance venues, and more. Meanwhile, the city of Fairbanks requires a city business license on top of the state one. There’s a good chance your city or county (or both) has similar requirements.

You may also need to get zoning permits for your location. Similarly, if you’re working out of your home, you may be required to get a home occupation permit. Ultimately, it’s your responsibility to research your local requirements.

Last but not least, you’ll need to research licenses related to your industry or profession. The Alaska Division of Corporations, Business, and Professional Licensing oversees a variety of different professional licenses, including licenses for medical practitioners, barbers, veterinary examiners, and more. If you’re in a regulated industry, it’s your responsibility to get and maintain your professional license. 

What Alaska business licenses and permits do I need?

You’re required to have an Alaska business license before conducting business in the state, so you’ll need to complete an Alaska Division of Corporations: Online Business License Application. You can do this online or by postal mail. In either case, the fee is $50. The Alaska LLC business license must be renewed either once a year for $50 or every two years for $100, depending on your initial application. Fees change over time, so check with the Division of Corporations for the current fee schedule. Regardless of the date you purchased the license, it expires on December 31.

You can find more information on what types of industries require special Alaska licenses and permits on the state website. Permit and licensing fees will vary depending on your line of business and other factors.

It’s important to note that the federal government as well as the state and your city and county could require special permits or licenses based on your industry, location, and/or other factors. Unfortunately, because licensing varies by industry and location and can occur on the federal, state, and local levels, there’s no central place to check to see if you have all the licenses and permits you need. You’ll need to do some research.

Essential Alaska LLC Forms and Fees

Here’s a quick checklist of the essential forms and expenses you’ll encounter when you start an LLC in Alaska. 

• Business Name Reservation (Optional): $25
• Articles of Organization: $250
• Biennial Report: $100 every other year
• Certificate of Compliance (Optional): $10

There is a significant chance that your business will have other forms to file, but these are the most common. No matter what your business is, these are the forms you can reasonably expect.

Important Steps to Take After Forming Your LLC

After you’ve completed the six steps in this guide, consider the following additional steps. Most are more considerations, but the Alaska LLC biennial report submission is required.

Opening a Business Bank Account

Commingling your personal and business activities into one bank account can be problematic when tax season arrives. Another problem can come up if you’re taken to court and someone claims that you and the business are the same entity since you share the same bank account.

Business Insurance

LLCs come with limited personal liability for their owners, but getting extra coverage may be worthwhile depending on your needs and industry. Workplace accidents and professional mishaps can happen, and when they do, you may find yourself paying heavy costs.

Discuss with the other LLC members (if any) whether additional protections are needed. Look into the many insurance companies out there that offer business coverage and see which policies have the most attractive benefits and affordability.

File your Alaska LLC biennial report

In Alaska, LLCs are required to file an Alaska biennial report with the Division of Corporations for a fee of $100 (as of this writing). According to the Division of Corporations, if your LLC was formed in an even-numbered year, then your biennial report is due January 2 of every even-numbered year after. The same goes for odd-numbered years. In other words, the biennial report is due on January 2 every two years. You can file online on the Division of Corporations’ “Biennial Report” webpage.

Additional Considerations

The following items may also apply to your business. 

Hire Employees in Alaska

Only you can run your LLC, so we can’t tell you who to hire. However, we can offer some information that can help you find employees. First, if there are other members in the LLC, discuss who you want to join the team. Which skills, education, experience, and qualifications will this person need to help the business run smoothly and grow?

If you aren’t sure where to start, head over to the Alaska Department of Labor and Workforce Development website. In the “Employers” tab on the homepage, you’ll find plenty of resources and informative articles that can help you find the employees you need. You can even post a job there.

Get a Certificate of Compliance (Optional)

A Certificate of Compliance, also known as a Certificate of Good Standing in many states, is a form that verifies your LLC is in good standing with the state. This means that it’s been legally formed and is following the state’s rules for operation. You aren’t required to have this form to conduct business, but it can make it easier to:

• Get business insurance
• Renew your permits and licenses
• Get funding
• Expand your business to other states

If your business is out of compliance, perhaps due to being late in filing your biennial report, for example, then the state will reject your request. To get your Certificate, go to the Division of Corporations’ “Certificate of Compliance” webpage.

Alternatives to an Alaska LLC

Alaska LLCs are a popular choice for a lot of small business owners. But if you’re not sure if it’s right for you, don’t worry. There are plenty of other business structures to choose from. Let’s talk through them. 

• Sole proprietorship: A sole proprietorship is an unincorporated business entity owned by a single owner. It doesn’t require any startup paperwork, so it’s easy to run. But the major downside is that a sole proprietor doesn’t enjoy any personal asset protections.
• Partnership: A partnership is very similar to a sole proprietorship, but it’s owned and operated by at least two individuals. The business is easy to set up (no registration paperwork), but it usually doesn’t offer limited personal liability protection to the owners. 
• Corporation: Corporations are incorporated business entities owned by shareholders and governed by a board of directors. They are a bit complicated to run, requiring formal registration paperwork and lots of annual compliance requirements. But on the plus side, corporations can sell shares of stock to raise startup capital, and they have personal liability protections for the owners. 

Ultimately, a lot of small business owners opt for an LLC because it combines the flexibility and easy management of a partnership or sole proprietorship with the asset protections of a corporation. For a lot of entrepreneurs, that’s a win-win. 

If you’re not sure which business entity type is right for you, we highly recommend chatting with an Alaska business attorney. They’ll give you personalized guidance so you can pick the most advantageous structure for your unique goals.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. For specific questions about any of these topics, seek the counsel of a licensed professional.

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