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Are you looking to start an Alaska S Corporation (S Corp)? If so, you might be wondering how to get the process started. We have a detailed guide that outlines the process of starting an S Corp in Alaska that will also teach you more about them.
Firstly, you should know that an S Corp is not a business structure like a limited liability company (LLC) or C Corp. Rather, it’s a tax classification that an LLC or corporation can apply for with the Internal Revenue Service (IRS). We’ll go into more detail about this below.
If you plan to create an LLC with an S Corp designation, then our S Corp service can help you out. We also have other services that can help you run and grow your business after you’ve formed it.
Business structures like limited liability companies (LLCs) and corporations (C Corps) can benefit from an S Corp designation. An LLC can save money on self-employment taxes while a C Corp can avoid double taxation. Learn more about what an S Corp is.
If you plan to create an Alaska S Corp, you’ll first need to create an LLC or C Corp. From there, you’ll need to file the appropriate paperwork with the IRS in order to get an S Corp election. Follow our guide for a fully-detailed how-to process.
If you haven’t chosen a business structure yet, that’s okay. Creating a detailed business plan ahead of time can help you determine what might work best for your company. However, regardless of whether you decide to set your business up as a limited liability company (LLC) or a corporation, one of your first steps toward creating your Alaska S Corp will be to select a name for the entity.
Before setting anything in stone, be sure to check state business records on the Alaska Department of Commerce website to confirm that no other entity is already using your desired name. Do you already have something in mind? We can help you reserve your business name so you can focus on other important steps in the business formation process.
Register Your Business as an S Corp
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Next, it’s time to choose an Alaska registered agent for your business. Your statutory registered agent will serve as the official recipient for any service of process and other legal notices for the business entity.
Now, you’re ready to choose the individuals who will run and manage the business. For an LLC, these individuals will be referred to as either members or managers, depending on how you decide to structure the LLC. For a corporation, these people are called directors.
Now you can formally register your business with the state.
To do so, you will need to file Articles of Incorporation for a corporation or Articles of Organization for an LLC. Regardless of which document is required for your selected business entity, you will file and submit your Articles along with the appropriate fee to the State of Alaska Division of Corporations.
Finally, you’re ready to turn your business into an S Corporation. You will do so by making what’s called an S Corp election.
To make the election, you file Form 2553 with the IRS. This form is what officially changes the entity’s classification to an S Corp. For LLCs, however, you must first change your entity classification to Corporation status by filing IRS Form 8832 before filing your Form 2553.
Additionally, don’t forget to get an Employer Identification Number (EIN) for your business. Not sure how to get started? We can help you obtain one from the IRS today with our EIN Service.
Only certain businesses can choose an S Corp election. To be eligible for S Corporation classification, an entity must:
If your business entity doesn’t meet these filing requirements, it will not qualify for an S Corp classification.
If your business does meet these minimum filing requirements, you can then file for election as an S Corp by completing and filing Form 2553 with the IRS. Importantly, this has to be done:
Visit the IRS website for more detailed instructions on how to properly and timely file Form 2553 for your Alaska business.
Like many business entities, an S Corp designation has its pros and cons. Take a look at them below and weight them before deciding if an S Corp election is right for your business.
In addition to pass-through taxation, some of the most common advantages of creating an S Corporation include:
As with most things, there are certain cons to take note of as well. For example, common disadvantages associated with forming an S Corporation include:
Thus, before setting your entity up as an S Corp, carefully consider these pros and cons. This will help you determine whether an S Corporation classification meets the needs and goals of your business. If you’re still not sure if an S Corp classification is right for your Alaska business, be sure to consult an experienced business lawyer to discuss your options in more detail.
At the time of formation, the default for a business entity is classification as a C Corporation. Thus, if you want your business to be set up as an S Corp, you’ll have to actively change its status.
Of course, forming an S Corp may not be the right move for all businesses. Thus, before deciding whether to make this election, there are a few important things you should know.
Again, the default classification for a corporation at the time of formation is as a C Corp. Notably, C Corps must file and pay taxes on their corporate income at the entity level in addition to the shareholder level on each individual’s income taxes. Thus, while S Corps benefit from pass-through taxation, C Corps do not.
However, although C Corps can’t avoid double taxation, they do benefit from greater flexibility and less stringent requirements in the formation process.
To create an S Corporation, you must first form a business that falls within the limitations identified above. Then, you have to file Form 2553 with the IRS within one of the timeframes listed above.
Yes, LLCs can choose an S Corporation election. While not appropriate for all businesses set up as an LLC, there are a number of advantages, particularly when it comes to self-employment taxes, that can make this a great option for many LLCs.
Ready to get started? Form your S Corp today with our help. We can also support your business venture from start to finish with a wide variety of formation, compliance, and maintenance products and services. Start your company and file as an S Corp with us today.
If an S Corp isn’t the right fit for your business, our Alaska LLC Formation Services and our Alaska Corporation Formation Services can help make the business formation process a breeze. And even after formation, you can use our Worry-Free Compliance Service to better ensure that you stay legally compliant with the state. In short, we have all the tools and resources necessary to help you start, manage, and grow your business.
Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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Creating an S Corporation for your Alaska business can result in a number of benefits, including pass-through taxation and increased asset protection.
You can choose nearly any name you want for your Alaska S Corporation, so long as you meet certain naming formalities required by the state. Additionally, it’s also generally recommended that you check the Alaska business entity records first to avoid selecting a name that is already being used by another entity.
If you choose to run your business as an S Corp, there is no need to include that information in its name. Rather, you identify your LLC as an S Corp by filing the appropriate paperwork with the Internal Revenue Service.
It’s imperative that you timely and properly calculate taxes for your Alaska S Corporation. Nevertheless, this is easier said than done. Use our S Corp tax guide for more information. If you still have questions, contact a certified tax professional to learn more.
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