If you are an Alaska small business owner, you likely already know that keeping your business legally compliant is important for success. But knowing what taxes to pay and when can cause quite a bit of anxiety, no matter how experienced you are. To help small business owners get a better handle on state taxes, we’ve put together a short guide to the types of business taxes Alaskans may face, where and how to pay them . We’ll also discuss how our products and services can help make the process easier and smoother.
Our Worry-Free Compliance Service can keep track of your important tax and other compliance deadlines, alert you when those deadlines are approaching, and help you make sure you’re filing the right document.
If you’re looking for information about federal taxes, head over to our page on federal taxes for small businesses to learn more.
Step 1: Establish your Alaska business’s corporate income tax obligations
If you are an owner of a corporation, you’re probably going to have more tax obligations than owners of other business entities in Alaska. This is because of Alaska’s rules on income tax.
Income Tax Obligations for Corporations
Alaska requires its C corporations to pay standard income taxes. Many S corporations don’t have to pay income taxes, but they do have to file returns. The Alaska business tax rate for corporate income depends on the amount of money a corporation brings in and can be:
- 0% for taxable income that is less than $25,000
- 2% for taxable income that’s over $25,000, but less than $49,000
- $480 plus 3% for taxable income that’s over $49,000, but less than $74,000
- $1,230 plus 4% for taxable income that’s over $74,000, but less than $99,000
- $2,230 plus 5% for taxable income that’s over $99,000, but less than $124,000
- $3,480 plus 6% for taxable income that’s over $124,000, but less than $148,000
- $4,920 plus 7% for taxable income that is over $148,000, but less than $173,000
- $6,670 plus 8% for taxable income that is over $173,000, but less than $198,000
- $8,670 plus 9% for taxable income that is over $198,000, but less than $222,000
- $10,830 plus 9.4% for taxable income that is over $222,000
Generally, your corporate income tax payment is due on the 15th day of the 4th month after your business’s tax year closes. If you have any doubts about when your tax years ends, contact the tax division of the Department of Revenue,
Income Tax Obligations for Pass-Through Entities
Pass-through entities such as sole proprietorships, partnerships, and limited liability companies (LLCs) don’t pay business income taxes. Instead, the owners of these businesses normally pay taxes for their share of the business income on their personal tax returns. In Alaska, there is no personal income tax so many pass-through business owners don’t have to pay a business income tax. However, if an LLC or a partnership has members or partners that aren’t natural people, the business likely has to file a tax return. Also, LLCs and partnerships that choose to be taxed as corporations need to file returns.
If you own a pass-through business entity that doesn’t have to pay income taxes, don’t get too comfortable. Your pass-through entity will likely have to pay other Alaska small business taxes on a number of its business activities.
Step 2: Determine your Alaska business’s employment taxes
Many businesses across the nation must pay employment or withholding taxes out of their employees’ wages to cover certain government benefits. Because Alaska residents don’t have to pay personal income taxes, Alaska businesses don’t have to pay state withholding taxes out of employee wages.
Step 3: Establish your Alaska business’s additional state tax obligations
Unfortunately, there usually isn’t just one tax you can pay to cover all of your Alaska small business tax obligations. Aside from income taxes, your business might have to pay several other state taxes to cover certain business activities. The most common of additional state tax obligations include:
- Sales taxes
- Franchise or privilege taxes
- Unemployment taxes
- Excise taxes
Read on for more information about these taxes and how they affect businesses in Alaska.
Many businesses across the nation have to pay state taxes on the sale of goods. Alaska doesn’t have a state sales tax. However, your business might have to pay local sales taxes for selling goods in some Alaskan cities and counties.
Franchise or Privilege Taxes
Franchise and privilege taxes are taxes on certain business assets or taxes for the privilege of conducting business in a state. The state of Alaska has a corporate income tax, but it doesn’t have a specific franchise or privilege tax.
What many know as unemployment insurance taxes, Alaska calls Employment Security Taxes. If your business has at least one employee, you usually need to pay Employment Security Taxes to cover unemployment benefits for eligible employees who leave your business. As an employer, you must file quarterly contribution reports and make quarterly payments to the Department of Labor. Due dates for contribution reports and payments are as follows:
- You must file your report and make payment by April 30 for the quarter that ends on March 31
- For the quarter ending on June 30, your must file your report and make payment by July 31
- You must file your report and make payment by October 31 for the quarter that ends on September 30
- For the quarter ending on December 31, you must file your report and make payment by January 31
The Department of Labor requires some businesses to file these reports and make payments through the online portal. Other businesses have the option of completing these actions online or by mail.
Excise taxes are taxes paid by the merchants and producers of certain products such as fuel, alcohol, tobacco, and marijuana.
Step 4: Prepare to file and pay your Alaska business taxes
Except for Employment Security Taxes, you send your Alaska business tax filings and payments to the Department of Revenue. You can file and pay your taxes online by using the Department of Revenue’s Revenue Online portal, which is the easiest and quickest method.
To prepare your taxes properly, you need to have your business records in order. You might need business records such as receipts, invoices, accounting records, legal documents, etc. When you have your important records together, preparing your taxes in a timely manner becomes less of a struggle.
If you wrestle with the balance of handling your business’s daily operations and organizing business information for future tax obligations, we can help you find equilibrium. Our ZenBusiness Money App helps you easily retrieve payments, customize invoices, and manage business finances and invoices from our Smart Dashboard.
Do I need an accountant?
The majority of small businesses need the help of a tax professional such as an accountant. While you can technically prepare and file your business taxes in Alaska on your own, there are many serious consequences your business could suffer if you don’t get your taxes right. You don’t want to take that chance. Finding and hiring a tax professional doesn’t have to be a complicated process, either. The IRS has a guide to tax preparer qualifications on its website so you can see what option best fits your business’s needs.
How we can help
We want your business to be successful, and the odds of this occurring increase when you have the proper support. Our ZenBusiness Money App can help you with the preparation of your tax returns by organizing your financial information. If you’re just beginning to form your business, we make it easier with our Alaska LLC Formation Service or Corporation Formation Service.
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.
- How much can an Alaska small business make before paying taxes?
An Alaska C corporation can make up to $25,000 before it has to pay state income taxes. Your business could be subject to other state taxes. The minimum thresholds for some business taxes depend on the structure and nature of your business.
- What percentage does an Alaska small business pay in taxes?
Your state business tax rates depend on what kind of business you run. Generally, only C corporations pay state income taxes, and they can pay from 0% to 9.4%, plus a set dollar amount.
- How does an Alaska small business pay taxes?
If you’re wondering how to file small business taxes in Alaska, you normally pay the majority of your state business taxes by using the Department of State’s Revenue Online portal.
- Do I have to file taxes for my small business in Alaska?
Corporations and some pass-through entities have to file income tax returns in Alaska. Even if your business doesn’t have to file an income tax return, you might have to file returns for other state taxes based on your location and business activities.