There are many ways to support yourself and make a mark as a business owner in Alaska. If you’re keen on the real estate market, you can run a successful business by running and leasing rental properties. Of the multiple entity types you can pick from to start a business, setting up a limited liability company (LLC) for your rental property in Alaska offers both legal and financial protections.
If you’re not sure how to set up a real estate LLC in Alaska, we can clear things up for you. Our Alaska LLC Formation Service can help you set up your LLC quickly and properly. We also offer a number of other formation and compliance services that can help you efficiently run your business from the moment you open your doors to the moment you decide to close up shop.
There are multiple steps to starting an LLC in Alaska. Our Alaska LLC Formation Service can help you get through these steps quickly and easily. You can also read on for some of the general steps.
To form an Alaska LLC, you need to submit Articles of Organization and pay a filing fee to the Department of Commerce.
You also need to submit a separate statement of the activities (established by Alaska law) that describe the nature of your business. Alaska law also requires businesses in the state to have all the necessary business licenses.
If you owned your rental property prior to forming your LLC, you can transfer ownership to the LLC by signing over the deed to the LLC. You must acknowledge the deed before an authorized person such as a notary or a certain kind of government official. Once you’ve properly transferred the deed, you record it with the Recorder’s Office in the district where the property is.
A mortgaged investment property that you transfer to an LLC or buy as an LLC normally requires a trip to the bank to change the names on the mortgage paperwork. Since mortgage rates and terms generally reflect the unique characteristics of the property owner, you will likely need to change the mortgage rates and terms with the change of ownership. You also need to inform current tenants about changes in ownership and make any necessary changes to their rental agreements.
Starting an LLC is one of many options for creating a business that pulls in rental income. When deciding how to structure your business, it’s important to understand what advantages an LLC offers.
One reason so many people form LLCs for their new business ventures is that LLCs often offer greater levels of personal protection than sole proprietorships or general partnerships. As a member/owner of an LLC, you are normally not personally liable for the financial or legal issues that your LLC encounters.
LLC owners enjoy many of the same liability protections that corporate shareholders enjoy, but aren’t subject to the financial burdens of “double taxation.” Owners of standard corporations are normally subject to double taxation because the corporation pays taxes on its income and the shareholders also pay income taxes on the distributions they receive from that income. Typically, LLC owners pay only individual income taxes on their share of the LLC’s earnings. This is called pass-through taxation.
When you’re personally liable for a financial debt or legal judgment against your rental property, your creditors might be able to recoup their losses from your personal assets. Creditors could lay claim to wages, property, or bank accounts. If you run your business as a rental property LLC in Alaska, your personal property is normally separate from your business property, and therefore it is not subject to judgments or collection efforts against your business.
Some states allow business owners to set up their LLCs as series LLCs. A series LLC allows owners to separate their business assets into groups. Each separate group of a series LLC is typically not affected by the financial or legal liabilities of another group. Alaska law doesn’t recognize series LLCs.
Generally, anyone who wants to run a rental property business can greatly benefit from forming the business as an LLC. If you don’t have your rental property already, it’s often easier to form your LLC first and then purchase the property as the LLC. This way, you immediately put the deed in the LLC’s name. Properties purchased or acquired by the LLC are owned by only the LLC and not its individual members. If you already own your rental property and want to put it in an LLC, it takes a little extra effort. We explain the basics of the process below.
If you’re an entrepreneur, you probably know it’s important to have resources to help you conduct business efficiently and easily. We have the resources to help make conducting your business less arduous. Our LLC Formation Service can help get your business up and off the ground in a snap. Our Business Plan Service can provide you with the structure you need to create a comprehensive outline for conducting business. As you run your business, you’ll likely need to file different kinds of paperwork frequently to remain legally compliant. We offer a Worry-Free Compliance Service that keeps track of your important business deadlines and can handle two amendment filings per year for you.
Disclaimer: The content on this page is for informational 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 in your state.
Creating an LLC for your rental property can shield you personally from legal and financial liabilities. You also don’t have to suffer under the double-taxation rules applicable to many corporations.
You have leeway when naming your LLC, but there are a few rules you need to follow. In general, the company name you put on your Articles of Organization must contain the words “limited liability company,” “L.L.C.,” or “LLC” (some abbreviations are acceptable). You can use the name of a city, borough, or village. However, you can’t include the words “city,” “borough,” or “village” in the name. Also, the name of your LLC needs to be distinguishable from other reserved names and business entities in the state.
Several states require owners to register their out-of-state LLCs as foreign entities in their home states. You will likely need to register your Alaska LLC as a foreign entity in your home state if you conduct business there. It’s important to check with your home state authorities about their specific rules.
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