Follow our free guide to form an LLC in Alaska:
- Pros and Cons of Forming an LLC in Alaska
- Starting Your Alaska LLC
- Maintaining Your Alaska LLC
- Additional Alaska Resources
Check out our informative guide on building an LLC in Alaska and learn everything you need to know about forming your business.
Pros and Cons of Forming an LLC in Alaska
No Corporate/Franchise Taxes
Alaska does not impose any corporate or franchise tax on LLCs. The only taxes owed on the LLC’s revenue is the personal income tax paid by the members.
No State Income Taxes
Alaska is one of the few states in the country that does not have a state income tax. Residents are only required to pay a federal income tax on their earnings.
Privacy for Owners
Alaska does not require the members/manager of an LLC to be listed in the formation paper — an organizer can sign and file the Articles of Operation in place of the members.
High Cost of Living
Alaska is one of the most expensive states in the country to live in, mostly due to its location. Housing prices are almost 40% higher than the national average. Common food staples are also pricier — a loaf of bread and one gallon of milk run almost $5 each.
Alaska currently has the highest unemployment percentage in the nation (7.2%), mostly due to the decline in the oil market and its slow rebound. Qualified workers are leaving the state in search of work elsewhere.
The drop in oil prices has hit Alaska hard since 2014, leading to a massive state deficit of $700 million and GDP growth of only .2% in 2018. The state has also seen enormous foreclosures in the real estate market — up to 170 in 2017.
Cost of Doing Business
- $250 filing fee/$100 biennial report
- No corporate/franchise tax
Phase One: Starting Your Alaska LLC
Forming an LLC in Alaska might seem like a difficult and complicated task, but with the right level of assistance, it is far less confusing than you might assume. Here are the steps needed to ensure that your Alaska LLC comes together correctly:
- Step 1: Name your LLC
- Step 2: Establish Ownership of your LLC
- Step 3: Choose a Registered Agent
- Step 4: File the Articles of Organization
- Step 5: File the Initial Report
- Step 6: Create your Operating Agreement
- Step 7: Register for an EIN
Step 1: Name Your Alaska LLC
Finding a name for your business is the first step in forming your Alaska LLC. Both the state and federal government have restrictions and regulations regarding the use of certain words in business names.
Business Name Guidelines
- The official name of your business must end with: Limited Liability Company, Limited Company, LLC, or L.L.C.
- Your business name cannot be intentionally misleading to consumers
- The name of your new LLC must not be similar to another organization’s name/trademark
- “Lottery” and “Bank” are ineligible for use (any state)
- Terms that represent educational or Veterans’ organizations are restricted
- Terms related to the Armed Forces or civil servants (police, EMT, fire)
LLC business names associated with government and/or financial entities are not always restricted - it depends on the state. Additional paperwork may be required.
In addition, it is also important to create a website for your Alaska LLC. Check the availability of domain names at various online web hosting sites.
Step 2: Establish Ownership
The owners are actually known as members or managers, depending on the chosen management structure of the business.
LLC Management Structure Options:
- Member-managed (ownership of business is divided among the members and all parties receive portions of the profits)
- Manager-managed (the appointed manager is the main operator and the members are passive investors who are not actively involved in the daily business operations)
After you have selected a name for your business, you then need to choose a management structure and designate the members of the LLC. A few rules concerning LLC ownership in Alaska include:
Required Number of Members
There must be at least one member or manager to form an LLC in Alaska.
Member Disclosure Requirements
Alaska state law permits an organizer/authorized representative to sign and file the Articles of Operation in place of the LLC members.
LLC members in Alaska may be of any age.
There are no residency restrictions imposed on LLC members in Alaska.
Step 3: Find a Registered Agent in Alaska
The registered agent is necessary for all LLCs formed in Alaska. Your business cannot be official without filling this position.
What is a registered agent?
A registered agent is a person or business who is authorized to accept official notices (including the Secretary of State) and service of process notices on behalf of the LLC.
Why do you need a registered agent?
Alaska law requires you to appoint a registered agent so that the state government has a consistent contact person for your LLC.
What are the main requirements for a registered agent?
- The registered agent must have a physical address — not a P.O. Box
- The registered agent must be available during business hours
Who can be a registered agent in Alaska?
- A state resident with a physical address in Alaska
- An LLC or corporation that is licensed to conduct business in Alaska.
Is the registered agent’s contact information publicly accessible?
The name and contact information of the LLC’s registered agent is a matter of public record.
Can I be my own registered agent for my business?
You are legally allowed to be your own registered agent as long as you have a physical address in Alaska.
Is being my own registered agent discouraged?
LLC business owners that choose to be their own registered agent risk compromising their personal information to the public as it is publicly listed.
Step 4: File the Articles of Organization
One of the most important steps involved in officially forming an LLC in Alaska is filing the Articles of Organization with the Secretary of State.
What is the Articles of Organization?
The Articles of Organization is a legally binding document that is filed with the state government to officially and legally form your LLC.
Why do I need the Articles of Organization?
Your LLC business in Alaska will not be legally recognized by the Secretary of State without filing this document. Consider the Articles of Organization as part of your LLC’s foundation.
What is the cost of filing the Articles of Organization?
The filing fee for Alaska is $100
What information is included in the Articles of Organization?
- The name of the LLC
- The type of registered agent (personal or commercial)
- The name of the members or organizer filing the paperwork
- The name and location of the registered agent
- The chosen LLC management structure
- The duration of the LLC (perpetual or not)
Step 5: File the Initial Report
LLCs formed in Alaska are required to file an initial report with the Department of State within six months of formation. The purpose of the report is to make the Secretary of State aware of your newly created business.
Due Date: within 6 months of forming LLC
Step 6: Create an LLC Operating Agreement
An Operating Agreement may not be required to form an LLC in Alaska, but it is still a foundational and necessary part of any successful business.
What is an LLC Operating Agreement?
The LLC Operating Agreement is an in-house legal document that defines the rights and responsibilities of each person involved in the business and lays out the details involving how the business will operate.
Why do I need an LLC Operating Agreement?
Because the LLC Operating Agreement defines the roles of the business’s members and provides direction for daily operations, the document ensures stability and structure to the LLC and reduces future disputes.
Do I need to file the LLC Operating Agreement?
You do not need to file the Operating Agreement with the state; it is for the benefit of your LLC and remains in-house.
What goes into an LLC Operating Agreement?
While you are generally able to customize the LLC Operating Agreement to your business, most documents include the following:
- List of the members/managers and their roles
- Designation of authority in the LLC
- Initial capital contributions of the members
- Voting designations and percentages of the members
- Member transfer/addition rules and restrictions
- Distribution of profits
- Meeting schedule
Tip: Get a customized LLC Operating Agreement for your small business with Swyft Filings. Add structure to your LLC now.
Step 7: Register for an EIN
Alaska state law requires any business that has/will have employees to register for an EIN. Additionally, most banks and financial institutions require the EIN in order to open any accounts.
What is an EIN?
The EIN is a nine-digit number that is assigned to your business by the Internal Revenue Service (IRS). The EIN identifies your business with the government much like a personal Social Security number.
What does EIN stand for?
EIN is an acronym for Employer Identification Number. It is also known as a Federal Tax ID.
Are all businesses required to have an EIN?
Federal law dictates that certain types of business entities register for an EIN:
- Any business with employees (even if owned by one person)
- Any business with more than one member
- A partnership (LLC or C-corp)
Please Note: A sole proprietorship is not required to have an EIN, but it is still recommended.
Why does my LLC business need an EIN?
The more common reasons you would need an EIN are:
- To hire employees
- To open a bank account in the U.S.
- To file your company’s taxes
- To pay independent contractors
In short, if you make money through your business and it has employees, you must have an EIN.
Is the EIN publicly listed?
The EIN for your LLC will be part of public record.
Can I use my Social Security Number as the EIN?
If you are a sole proprietorship who wants an EIN for your business, you can elect to use your social security number; however, your EIN is part of public record.
Swyft Filings offers EIN services for small businesses in [State]. Find more information here.
Phase Two: Maintaining Your Alaska LLC
The first part of forming your Alaska LLC is completed; the next part focuses on getting you ready to actually conduct business. There are a few steps that you need to compete to keep your LLC compliant with the state:
- Step 1: Register for taxes in Alaska
- Step 2: Apply for Permits and Licenses
- Step 3: File the Biennial Report
- Step 4: Request a Certificate of Compliance
Step 1: Register for Alaska State Taxes
Alaska does not impose corporate or franchise taxes on LLCs, nor does the state have a state income tax. LLC members only need to pay federal income tax on their portion of the company’s revenue.
State Income Taxes
Alaska does not have a state income tax.
Corporate Tax Information
You can also choose to have your LLC taxed as a corporation; if so, you will be responsible for paying the corporate income tax rate on your business’s earnings. Alaska’s state income tax rates are listed in the chart below:
$0 - $24,999
$25,000 - $48,999
$49,900 - $73,999
$74,000 - $98,999
$99,000 - $123,999
$124,000 - $147,999
$148,000 - $172,999
$198,000 - $221,999
$222,000 and up
Additional Tax Information
Other taxes your LLC may need to pay:
- Employee Withholding Tax
- Unemployment Tax
Please Note: Alaska does not have a state sales tax.
Step 2: Obtain Business Licenses and Permits
Alaska law states that all businesses (LLCs and corporations) must obtain a business license in order to conduct any business in the state.
In addition to the general business license, the state of Alaska also requires some businesses to secure additional licenses and permits. The required list can vary depending on the industry of the LLC.
If you would like to see more in-depth information on licenses and permits, please feel free to visit the content in our learning library that covers business licenses and permits.
Step 3: File the Biennial Report
Following the filing of the initial report, Alaska LLCs must submit a biennial report with the Secretary of State.
What is a biennial report?
A biennial report, which is also called an annual report, is a legal form that is filed with the Secretary of State to maintain your business’s information.
What kind of information is in the biennial report?
The information requested in the biennial report is similar to what is in the Articles of Organization:
- The name and address of the business
- The name and address of the registered agent
- The names of the members
- The business’s EIN
Is the biennial report part of public record?
The biennial report filed on behalf of your LLC is a matter of public record.
Fees and Due Date
Due Date: January 2nd (beginning 2 years after initial report)
Frequency: Every 2 years
Implications of Late Filings: $37.50 late fee/eventual closure of business
Swyft Filings helps you stay compliant by providing stress-free solutions. File your biennial report with us today.
Step 4: Obtain a Certificate of Compliance
Once you have completed all of the steps to form your new Alaska LLC, the last thing to do is order a Certificate of Compliance.
What is a Certificate of Compliance?
The Certificate of Compliance, also known as the Certificate of Good Standing, is an official notification that confirms your business is properly formed and adheres to all state regulations.
Who issues the Certificate of Compliance?
The Certificate of Compliance is generally issued by the Secretary of State.
When can I request a Certificate of Compliance for my business?
You will be able to request a Certificate of Compliance after your LLC is officially formed through the Secretary of State.
Why do I need a Certificate of Compliance?
Having a Certificate of Compliance adds a measure of credibility to your new LLC for banks, financial institutions, and other businesses.
Does the Certificate of Compliance have an expiration date?
The Certificate of Compliance does not expire/does not need to be renewed.
Swyft Filings can create a Certificate of Compliance for your Alaska LLC. Click here for more information.