Top Three Alaska LLC Formation Questions:
- Long does it take to form an Alaska LLC? During slower times of the year, processing of your LLC formation should only take 10-15 business days. Please note that the estimate of 10-15 business days begins once ALL required paperwork is in order and filed correctly.
- How much does it cost to create an LLC in Alaska? The state charges a $250 fee to form an LLC. This does not include additional fees for a using an incorporation service or establishing a Registered Agent. A complete fee schedule for the state of Alaska can be found here by doing a search of their database.
- Do I have to be a US citizen to start an LLC in Alaska? The short answer is no. However, there may be restrictions depending on the type of entity you’re establishing. For example, you must have a social security number in order to apply for an EIN. It is recommended that you seek consultation with an attorney or the IRS, so that you know of any caveats before applying for your business formation.
You can access a step-by-step guide for the state of Alaska here.
Step One: Choosing a Name
What are naming requirements? Alaska has a few rules for naming. The first is that your LLC (Limited Liability Company) requires a notation at the end like “LLC” to show that it is an incorporated entity, which you can read more about here. The second rule is that your name must be unique compared to other named businesses. If you’re not sure if your preferred business name is in use, click this link to check availability.
And finally, Alaska put restrictions on some words that cannot be used in business names. For example, your name cannot imply in anyway that it is a governmental agency. If you would like to include keywords like university, for example, you may have additional filing requirements before securing your name. In addition, the name you choose cannot be misleading and must match the purpose outlined when applying for incorporation.
What is a name reservation, and is it required? While it is not required, it is recommended that you reserve your name in advance of beginning the business formation process. You can file two ways to secure your business name. The first is by filing a Business Name Reservation, which protects a name for 120 days; or you can file a Business Name Registration, which gives you exclusive rights for 5 years.
However, it is important to note that Alaska has no restrictions on the same or even a very similar business name being used by multiple entities. You can read more about securing your business name, as well as what it means to have “exclusive rights” to a name here.
How Do I Check to See if the Name is Available? Visit the state’s website here to check availability before filing to reserve your name. Since Alaska has fewer naming restrictions when it comes to uniqueness, it shouldn’t be difficult to secure the name of your choosing.
Step Two: Designate a Registered Agent
What is a Registered Agent? As a business owner, you will be required to provide a physical address where mail can be accepted during regular business hours. In Alaska, you cannot act as your own Registered Agent, per the FAQs found here. We always recommend that you assign what is called a “Registered Agent” to receive mail on your behalf, and in this case it is a requirement for establishing a business in the state.
There are two distinct benefits to hiring a Registered Agent. First, it limits the way your personal information is shared, since you won’t be using your own address and phone number. As a result, this cuts down on the amount of junk mail you have to sift through, as your Registered Agent can manage your mail and provide you only with the pertinent documents.
Who can be my Alaska LLC Registered Agent? Your Registered Agent must have a physical address within the state of Alaska where mail and legal notices can be served during regular business hours. Other limited liability corporations cannot serve as your registered agent, but an attorney or incorporated law firm can. You can read more about the restrictions here.
You can hire a service to act as your Registered Agent, serve as your own, or even use an accountant or other business professional’s address – with their consent, of course. You can click here for more details on Registered Agents within the state of Alaska.
Our Recommendation: At the end of the day, we recommend designating a Registered Agent service to handle these requirements. Doing so will help eliminate junk mail and more importantly, keep your personal and/or business address off public record. Incfile and Northwest Registered Agent both offer a free Registered Agent service when you utilize their services to form an LLC. Both are fast and affordable. In fact, they’re the best available.
Step Three: File Formation Documents
What are Articles of Incorporation? This is THE document that formally registers your LLC with the state of Alaska. However, before even filing this document, Alaska has other requirements for you to meet.
In Alaska, you’ll actually be applying for a professional business license as you file to incorporate your business. A license type can be chosen here based on the nature of your business. Then, you must secure your business name and determine what your NAICS code is, short for North American Industry Classification System. You can read more about the importance of identifying your correct code here.
Once these items are in order, you can file Articles of Incorporation with your license application here. It is recommended that you read and then reread what you’ve included on your application. Compare the information to what is required. Double check your information again and be sure nothing is missing or you could hold up the process of finalizing your incorporation. Since Alaska has extra steps compared to some states, it is important that each of the required fields is correct.
Step Four: Get an Employer Identification Number (EIN)
What is an EIN? An EIN, short for Employer Identification Number, is the business equivalent of a social security number.
Am I Required to get an EIN? Yes. An EIN is required for filing taxes, opening a business bank account and hiring employees. However, it is free to apply for one through the IRS.
How do I get an EIN? Just visit the IRS website here to walk through the application process. The principal business owner or partner will need a valid social security number to apply for an EIN.
Step Five: Create an LLC Operating Agreement
What is an Operating Agreement? Usually when you establish a business within a state, you have to create a detailed outline that explains how you will run and manage your business. While this type of document is called different things in different states, in Alaska it is called an Operating Agreement.
Do I Have to File it with the State? In Alaska, this document is not specifically required, but it is still important to have a plan in place for how you will be successful, and how you will handle different aspects of the business. In fact, they have a statute in place that lists an operating agreement as a specific recommendation for those seeking to establish a business in Alaska. Even though it doesn’t need to be filed with the state, put it together and keep it for your records.
How to I Create an Operating Agreement? An attorney can help you outline your Operating Agreement or create one from a template. You can read more about Operating Agreements in Alaska here, but some of the basic information you’ll want to have includes:
- Individual members’ ownership percentages
- Rights and responsibilities
- Voting powers and meeting guidelines
- Allocation of profits and losses
- Management rules for the LLC
- Provisions for buying a member owner out, or transferring their shares in the case of illness or death
Next Steps: What Happens After Creating an LLC in Alaska?
- Understand your ongoing requirements. Depending on what the nature of your business is, you may have different compliance requirements due to the state or federal government on an annual basis. We’ve listed some of the more general requirements below, but you may have more to meet than just these.
- Get any business licenses or permits. Alaska already requires that you have a specific business license no matter the nature of your business. You can check here to see what licenses the state of Alaska requires based on the category your business falls under. You can also review the federal government’s Small Business Administration guide here for any additional requirements you may need to meet.
- Understand annual reporting. Alaska requires an initial report to be filed here within six months of establishing your business. Then you’ll have a biennial report due every two years, which can be filed here and will also include a $100 fee.
- Register for taxes. The state of Alaska doesn’t impose a state income tax. Still, if you are collecting taxes, that will have to be reported, and you’ll also have to report on your income and losses. You can access the State of Alaska’s tax site here and also read FAQs on any requirements you may need to consider.
- Open a bank account. We highly recommend that you establish a business banking account so that your business and personal finances are maintained completely separate. This is important because it helps to protect your personal assets and also makes filing taxes much easier. Once you receive your EIN back from the IRS, you’ll be able to use it to establish an account at the bank or credit union of your choice.
- Find an accountant. We do not suggest that you attempt to manage your business finances without the help of a professional. There is too much room for error, and a professional can ultimately save you time and money by guiding you on how best to manage your business finances. At a minimum, enlist professional help to set you up with software and the steps for keeping up with your finances on a regular basis. Then, consult back with your accountant at least a couple of times per year – and especially at tax time – to ensure you’re keeping track of everything correctly.
- Understand income reporting. Income reporting is just what it sounds like – reporting the income you made from your business. It is important to note that you must file this form whether you made or lost money over the course of the year. The state of Alaska has a guide that can be accessed here to walk you through reporting your income or loss for the year.
Why Do We Recommend Using an LLC Formation Service?
As you can tell from above, there are so many logistics to consider when incorporating and managing a business. You have to plan, assess funding, think about how you’ll market your product or service, and manage ongoing legal requirements.
There is something you’re great at, and that’s why you’re establish a business. You have a product or service that provides a needed solution, and we believe that you should spend your time focusing on your business. Outsource the legal details to professionals so you can be more effective as a business owner.
While it is fairly easy to form an LLC on your own, the ongoing compliance can be time consuming. Just as we recommend hiring a knowledgeable accountant in your area, we also recommend hiring an LLC formation service to handle the logistics of forming your LLC as well as the ongoing compliance of it. They can help you make sure all of the t’s are crossed, and the i’s are dotted.
You’ll receive reminders of ongoing requirements like annual reporting so your LLC isn’t shut down because of an innocent oversight. Plus, an incorporation service can serve as your Registered Agent, providing a little additional help in sorting through junk mail and eliminating your personal information from being widely shared.
An LLC formation service basically provides that little extra something you need to be successful. It adds the polish behind the scenes that will give you the confidence to be the best you can be for your business and customers.