How to Form an LLC in Alaska
A limited liability company (LLC) is a popular business structure for small businesses. The main advantages of LLCs include liability protection and potential tax upsides. With liability protection, your personal assets receive protection from your business liabilities. This means that your house, cars, and personal accounts are not at risk for your LLC's lawsuits, debts, and other liabilities.
It's easy to form an LLC for your business in Alaska. To learn how to start one yourself, simply follow along with the six steps below.
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Step One: Choose a Name for Your LLC
Your Alaska LLC name must be unique and distinguishable from any other company's name to comply with Alaska law. A unique name will also help customers remember your business.
To find out whether your name is already taken, you should start by searching the Alaska Department of Commerce's corporations database. If there are no matches there, it's wise to continue by doing a simple internet screening search. Just type your desired LLC name into your favorite search engine to find out if your name is taken. Finally, you should run a name search on the U.S. Patent and Trademark Office's (USPTO) trademark database.
Once you are satisfied your name is not already taken by another business, you should make sure it complies with Alaska's other naming rules. According to the Alaska Revised Limited Liability Company Act, your LLC's name must contain language that indicates that it is an LLC. You can accomplish this by putting either “Limited Liability Company", “LLC", or “L.L.C." in your name. If you like, you can replace the words “company" and “limited" with the abbreviations “co." and “Ltd."
Further, your name must not contain any suggestion that your company represents a municipality. You cannot use the words “borough," “village," or “city" in your name.
Step Two: Designate a Registered Office and a Registered Agent
After you have chosen a legal and unique name for your LLC, the next step in the process is to choose a registered office and registered agent. Most LLCs choose their business's main office as their registered office.
A registered agent is a person or entity that you appoint to accept legal documents on behalf of your LLC. They will receive legal notices and service of process for your LLC in case of a lawsuit. Your registered agent must be either an Alaska resident or a corporation that's registered to do business in Alaska. Your registered agent cannot be a PO Box. They must have a physical street address in the state of Alaska.
You and your fellow LLC members may not be able or willing to be your company's registered agent. Instead, you could consider using an Alaska registered agent service. With a registered agent service, you pay a fee to another business to accept legal papers on your behalf. You can easily find Alaska registered agents by searching online.
Step Three: File Your Alaska Articles of Organization
The articles of organization form the legal charter that establishes your LLC as a legal entity. By filing this document with the state of Alaska, you will formally create your LLC as a legal entity.
To complete your articles of organization, you will need to give identifying information about your LLC. These details should be easy to gather. Specifically, you will need to provide:
- The name of the LLC
- The purpose for which the LLC is organized
- Contact information for your LLC's registered office and registered agent
- A statement on whether the LLC will be member-managed or manager-managed
You can complete your articles of organization by filling out an online form at the Alaska Department of Commerce's Division of Corporations, Business and Professional Licensing website. Once there, you need to click on the tab for limited liability companies to proceed. You will also need to submit a $250 state filing fee. If you prefer, you can file by mail.
You should receive approval immediately with online filing. However, you may have to wait up to 10-15 business days for your approval if you file by mail.
Step Four: Comply With Business Licensing Requirements
According to the Alaska Business Licenses Act, you will need to apply for a license to do business in the state of Alaska. You can apply for your Alaska state business license online with the Department of Commerce.
Your LLC may need other licenses, too, depending on your location and the type of business you operate. You should check with your county to find out if you will need to apply for any local licenses.
Finally, you should check whether you are subject to any federal licensing rules. The Small Business Administration (SBA) provides helpful information on federal licensing. On the SBA's website, you will find a comprehensive list of the business activities that federal agencies regulate. This includes agriculture, commercial fisheries, the sale of firearms, and others. If your business falls into one of the listed categories, you will need to apply for a federal license.
Step Five: Apply for an EIN
Unless you have a single-member LLC with no employees, you will need an employer identification number (EIN). An EIN is sometimes called a Tax Identification Number. It is a unique number that the Internal Revenue Service (IRS) uses to distinguish your business from all others for tax purposes. In this sense, it is very much like a Social Security number for individuals.
You will use your EIN to file taxes, pay employees, open a business bank account, get a business credit card, and more.
Step Six: File an Initial Report and Biennial Reports
The final step in creating your LLC is to file an initial report with the Alaska Division of Corporations. You can file this report online or by mail. You should do so as soon as possible after filing your articles of organization.
Although Alaska does not require annual reports, you will need to file a biennial report for your LLC every two years. You can file this report by mail or online with the Alaska Division of Corporations.
To complete your initial report and biennial report, you will need to provide the following information:
- Your LLC's name and the state or country where you organized it
- The names and addresses of your LLC's managers (if manager-managed)
- The names and addresses of your LLC's members (if member-managed)
- Your registered office's address
- Your registered agent's name and address
- The names, addresses, and percentage ownership of each person who owns at least 5% of the company
- For foreign LLCs, the out-of-state or international address of your LLC's principal office
Alaska LLC FAQs
Why should I create an Alaska LLC?
An LLC's limited liability protection helps to shield your personal assets from business liabilities. This means that your home, cars, and bank accounts, are shielded from your business's lawsuits and debts with an LLC.
LLC taxation allows your company to pay taxes on its income through your members' personal income tax returns. This is typically called “pass-through" taxation. It's similar to the tax treatment that partnerships receive. This can be preferable to corporate tax treatment because a corporate business entity can be subject to so-called double taxation. This occurs when the corporation pays taxes on its income and stockholders pay taxes on dividends, too.
Can I reserve my LLC Name?
Yes. If you plan to create an LLC but are not quite ready, you can reserve your name in the meantime. To do so, you need to visit the Division of Corporations website and file by mail or online. There will be a $25 filing fee to reserve your name. Your name will then be reserved for 120 days.
Should I create an Alaska LLC operating agreement?
Yes, it's wise for all LLCs to create an operating agreement among members. An operating agreement forms a contract among your LLC members and helps to form rules about certain important LLC issues. In this way, it's similar to corporate bylaws.
You can use your operating agreement to put several key issues into writing, such as:
- Voting rights among members
- Profit and loss sharing plans
- Members' rights and responsibilities
- The procedure for adding of removing members
- Management structure
- Buyout agreements and procedure for dissolving the business
- Any additional provisions that are important to your LLC
Unlike articles of organization, your operating agreement is not a required document, and you do not have to file it with the state. However, the SBA recommends that all LLCs form operating agreements. If possible, you should draft your operating agreement when you form your LLC.
Without an operating agreement in place, you may find it difficult to secure professional services for your business. Financial institutions may ask to see an operating agreement before opening a business bank account for your LLC. Accountants, lawyers, and other professionals may also require an LLC operating agreement before working with your business.
What if I don't file a biennial report?
If you don't file your biennial report, your LLC is at risk of being terminated against your will. Under Alaska law, the commissioner of the division of corporations can dissolve your LLC if you are six months late with filing your biennial report.
If you created your LLC in an even-numbered year, you would file your biennial report before January 2nd every even-numbered year thereafter. If you created your LLC in an odd-numbered year, your biennial reports would be due every odd-numbered year.
To avoid late fees and legal complications, you should mark your calendar to file your report before January 2nd every two years.
Forming an LLC in Alaska: Related Resources
Fortunately, forming an LLC in Alaska can be a straightforward process with FindLaw's Business Formation Service. If you'd like more information and resources related to this topic, you can visit the links listed below.
Get Professional Legal Help to Start Your Alaska LLC
If you have questions about starting an LLC in Alaska, or you'd like an experienced legal professional to make sure you're in compliance with all applicable laws, you should speak with a local business organizations attorney.
Note: State laws are always subject to change through the passage of new legislation, rulings in the higher courts (including federal decisions), ballot initiatives, and other means. While we strive to provide the most current information available, please consult an attorney or conduct your own legal research to verify the state law(s) you are researching.
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