Forming 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 personal liability protection, your personal assets receive protection from your business liabilities.
It's easy to form an LLC for your new business in Alaska. To learn how to start one yourself, simply follow along with the steps below.
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Steps To Forming An LLC In Alaska
Name 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 your search by doing a simple internet screening. 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.
If you plan to create an LLC but are not quite ready, you can do a name reservation. Visit the Division of Corporations website and file by mail or online. There will be a $25 filing fee to reserve your name. Your business name will then be reserved for 120 days.
Get 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 P.O. 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.
File Your 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 file Alaska 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 file 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 by filing online with the government agency. However, you may have to wait up to 10-15 business days for your approval if you file by mail.
Draft an Operating Agreement
Although Alaska law does not require LLCs to have an operating agreement, it does allow members of an LLC to adopt an operating agreement and appeal or amend it later. Having an Alaska LLC operating agreement from business formation can help aspiring entrepreneurs avoid potential issues by laying out the rules and responsibilities of each member.
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.
Get an EIN
Unless you have a single-member LLC with no employees, much like a sole proprietorship, 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 federal 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.
You can apply for an EIN at the IRS website. Or, if you prefer, you can file by mail.
Set Up Business and Tax Accounts
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.
Biennial Filing Requirements in Alaska
One important step in maintaining 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. There is no fee to file an initial report.
Although Alaska does not require annual reports, you will need to file a biennial report for your LLC every two years. The state fee is $100. 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
Business and Tax Requirements in Alaska
There are state taxes in Alaska that may apply to your business. You should confirm the taxes your LLC is required to report and pay.
State Employer Tax
If your Alaska LLC has employees, then you need to obtain an (EIN) and pay federal employment taxes. You also must file and pay unemployment insurance tax to the state of Alaska.
Sales and Use Taxes
LLCs are not required to pay sales and use taxes if they are located in Alaska. However, some local jurisdictions may charge local sales tax on businesses.
Business Licenses and Permits
The business licenses and permits depend on your business's activity and location and should be renewed annually. Check the Alaska Department of Commerce, Community, and Economic Development for regulatory boards or agencies to learn more about your LLC's licensing requirements.
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FAQs About Alaska LLC Formation
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