If you're interested in establishing a limited liability company (LLC), you may want to form one in Alaska. Alaska LLCs enjoy tax advantages because they don't pay state income taxes. Instead, an LLC's business income is taxed as personal income to the LLC owners, reducing tax burden. This business structure is also considered favorable because it offers personal liability protection and management flexibility.
Small businesses make up 99.1% of all companies in Alaska. If you'd like to join the ranks of these businesses, follow along to learn how to form your own LLC in The Last Frontier.
How to form an Alaska LLC in 7 steps
It's easy to form an AK LLC in a few simple steps. Discover how to appoint a registered agent service, obtain a NAICS code, file Alaska articles of organization, and more.
1. Choose your business name
The first step is to select a business name for your Alaska LLC. However, you can't just choose any name—it must comply with Alaska naming guidelines. For instance, your business name must include the words “limited liability company” or abbreviations such as LLC or L.L.C.The word “Limited” may also be abbreviated as “Ltd.” and the word “Company” may be abbreviated as “Co.” Also, the name cannot falsely imply that it's associated with a government agency or regulated industry, such as banking, insurance, or medical services, and certain restricted words (bank, lawyer, attorney, credit union, etc.) may require additional documentation and licensure paperwork.
Furthermore, your business name must be different and distinct from already registered business names in Alaska. You can perform an Alaska LLC lookup using the Alaska Secretary of State Corporation & Business Entity Search to browse registered businesses and ensure your name is unique.
Once you've picked a compliant business name, you can move on to the next step. However, if you're not ready to register your Alaska LLC yet, you can reserve your business name with the state for 120 days. Simply fill out the Business Name Reservation application with the Department of Commerce, Community, and Economic Development. The filing fee is $25.
2. Appoint a registered agent
Selecting your own registered agent is the next step in the LLC formation process. A registered agent is an individual or business you appoint or hire to oversee government correspondence. For example, a registered agent service oversees legal documents on behalf of your LLC.
When appointing a registered agent, they must meet the following criteria:
- They must have a physical address in Alaska
- Their mailing address cannot be a P.O. box
- They must be available at the physical address during regular business hours to accept official mail
- Individuals must be an Alaska resident
- Individuals must be at least 18 years old
- A business, if appointed as agent, must be licensed to do business in Alaska
To ensure your Alaska registered agent is compliant, turn to LegalZoom. We offer a convenient and affordable registered agent service.
3. Determine your NAICS code
Alaska is unique in that it requires every limited liability company to obtain a North American Industry Classification (NAICS) code. This six-digit code is used to classify your company based on its business operations. The first two digits identify your line of business, while the remaining four digits determine your business activities within the line of business. This information may be used in reporting statistical data for each of the industries in the U.S. You may also need this number to file annual tax returns.
Use the 2022 U.S. Census Bureau NAICS code listing to select your NAICS code. You can choose a primary one for your main business activities and select additional codes for secondary business operations.
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4. File articles of organization
Once you've determined your NAICs code, you're ready to move on to the Alaska articles of organization. This is the document that officially establishes your limited liability company with the state.
When submitting the articles of organization, you'll include the following information about your Alaska LLC:
- Your LLC name
- The purpose of your LLC
- Your NAICS code
- The name and physical address of your registered agent or registered agent service
- Management structure
- Signature of organizers
- Your LLC's duration or time period over which the LLC will exist. In most cases, LLCs are perpetual, meaning the duration is indefinite. A perpetual LLC can be dissolved voluntarily or involuntarily. If your LLC exists for a purpose that will end at a specified date, you will specify that date here.
You can mail the articles of organization form to the State of Alaska Corporations Section or file online. There is a $250 filing fee.
5. Create an operating agreement
Alaska is one of the states that does not require an LLC to create an operating agreement. However, we highly recommend drafting one for your business because it helps outline important details like management, procedures, and roles and responsibilities.
When developing your operating agreement, address the following in your document:
- LLC structure
- LLC members
- Duration of the LLC
- Registered agent
- Profit and loss distribution
- Voting rights and meetings
- Procedure for admitting new members, as well as outgoing members
- Capital contributions
- Ownership percentages
- Indemnification and liability clauses
- Instructions for dissolution
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6. Obtain an EIN and open a business bank account
Now, it's time to acquire an employer identification number (EIN) from the Internal Revenue Service (IRS). You'll need this nine-digit number to complete certain tasks, such as hiring employees, paying business taxes, and opening a business bank account.
Fill out Form SS-4 on the IRS website to obtain your EIN. There is no filing fee. Or, you can hire LegalZoom to submit your EIN application for you.
After receiving your EIN, you're ready to open a business bank account. This is an important step because it can help establish personal liability protection as you separate your business assets from your personal assets. In other words, if your LLC faced debt, creditors could only go after your business income and assets.
7. Register for state taxes and business licenses
To further fulfill your tax requirements, you may need an Alaska tax identification number, especially if you plan to hire employees. You can register for one with the Alaska Department of Revenue.
Your LLC must also obtain an Alaska business license. Unlike many other states, Alaska requires all business entities to have general state-level business licenses. You can register online for your Alaska business licenses with the Alaska Division of Corporations, Business, and Professional Licensing. The filing fee is $50. The license expires every year on Dec. 31. You can renew it by paying an annual fee.
In addition to a general Alaska business license, your business may need other licenses or permits to operate in the state. For instance, it may need a professional operating license or a special permit to conduct business in a certain county. These permits and licenses carry additional filing fees, too. To learn more about what professional licensing is required for your business, navigate to the state's licensing portal.
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What to do after forming your Alaska LLC
Now that you've completed the Alaska LLC formation steps, there are a few more tasks you should complete to help ensure your business is in good standing.
Register a domain name
Even if you don't think you'll need a webpage, you probably will. At the very least, you should reserve the option of having one in the future by buying your domain name now. To establish an online presence, it's essential to purchase a domain name that matches your business name. This helps your customers easily find your website on the internet. In addition to registering a domain name, we recommend setting up social media accounts on platforms like LinkedIn, Facebook, and Instagram to further expand your digital footprint.
Maintain compliance
Alaska requires all small business owners to file biennial reports with the Alaska Division of Corporations, Business, and Professional Licensing. The initial report is due within six months of forming your LLC, and you can find future deadlines using the Search Corporations Database. There is no filing fee for the initial report, but the biennial report fee is $100. LLC owners can file biennial reports online or by fax or postal mail.
Alaska also prides itself on its environmental initiatives, so the state may have certain regulations that impact your business operations. Navigate to the Alaska Department of Law, Environmental Section to learn more about the state's programs. Furthermore, under the Alaska Native Claims Settlement Act (ANCSA), Alaska Natives can join the Alaska Native Corporation and receive benefits if they meet eligibility requirements.
You also must ensure that you're completing your tax obligations. Alaska LLCs are taxed as pass-through entities, meaning your LLC owners pay state income taxes on their personal tax returns.
LegalZoom’s compliance packages offer expert guidance and assistance with meeting deadlines and correctly filling out required forms.
Obtain a certificate of good standing
A certificate of good standing isn't required, but it's nice to have, as it proves your business is allowed to conduct business in the state. You can request a certificate of good standing from the Alaska Division of Corporations, Business, and Professional Licensing. The filing fee is $10.
Consider a foreign LLC
We've discussed how to form a domestic LLC in Alaska, but what if you want to expand your business operations in another state? In that case, you'll need to register as a foreign LLC through foreign qualification in the state where you plan to do business.
The cost of forming an LLC in Alaska
There are filing fees associated with forming an LLC in Alaska. The following are some Alaska state fees you may face when establishing your business:
- Name reservation fee: $25
- Articles of organization fee: $250
- Alaska state business license fee: $50
- Certificate of good standing fee: $10
- Biennial report fee: $100
- Permits, licenses, registered agent, and domain name fees: Varies
How much you pay will depend on several factors, like what kind of additional licenses and permits your LLC requires. However, the lowest amount you'll pay is $350, which includes the cost of filing your articles of organization and general business license.
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How to start your Alaska LLC with LegalZoom
At LegalZoom, we provide a handy Alaska LLC formation service that oversees every step of the process, from filing your LLC operating agreement to acquiring the appropriate business licenses. Allow us to do all the heavy lifting for you, so that you can focus more on growing your business and less on filing paperwork.
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FAQs
How long does it take to form an LLC in Alaska?
It depends on how and when you file your articles of organization. If you file online, your documents are filed immediately. However, if you file by postal mail, the standard processing time is 10 to 15 business days between March and September and 15 or more business days if you file between October and February.
What are the annual filing requirements for Alaska?
Alaska requires LLC owners to file an initial report within the first six months of establishing their businesses. After that, they must file a biennial report every two years.
How do I correct filing errors in AK?
If you've made an error on your articles of organization, contact the Corporations Section at corporations@alaska.gov to determine next steps. The Alaska Department of Commerce, Community, and Economic Development may ask you to submit a subsequent form and fee to correct the error.
How do I dissolve an Alaska LLC?
When you're ready to dismantle your LLC, you can file articles of dissolution with the Alaska Department of Commerce, Community, and Economic Development and pay the $25 filing fee. Or, you can hire LegalZoom to file your dissolution paperwork for you.
Rudri Bhatt Patel contributed to this article.
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