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Forming an LLC in Alaska allows business owners to take advantage of tax benefits, input new management styles into their organization, and include every employee. This article will discuss the primary steps to form an LLC in Alaska and what you should avoid when cultivating a successful business.
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Step 1: Name Your LLC in Alaska
If you want to form an LLC, you need to decide upon a name. It must include the phrase “Limited Liability Company,” abbreviated as either “L.L.C.” or “LLC.” You could also shorten “Limited” to “Ltd.” and “Company” to “Co.”
Ensure that the name is unique from other registered Alaska businesses. You can check the Alaska Corporations Database to see if other entities share this name.
Alaska forbids the use of words that could mislead people into thinking your LLC is a government agency. Some examples include “Treasury,” “FBI,” and “State Department.” You also must exclude words like “village,” “city,” and “borough.”
Some restricted words like “University” and “Bank” may require you to file additional paperwork and hire licensed individuals for your company.
Furthermore, you cannot use designators that make your LLC appear like a separate business identity. Such phrases include “Inc,” “LP,” “Incorporated,” and “LLP.”
While not a legal requirement, you should choose an LLC name that doesn’t have a pre-existing web domain. A web presence is imperative to keep your company competitive in the modern age. Use this domain name search to see if you can get a suitable domain for your business.
If you have a name idea but want to wait to register your LLC, you can reserve your name for up to 120 days when you pay a $25 fee and submit some paperwork.
Step 2: Choose a Registered Agent
You need to appoint a registered agent to act as your LLC’s official contact. This entity receives tax forms, government correspondence, a notice of lawsuits, and legal documents.
Anyone in your organization can act as a registered agent. The individual must meet these criteria:
- Have an Alaska address
- Deliver registered agent services
- Must remain on-site to accept documents during business hours
You could also go through a third party to appoint a professional registered agent.
Step 3: File the Articles of Organization
You need to file the Form 08-484 Articles of Organization online, via mail, in person, or through fax. It costs $250 to submit your Articles of Organization.
The Articles of Organization include information about the LLC’s name, purpose, registered agent, and management system.
Step 4: Find Your NAICS Code
The North American Industry Classification System (NAICS) will classify and categorize the business activities that your LLC conducts. This six-digit number is used when reporting statistical data for U.S. industries. You may also use it when filing your taxes.
Step 5: Receive a State Certificate
Alaska will certify that your LLC exists once the paperwork gets filed and approved. If you submit your files via mail, it will likely take 10-15 business days for approval. You will get your Articles of Organization and Certificate of Organization stamped, approved, and returned in the mail.
Online filing has the advantage of immediate approval time. You can print a copy of your Articles and Certificate of Organization by searching for your LLC under “Filed Documents” in the Corporations Database.
You need this certificate to get an Employer Identification Number, bank account, and business license.
Step 6: Get a Business License
You need a license to conduct business in Alaska. You can get this license here.
Step 7: Create your Operating Agreement
The Alaska LLC Operating Agreement outlines the inner workings of your company. This document details the relationship between the owner and members of the LLC. It protects the interests of everyone involved in your organization if you encounter legal trouble. The six articles involved in an Operating Agreement are:
- Management and Voting
- Capital Contributions
- Membership Changes
While you do not need one of these to start an LLC, it helps if you decide to dissolve your company. Furthermore, you are advised to form an operating agreement due to its many benefits. This form can:
- Resolve Problems: An agreement can resolve problems and issues before they spiral out of hand and require a third party to get involved.
- Credibility: An agreement can boost your credibility and ensure your business remains a limited liability company.
- Regulations: It can help you avoid unnecessary regulations and rules that could be applied to your business without the LLC.
Step 8: File Reports
After forming your LLC, you need to file an Initial Report within six months of its organization. There is no fee for this report. You need to file a Biennial Report every two years before January 2 of the filing year.
If you have an Alaska LLC, it costs $100 to submit the Biennial Report. Foreign LLCs must pay $200.
Step 5: Obtain an EIN
LLCs with two or more members must obtain an IRS Employer Identification Number (EIN). You will need to get this number even if you do not have employees. Single-member LLCs that will have employees or get taxed as corporations also need EINs.
You can get an EIN by filing IRS Form SS-4 or an online application.
Cost to Start an LLC in Alaska
The costs associated with forming a domestic LLC in Alaska are:
- Articles of Organization: $250
- Biennial Report Fee: $100
- Business License Renewal Fee: $50
Foreign LLCs have a $350 filing fee for the Articles of Organization. You also need to pay $200 to file your Biennial Report.
If you use a professional registered agent, you will pay somewhere between $0 and $100 plus state fees. While hiring a third-party agent will cost more, this individual will make fewer mistakes and better protect your business.
What To Do After Forming Your LLC in Alaska
Here are some things to do that can help you maintain your LLC.
Open a Company Business Bank Account
Make sure you open a business bank account after forming your Alaska LLC. This account is designated for business transactions. You can also acquire a credit card that you use for company purchases. Developing your credit score
Since your LLC will have personal liability protection, obtaining a business bank account means never having to use your finances to avoid going into debt or paying late payments. Having a business bank account can help you avoid mixing your finances.
Hire an Accountant
An accountant may seem unnecessary for your LLC, but hiring one can protect your business from any potential issues or liability in the future. Some benefits of hiring an accountant include:
- Easier Payroll: Less time spent going through payroll and giving your employees their money means more time creating products and services.
- Preventing Overpayment: If you make payments on your own, you may miss a thing or two. Avoid overpaying employees and hire a professional who can do this step for you.
- Manage Losses: Every business will go through a period of loss. Hire an accountant to minimize losses and maximize profit.
Build Your Website
All modern businesses need websites to attract customers. According to GE, 81% of people research products online before visiting the store. If you do not have a digital presence, your potential customers will go to an establishment that does have one.
You do not need extensive coding knowledge to create a professional-looking website. You can use a drag-and-drop builder to create a website in minutes. You could also work with a web developer for a unique site if you would like.
Acquire the Necessary Licenses, Permits, and Insurance
You will need to acquire business licenses on the state, county, and city levels. Depending on your industry, you may need an occupational license or specific permits.
After acquiring the necessary licenses, you should implement insurance policies. You may need specific coverage from the state if you have employees. Landlords may have other requirements. Some widely-used business insurance policies are:
- Workers’ Compensation: This insurance protects your employees from injuries and illnesses acquired on the job. Alaskan businesses need this coverage if they have more than one employee.
- General Liability: This option protects against property damage, personal injury, and bodily injury claims. You will likely need this to rent warehouse or office space.
- Professional Liability: This insurance can protect against negligent or inaccurate work claims. It is frequently used for businesses that provide services to consumers.
Register with Alaska’s Tax Agency
Alaska may not have state income or sales taxes, but you will need to register your LLC as a sole proprietorship, partnership, or corporation. It’s worth mentioning that some municipalities levy a sales tax, even though there is no state-wide sales tax.
How to Keep Your LLC Compliant in Alaska
Keeping your LLC complaint in Alaska can help avoid conflict, lawsuits, and workplace dissatisfaction.
One facet of compliance involves acquiring the necessary permits. You may need signage, health, or building permits for your industry. Each permit requires a different fee as well.
Ensure you submit your Biennial Report on time. If you fail to file your report, you could face fines or automatic dissolution.
You can prevent this from happening by working with registered agent services. These individuals can remind you of upcoming submission deadlines and complete the reports on time.
Tax Filing Requirements for LLCs in Alaska
Alaska does not impose a sales tax on goods and services. Even if your LLC does not have employees, you will still have to pay a state tax.
Companies with employees must register for Unemployment Insurance tax.
Alaska does not have a state personal income tax.
Most LLCs have to report their income with one of these forms:
- Form 1040 Schedule C for single-member LLCs
- Form 1065 Partnership Return for multi-member LLCs
LLCs that are taxed as C-Corps need to file Form 1120. Those that act as S-Corps file federal taxes with Form 1120S.
Frequently Asked Questions
How long does it take to register an LLC in Alaska?
The average approval time and frame take between a few days and a few weeks, depending on the method of filing, the paperwork included, and what time of year you file.
What tax structure should I choose for an LLC in Alaska?
There are various methods that users can use for forming an LLC in Alaska, with different structures available for owners. These include sole proprietorship, partnership, or corporations.
If you want to form an LLC in Alaska, try to opt for a sole proprietorship or disregarded entity for a single-member LLC. Multi-member LLCs benefit most from partnerships.
Should you hire an LLC formation service in Alaska?
An LLC formation service involves a professional registered agent that can help individuals form an LLC without prior experience.
For business owners who are new entrepreneurs trying to make ends meet, using an LLC formation service can help you figure out each step, avoid mistakes, fulfill requirements, and meet deadlines.
If you are searching for the best LLC formation service in Alaska to create your dream business, you should look into formation services with low start-up costs and affordable features.
Some assets that you should consider when searching for an LLC formation service are:
- Straightforward and understandable terms and packages
- Affordable deals for new and small business owners
- Responsive customer support available day and night
- Knowledgeable workers to help with your complicated queries
- Positive customer feedback and high customer satisfaction levels
- Highly-qualified registered agent services with Alaska-specific knowledge
- Affordably priced packages that are accessible to small business owners
- One free year of registered service after sign-up as a ‘sign-on perk’
- Real-time order tracking for constant communication
- An accessible online dashboard that helps you with compliance reminders, deadlines, and paperwork
- Brand authority
By knowing what to look for in an LLC formation service for your Alaskan business, you can choose a reputable company and avoid any mistakes along the way. After all, you want this company to help you get off the ground, not hinder your progress.
Filed under: Alaska Business Guides