If you’re starting a business and considering forming a Limited Liability Company (LLC) in Alaska, this guide will explain the basics of an LLC and the steps to filling out the Alaska LLC paperwork.
Related: Starting A Business In Alaska Checklist
What is an LLC?
The Limited Liability Company (LLC) is a popular business structure (also called a business entity) for many businesses starting in Alaska. The LLC provides personal asset protection and has the potential to save money on taxes. With a little research, you can learn how to form an LLC in Alaska without an attorney.
Unlike an Alaska sole proprietorship or general partnership, where the small business owner can be held personally liable for lawsuits against the business, the LLC is a separate legal structure that protects the business owner’s personal assets.
LLCs in Alaska have a unique benefit compared to other states, which is having perhaps the best protection against charging orders in the United States. A charging order is the result of a final judgment against a company if it is found liable. Even if a creditor obtains a charging order against an LLC in Alaska, they cannot access the business income or assets.
While the Alaska corporation also provides liability protection, the Limited Liability Company is often a better choice for a small business because of the multiple tax options and fewer administrative requirements.
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Steps To Form An Alaska LLC
Step 1: Choose a Name for the LLC
The first step to starting an LLC in Alaska is finding a name.
First, the LLC’s company name must be unique to the other registered entities in the state of Alaska. You can check the availability of Alaska LLC names by searching the online name database on the Alaska Department of Commerce, Community, and Economic Development website.
There are a few Alaska LLC name requirements to be aware of as well, as the legal name of the LLC can only be one of the following words or abbreviations:
- Limited Liability Company
- Limited Liability Co.
- LLC
- L.L.C.
- Ltd.
Additionally, the LLC name cannot include the words “city,” “borough,” “village,” or any word that could refer to the business as part of a municipality or government agency.
Step 2: Appoint an Alaska Registered Agent
Every LLC in Alaska must have a registered agent. The registered agent must be either a resident of Alaska or an Alaska corporation authorized to transact business in Alaska.
The registered agent ensures proper service of process, also known as a notice of litigation. The agent ensures the company receives all important correspondence, such as tax documents, summons, summons, and other legal documents, in a reasonable time frame should the LLC need to prepare for and respond to a lawsuit.
The requirements to be an Alaska registered agent include;
- Someone over 18 years of age
- Generally available during normal business hours to receive service of process
- Have a physical address (no PO Boxes are allowed).
You, as the business owner, can act as your own registered agent in Alaska and not pay to hire one. While many LLC owners opt to fulfill this role themselves, some owners choose to hire registered agent services like Northwest Registered Agent. Utilizing a registered agent service ensures that your LLC adheres to state requirements while offering an added layer of convenience and confidentiality since the owner’s personal address isn’t disclosed in public records.
Related: How Do You Appoint An Alaska Registered Agent?
Step 3: File the Alaska Articles of Organization
The paperwork to create an LLC in Alaska is called the Articles of Organization.
To get started, either register and file online with the Alaska Department of Commerce, Community, and Economic Development or download the Alaska LLC Articles of Organization (Form AS 10.50.075).
The steps for filing for a domestic LLC in Alaska online or by mail are largely the same. The state filing fee is $250, whether submitted online or through the mail.
The turnaround time for approving the Articles of Organization is immediate when filing online versus 10-15 business days for mailed-in forms. After the LLC is approved, a copy of the Alaska Articles of Organization will be mailed back along with the Alaska Entity Number.
Related: How To Fill Out The Alaska LLC Articles of Organization
If you have questions regarding the filing of the Articles of Organization, contact the Alaska Division of Corporations, Business, and Professional Licensing.
Phone: 907-456-2550 (phone)
Email: corporations@alaska.gov
Website: https://www.commerce.alaska.gov/web/cbpl/Corporations.aspx
Tips for Filling Out the Alaska LLC Articles of Organization
When filing the Articles of Organization, there are a few sections that you may not know how to fill out. Let’s go over a few of those sections.
Purpose of the LLC: In this section, describe the business activities of the LLC. It is usually better to be a little vague in case the focus of the business ever changes. To keep the purpose of the business flexible, you can use “Any lawful business for which a limited liability company may be organized under the laws of the State of Alaska.”
NAICS code: NAICS (North American Industry Classification System) is a six-digit number that classifies and categorizes the type of business activities performed by your LLC. This information is used to report statistical data for each of the U.S. industries. Remember this number, as you will need it when filing annual tax returns.
If the activities of your business aren’t specifically listed, choose the code that is the closest.
Management: The Management section asks whether the management structure of the LLC is Member-Managed or Manager-Managed.
- Member-Managed LLCs have an active involvement in the day-to-day operations of the business.
- Manager-Managed LLCs are hired by the members to run the LLC, similar to a CEO of a corporation.
Most LLCs are member-managed.
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What To Do After Setting Up Your Alaska LLC
Once the LLC has been formed, there are a few additional steps to take. Below is a list of the most common tasks.
File the Initial Report
After the LLC is formed, an Initial Report must be filed with the State of Alaska Division of Corporations within six months of forming the entity. Filing can be done online or by mail.
Prepare an Alaska LLC Operating Agreement
The LLC operating agreement is a legal document that governs the LLC’s framework and covers ownership rights, capital contributions, LLC member responsibilities, how profits and losses are distributed, and more.
In Alaska, the LLC Operating Agreement is an internal document that the state does not require, but it is still worth considering. Without an operating agreement:
- The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
- Member’s personal liability protection may be diminished.
- LLC members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.
Obtain an EIN
If the LLC will hire employees or is owned by more than one member, an EIN is required.
The EIN or Employer Identification Number (also referred to as a Federal Employer Identification Number, FEIN, or Federal Tax ID Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes.
Related: How To Register For An EIN
Open an LLC Bank Account
Opening a checking and/or savings account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.
Several documents will be needed to open an account, such as:
- A banking resolution is a document that authorizes the members of the LLC to open a business bank account on behalf of the LLC.
- Copies of the original formation documents from the state showing the official creation of the LLC.
- Driver’s licenses of the members.
- Depending on the age of the LLC, an Alaska Certificate of Compliance may be needed to prove the LLC is active and in good standing with the state.
Apply for Alaska Business Licenses and Permits
Depending on what your business does and where it is located, there will likely be some business licenses and permits to register before starting. Some common registrations include:
- Business license: In addition to a state of Alaska business license, which is required for all businesses operating in Alaska, local business licensing may also be needed.
- Professional license: In Alaska, some businesses, such as barbershops, accountants, and home inspectors, need licensing to provide certain services.
Related: How To Register A Business In Alaska
File the State of Alaska Biennial Report
In addition to the Initial Report, LLCs are also required to file a Biennial Report every two years with the Division of Corporation, Business & Licensing. The report is due before January 2 of the filing year and updates ownership information and other details.
Related: How to file the Alaska LLC Biennial Report
File the Beneficial Owner Information Report
Beginning in 2024, any individual who owns at least 25% or has “substantial control” of an LLC or corporation in Alaska or any other state must file the Beneficial Ownership Information (BOI) form with the Financial Crimes Enforcement Network (FinCEN). BOI reports are filed electronically through FinCEN’s website.
Alaska LLC FAQs
How much does an Alaska LLC cost?
To form an LLC in Alaska, the Articles of Organization and state filing fee of $250 must be sent to the Alaska Department of Commerce, Community, and Economic Development.
Are there recurring fees for an LLC in Alaska?
Yes -To keep the LLC active, the Alaska Department of Commerce, Community, and Economic Development will receive a biennial report and $100 (paid every two years).
How long does it take to start an LLC in Alaska?
Online filings are processed immediately when registering online or 10-15 days when mailing.
What is an Alaska Foreign Limited Liability Company?
An LLC is one that is physically operating in states outside of where it was formed and must register as a foreign LLC in each state where it plans to operate. Physically operating means having a presence, such as having an office or employee.
What is an Alaska Professional Limited Liability Company (PLLC)?
Businesses that require state licensing, such as accountants, attorneys, podiatrists, physical therapists, acupuncturists, etc., often must file as a Professional Limited Liability Company (sometimes referred to as a Professional LLC or PLLC) instead of an LLC. Filing for a PLLC is very similar to filing for an LLC.
