How to Form an LLC in Alaska
Establishing an LLC in Alaska is easier than most people think. This article offers important information on how you can register your company in Alaska in less than 48 hours.
In this article, you will get detailed instructions on how to:
- How to Form an LLC in Alaska?
- Prepare Article of Organization
- Appoint a Registered Agent
- Prepare an Operating Agreement
- File Initial and Biannual Reports
- Complete Tax and Regulatory Requirements
- Open Bank and Credit Account
- Setup an LLC if you’re a foreign company
- Why setup LLC Alaska
- Get Business Insurance in Alaska
How to Start an LLC in Alaska?
Select a name for Alaska LLC
Based on your preference, anyone can register a company if the name of the new company doesn’t match other companies already registered in the state. To check name availability, you may use Alaska LLC Search Corporations Database on this website.
If you are still thinking about the name, you may reserve a name for your company by paying only $25 for name reservation. Once reserved, a potential business owner has three months to register the name before it is released back in the public domain.
Once you are sure that you have a unique company name, it’s time to fill articles of organization.
Prepare Article of Organization
Article of Organization is a legal form that contains information about the new business. After preparing the article of organization, you will get a certificate from the State of Alaska recognizing you as a legal limited liability company.
To make the process easier, Alaska provides a very simple form that is easy to understand. The cost of registering an LLC in Alaska is $250, which can be paid by credit card or by a cheque.
Article of Organization asks you to fill important information about your company and its structure. Most questions are easy to answer as you only need to write your company name, the address of the company, and the number of members.
If your LLC has more than one person, you will also need to write the name of the person, their title, and address. Depending on how much information you want to provide, some LLCs also provide details about the role of each member which also includes the distribution of profits. Overall, preparing article of organization is not difficult.
Despite the ease of the process, a lot of business owner hire a professional to help them fill the form. By paying a few extra dollars, an agent can streamline your filing enabling you to concentrate on more important matters. Another advantage of hiring a professional company is the time savings because you don’t want to get your papers back after a week if there is a slight typo or wrong information in the filing.
After preparing the article or organization, you can send it to the State of Alaska Corporations. If you have filed the paperwork online, it will take approximately 48 hours to process it. If you are mailing the papers, it can take anywhere from a week to ten days to get a positive reply.
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How to complete Articles of Association?
Unlike many U.S. States, Alaska only requires specific information from potential business owners. It means that you can fill the form quickly if you know what each field requires. The requested changes are in six sections, which are outlined below:
Article 1: Name of the Limited Liability Company
As suggested, you will need to write the name of the company in this section. You cannot use specific words such as the name of the government and state organizations. Similarly, using the name of a Village or Borough is prohibited. The website also provides useful instructions on how to name your LLC.
Article 2: Disclosure of Corporate Purposes
This section requests potential owners to disclose the nature of their business. To streamline the process, you will use NAICS, North American Industry Classification Codes to indicate the nature of your business. These codes and the relevant industry associated with each code are listed on the state and local government website. You can also use the Alaska NAICS code to provide specific information about your business.
The North American Industry Classification Codes are very extensive, which means you are likely to find a code that is similar to your business. If you are not sure about the code of your company, then it is better to call the help desk of state authorities or consult a professional agent.
Article 3: Registered Agents
You will need to write the name and address of the registered agent in this section. According to the state laws, a registered agent must have a physical address and an email address, which should remain active throughout the duration of business. While a resident of Alaska can be a registered agent, it is better to use a commercial registered agent. Commercial registered agents are professional companies authorized by the state to provide such services. Details about the registered agents are given in the next section.
Article 4: Management
Just like other U.S. States, the management of LLC can include members of the company or the appointed managers of the company. If you haven’t appointed a manager, you can put the names and address of the management. If you have one or more managers to control your business affairs, you will need to provide their information. For single individual LLC, they can name themselves as the manager of the company or just write their name and address.
Article 5: Optional Provisions
This is an optional section for you to fill. A lot of times, there is not enough space to provide detail information about your business. If you cannot complete a specific Article, you can attach a separate page or pages to complete the registration requirements. As such, you will need to indicate the reason for using additional space. Just treat this page as information section where you can let the state authorities know about the structure of organization, liabilities, legal issues, and related information.
Article 6: Signatures
This section is self-explanatory as you just need to sign the paper. It is usually signed by the person or a representative of a legal entity that fills information about the Article of Organization. You don’t have to be a member or stakeholder of the organization to sign the documents. Anyone including the professional agent can sign it. The signatory is assumed to have filled the information; therefore, it is better to get the papers signed from the person who has filled Article of Organization.
Once Article of Organization is submitted, it’s time to appoint a registered agent. Details about the registration are given below:
Appoint a Registered Agent
A “registered agent” or “agent for service of process” is any person or legal entity that receives and handles legal papers and claims on behalf of a limited liability company. To establish an LLC, everyone must designate a registered agent.
According to the laws of the state, a registered agent can be any responsible person or it can also be a private service company. As per the law, a registered agent should have a physical address in Alaska. Under the guidelines, an LLC cannot be its own agent. If you want to name someone as your registered agent, you can name any member of the company. Likewise, you can also name a resident of Alaska to represent you as a registered agent.
There are a lot of private service providers that offer registered agent service at an affordable cost. The state requires these private companies to fulfill certain criteria to offer such services. The advantage of a private service provider is their ability to offer round-the-clock service to clients enabling them to receive their legal papers and important documents in a timely manner.
For many online businesses and individuals residing in other U.S. States, a private company offering registered agent service is very useful. As a professional service provider, these companies offer a variety of services that includes registration of Alaska LLC, office address, phone answering, and business process handling.
Prepare an Operating Agreement
Preparing an operating agreement is not mandatory. You can skip this process if you don’t want to submit these papers; however, many LLC chose to prepare operating agreements. An operating agreement outlines the duties and responsibilities of each member of a company. It also provides details about the profit-sharing and investment of stakeholders. The operating agreement is designed to streamline the operations of a company.
Without an operating agreement, companies that have more than one member may lose focus because the responsibilities of each member are not defined. The operating agreement is also necessary for organizations because it can act as a proof in case of a legal dispute. As it also highlights the liabilities of each member, members often take their duties more seriously because everything is written in the papers to hold them accountable for their duties.
If your company has only one business owner, preparing an operating agreement may also help in dealing with banks and other financial institutions who want to understand your role. In fact, many banks, financial institutions, and insurance providers require you to submit an operating agreement before initiating any kind of dialogue.
There are many online websites where you can download such agreements. As there is no uniform format, you can use the online samples to design your own operating agreement as per the requirements of your limited liability company. If it seems a time-consuming process, get the help of a professional agent because these agents can write an operating agreement according to the operational setup of the company.
File Your Company Reports
The State of Alaska Division of Corporations requires each LLC to submit an initial and biennial report. These reports are required so that the state can easily update their record. The initial report is due within 6 months of the company registration. In contrast, the biennial report must be filed every two years before 2nd January.
There is no charge to file the initial report but you must pay anywhere from $100 to $200 every two years when filing the biennial report. These reports can be filed online or you can send them by registered mail.
The report requires owners or the signatory of Article of Organization to update the State regarding the name and the state where the company is organized. You will also need to disclose the address of your company, the address of the registered agent, and the address of any other offices in the United States or abroad.
If the company is run by a manager, then the company report must state the name of the manager and the updated street address. If there is no manager, then every LLC must let the state know the name and address of each member of the company. Lastly, you will be required to disclose the names of each person who holds more than 5% shares in the company and the percentage of interest owned by that member.
Tax and Regulatory Requirements
In order to comply with the tax requirement, LLC that has a worker must file for EIN, employee identification number. It is easy to get EIN by filing a short form, online. Once the form is submitted, you will get the EIN instantly.
EIN is needed for a variety of purposes, which includes paying taxes and opening a bank account. Free of cost, the IRS EIN can be obtained from the IRS website by filling Form SS-4. If you are the only owner of a company, EIN is still important because you will need it to open a business account under your company’s name.
Besides EIN, certain businesses also require licenses and permits to continue their business. For instance, healthcare, real estate, and construction industries require special permits to operate. Under these circumstances, you cannot start your business just by registering your company.
If your company is involved in selling tobacco products, electronic smoking products, or products containing nicotine, you will need to obtain a business license from the division of corporations, business, and professional licensing. The business license can easily be obtained online by paying a $50 fee.
In addition to these licenses, your business may also need permission from Alaska department of commerce, community, and economic development. You can visit their official website to see if your business is in need of a permit. If you are not sure, contact a professional agent who can help you get license and permits, if required.
Bank and Credit Accounts
After setting up an LLC, you want to make sure that you have separate business and personal accounts. It is not prudent to mix your business and personal accounts as it will be detrimental to the protection of your personal assets. Once you have registered the company and appointed someone as your registered agent, it’s time to visit the bank.
In order to set up a commercial account, most banks will like to review the company formation number, employer identification number, and an operational agreement. If you have read this guide thoroughly, we have answered how to get these documents. If you’re not sure, you may call the bank directly or let your professional agent help you with opening a commercial account.
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Any foreign LLC that is not registered in Alaska must register with the state of Alaska to conduct business in the state. There is a $350 filing fees to register and conduct business in Alaska. The process can be completed online within a matter of minutes. Just like any other business, foreign LLC in Alaska must also designate a registered agent who has a physical address in Alaska. Similarly, any foreign LLC doing business in Alaska will need to file a biennial report with the state authorities.
Why set up a Limited Liability Company
The legal structure of a company affects how owners receive income, how companies make decisions, and how taxes are paid. A limited liability company is a type of business that shares certain characteristics with the two companies and corporations. Having a business with LLC can have several potential benefits.
One of the main advantages of the LLC is that the owners have limited responsibility for the decisions of the company. If the company has debts or it faces a legal claim, the owners do not have to pay for the debts of their own pockets. Individual entrepreneurs and members of associations are responsible for the debts of the business, so if an individual company or association goes bankrupt, the owners could carry a large financial burden leading them to personal bankruptcy. The members of limited liability companies and companies are protected from the debts of the business.
According to the US Small Business Administration, the income earned goes to the members, and the company’s income taxes are paid through the owners’ income taxes. In other words, an LLC is not taxed as an entity separate from the owners. This gives business flexibility to distribute the income to the owners at their discretion.
The limited liability company has a flexible structure. For example, an LLC can have a single member, giving that member complete control over the business. In addition, companies and other limited liability companies may also become members of an LLC.
How to get Business Insurance in Alaska?
Alaska has business-friendly laws that favor LLC and small businesses but you need to cover yourself in case of mishap. There is a variety of business insurance that you may get in Alaska. Business insurance will help your company reduce risks and focus on increasing sales.
For instance, most small businesses get general liability insurance for their companies, which help them protect against the lawsuit. While personal assets of the owners of a limited liability company are protected by law, it makes sense to protect your profits generated from the company.
General liability insurance will make sure that the profits generated from the business are not lost to a legal process; therefore, many businesses in Alaska also take general liability insurance. Similarly, if you are an accountant or a consultant, you may prefer a professional insurance as it will protect you from claims of malpractice.
Interestingly, if you have more than five workers in a company, the state of Alaska requires every business to have a worker’s compensation insurance. As part of the legal framework, owners and members of a business are also counted as workers. The workers compensation insurance will cover you in case of an illness, injury, or job-related death of a worker.
You can get these insurance from the website of private insurance providers. If you’re not sure of the type of insurance, it is better to ask a professional agent or the local chamber of commerce for further details.
Overall Alaska is a great place to start a business because it ranks among the top five states that have healthy economies. According to Inc. Magazine the state owes its development to oil and gas resources. It has a lot of cash to cover short-term spending and its yearly revenues exceed spending. Low levels of debt and relatively low levels of pension benefits are other things that are keeping Alaska on top of the list of healthy economies. For new businesses it means that they will not face any unexpected tax and legal hazards in the near future. If you need further information on registering your business in Alaska, talk to a professional company to give you a business package that can assist you in running a successful LLC. Also be sure to check out our Arizona LLC page next.