Starting LLC in Alaska: Peculiarities & Detailed Manual
Want to start an LLC in Alaska? It is a profitable decision for a business, as the state has waived corporate tax in favor of gross corporate income tax. So you’ve decided to start an LLC? Not sure how to initiate the process? To start an LLC in Alaska, you need to get ready for several stages.
We’ve prepared a guide for you with just six steps to form your LLC and to get success! You can also refer to the virtual LLC formation service.
Note: ZenBusiness is the best service to file the LLC. You’ll surely appreciate reasonable prices, company values, and other peculiarities.
An Alaska LLC: The Notion & Essence
Many Alaska business owners choose to start an LLC. So, unlike a corporation, they can take advantage of flexible management. We’re talking about the protection of personal assets that sole proprietorships and general partnerships lack.
The state of Alaska puts forward simplified requirements for registration and maintenance of LLC and invites business owners to choose the type of taxation. Do you still have doubts about the LLC?
6 Stages to Form an LLC Correctly
Stage №1: Choose Your LLC Name
The LLC name is a significant aspect, as it is the name of your company that makes the first and strongest impression on the audience of your potential customers! The name must be different from existing company names and must meet Alaska’s regulatory requirements. Now get started with the following aspects.
LLC name in terms of jurisdiction
The State of Alaska obliges business owners to include the abbreviation DDS or the phrase – limited liability company in the name. Please note that the terms corporation or registered are prohibited. In addition, you cannot use the designations of other forms of business: banks or law firms.
Take care of the explanations
You must include in the title an explanation of the nature of your business. For example, if you are engaged in the computers’ repairing, write in the LLC title – computer wizard. If you have any values or principles, also indicate this. For example, if you are farming, use the term natural, nitrate-free, etc.
So, you need to get a little creative and fully comply with Alaska’s legal requirements.
Stage №2: Hire a Registered Agent
A registered agent is called a statutory agent in Alaska and will help you to start an LLC. The agent can be an Alaska resident, natural or legal attorney responsible for sending and receiving legal documentation on behalf of the future company. A company representative can also be an employee of the company or its owner.
The registered agent of a company is an agent who can receive processes, demands, or notices that are required or allowed by the government to be served upon a company. According to the law, the responsibilities of the registered agent consist in receiving and forwarding notices, demands, and processes to the company’s physical address.
A registered agent guarantees an excellent reputation for your Alaska LLC. Also, if your business gets worse, Alaska can take legal action against it without notifying you. The registered agent will always receive appropriate notification and will be able to take timely measures to protect your interests as an attorney.
You should apply to the online service to get started a business in compliance with all regulations and requirements. So, you will have the opportunity to filter spam and protect your personal and contact information. If you use the ZenBusiness and Northwest Registered Agent to form an LLC, you will receive the free services of a registered agent.
Stage №3: Applying for Registration
To register a business in Alaska, you must file the Articles of Association with the Alaska State Secretariat. If you are anxious about your LLC formation, you can submit your documents for pre-processing, which will allow the Secretary of State’s office to advise you of the eligibility. It can be a good option if you get started for the first time in an LLC without consulting an attorney. Be sure to provide:
- The desired name of your business.
- Personal and contact details of the registered agent.
- Business management form.
- Personal and contact details of the manager of your company.
- Signature of the applicant and registered agent.
- Date of application submission.
In Alaska, you can fill out your articles of organization electronically or print out a PDF form and send it by mail.
Cost to form an LLC: The fee you should pay for opening an LLC in Alaska equals $100.
Processing time: During the heavy filling load, it usually takes from 10 to 15 working days for the state to finalize the processing of the documents for your Alaska LLC formation and mail them back to you. Nevertheless, if you file a form online, it can be processed much faster (within just 1 working day). Please consider that the counting of working days starts only once all the required documents are put in order and filled out appropriately.
Stage №4: The Operating Agreement Background
While an operating agreement is not binding in Alaska, creating one could significantly improve the company’s climate. An operating agreement is a document that describes the structure of a project, the way it works, the rights and obligations of each partner.
This document reflects the consistency of partners and thereby reduces the chance of controversy and disputes. Therefore, it is significant that all members of the future LLC carefully read this document before joining the company.
An attorney can help draw up an operating agreement and determine the way income and liabilities will be distributed among the owners of your LLC. You will find more information about the operating agreement here. Prepare to enter the following information:
- Names of all participants.
- The rights and obligations of each of the listed participants.
- Description of procedures for voting or resolving differences between members.
- Regulations on the financial share of participation of LLC members.
- Description of the way you’re going to manage the LLC.
So, do not neglect this stage of LLC formation. It largely guarantees your safety and the observance of your rights by all members of the business project.
Stage №5: Tax Compliance
To conduct a business that you want to register as an LLC successfully, you need to comply with several tax requirements at various levels.
Requirements of Federal Significance
Does your LLC involve multiple owners? Then you need to take care of the EIN! The EIN, or Employer Identification Number, is a unique nine-digit number assigned by the IRS to US corporations. This number must be obtained by all business owners under whose leadership the hired employees work. A business owner can obtain an EIN from the IRS in person or by mail.
Your state’s cess requirements
The laws of Alaska don’t require individuals to pay income taxes; it means that if on your income report your company’s earnings are filed under schedule C (like sole ownership or a partnership), your LLC won’t be obliged to pay income taxes.
However, if your LLC is recognized as a corporate entity, you will be required to pay the corporate income tax. The state actuates this type of tax on the rate on the income scale; if your company’s taxable income is higher, the rate will be higher as well. If your LLC will be filling and reporting as a corporation, consult the state’s guide here.
Moreover, every limited liability company in Alaska, no matter its taxable status, should file a biennial report. Within six months of forming your LLC, you’ll have to file an initial report (you can fill the form of the report here). Further, you should file a report every 2 years. The cost of filing is $100, and you can start filing on this page.
In addition, you could be subject to some industry tasks depending on the sphere of your business. You can see the list of taxes that might apply to your business on the Alaska Department of Revenue site.
Local Tax Business Demands
Depending on the exact location of your company, you may also be required to pay some local variations of taxes.
The state doesn’t collect the tax on sales and use, but your city or municipality has the right to do it. To determine whether there are any local taxes you need to pay, consult an accountant or the offices of the local administration.
Stage №6: Getting Business Licenses & Permits
The state of Alaska requires that every company should acquire a general business licensing, but mostly this license is obtained by filling out the articles of organization, so if you managed to do it, consider this step done.
Alaska also obliges Endorsements to sell particular products, such as tobacco, electronic cigarettes, and nicotine products. Moreover, many spheres of business, for example, hairdressers or veterinarians, require licenses as well. You can get to know which charges might apply to your LLC out of the Business Licenses Statutes.
Other Stages for Business Owners After LLC Registration
After completing the six mandatory steps towards starting an LLC, you need to take care of the following.
Opening a business bank account
Separate your personal and LLC accounts. Thus, you will be sure of the safety of your personal and financial data. Besides, you won’t have any hassle when filing your charge returns. Your EIN will help you open a business account quickly, no matter what you choose a bank or credit union.
All owners of companies/corporations, regardless of their form of management that attracts employees, must go through the compensation insurance procedure.
This policy aims to protect the rights of workers who are injured at work and unable to work. It will not be superfluous to get a civil liability insurance policy, as well as pay attention to some other types of insurance.
Income reporting means exactly what it sounds like – reporting the earnings you made from your company. It’s essential to consider that this report should be done whether you regained or lost money during the year. In Alaska, every LLC, no matter how is its taxable status, should file a biennial income report as well.
On this page, you will file an initial report within six months after forming your LLC. Further, you will have to do it every 2 years. The cost of filing is $100, and you can start filing on this page.
Referring to the services of a qualified accountant
Whenever you need to report your income or loss for the year, you can take advantage of the guide that can be accessed here. You should essentially file an annual report to keep your business updated about the changes of your business that take place during the year.