How To Start A Business In Alaska 
Starting a business in Alaska offers unique opportunities and challenges, owing to the state’s abundant natural resources, thriving tourism industry, and low personal taxes. However, the remote location, harsh climate, and relatively small population also present obstacles that entrepreneurs must navigate.
With its abundance of natural resources, diverse industries, and supportive business climate, Alaska offers many opportunities for entrepreneurs. From fishing and tourism to oil and gas, there are plenty of industries in which to start a business. Additionally, the state’s strong infrastructure and low taxes make it an attractive option for businesses.
Alaska Small Business Stats
- There are 74,587 small businesses in Alaska, which are 99.1% of all businesses in the state. (2022 SBA Small Business Profile)
- Small businesses accounted for 52.3 percent of Alaska employment in 2020, with 138,517 residents working for a small business. (Statistics of US Businesses)
- Exports by small Alaska firms reached $1.7 billion. (2022 SBA Small Business Profile)
- The largest number of small businesses in Alaska are categorized as agricultural, forestry, fishing, and hunting small businesses. (2022 SBA Small Business Profile)
- In 2022, Alaska was ranked as the #3 most tax-friendly state in the United States, primarily due to low individual taxes and no sales tax. (Tax Foundation)
Steps to Start a Business in Alaska
Embarking on the journey of starting a business in Alaska presents unique opportunities and challenges. To successfully navigate the process and set a strong foundation for your business, it is crucial to follow a series of well-planned steps.
From conducting developing a solid business plan, registering your business, obtaining necessary licenses and permits, and finding funding, each step plays a vital role in establishing a profitable and sustainable business in the Last Frontier.
Here, I’ll break down the steps and explain the common steps most businesses will task when starting a business in Alaska.
Step 1: Choose a Business Idea
The first step in starting a business in Alaska is having a good business idea. Maybe you already have an idea picked out, or maybe you are still deciding on one.
The “best” business to start in Alaska will largely depend on your interests, skills, and target market. However, some businesses tend to perform well in Alaska due to the state’s unique characteristics and opportunities. Here are the top 10 most popular types of businesses to start in Alaska based on online searches:
Tourism and hospitality: With its stunning landscapes, wildlife, and outdoor activities, Alaska attracts millions of tourists each year. Starting a business in the tourism and hospitality industry, such as a hotel, lodge, restaurant, guided tour service, or adventure sports company, can be highly profitable.
Fishing and seafood processing: Alaska has a thriving fishing industry, thanks to its abundant marine resources. Businesses related to commercial fishing, seafood processing, or exporting seafood products can capitalize on this natural advantage.
Transportation and logistics: Due to Alaska’s remote location and challenging terrain, there is a constant demand for transportation and logistics services. Starting a business focused on air, sea, or land transportation, or providing logistics and freight forwarding services, can meet this demand.
Renewable energy: Alaska has vast potential for renewable energy production, such as wind, solar, hydro, and geothermal power. Developing renewable energy projects or providing services related to installation, maintenance, and consulting can be a lucrative business opportunity.
Specialty retail or e-commerce: Given the limited availability of some products in Alaska, there is a market for specialty retail or e-commerce businesses that offer unique or hard-to-find items tailored to the local population’s needs and preferences.
Agriculture and local food production: With its short growing season and limited agricultural land, Alaska imports most of its food. Starting a business focused on local food production, such as greenhouses, hydroponics, or vertical farming, can help meet the demand for fresh, locally sourced produce.
Health and wellness services: Providing health and wellness services, such as fitness centers, yoga studios, or mental health counseling, can cater to the growing interest in personal well-being and self-care among Alaska residents.
Before starting any business, it’s critical to conduct thorough market research and understand the local regulations. To learn about different types of businesses, feel free to check out our library of business ideas to get detailed industry information, trends, costs to start, tips, and lots more.
Step 2: Write a Business Plan
Writing a business plan is an essential step in starting and running a successful business. A well-crafted business plan serves several purposes, such as outlining your business’s goals, strategies, and timelines, calculating how many clients or sales you need to break even, calculating the funding needed to start, and more.
Writing a business plan for the first time might seem daunting, but it’s a vital step toward transforming your vision into a successful reality. Crafting a well-researched and comprehensive plan will not only help you secure funding but also give valuable insights into your industry, market, and competitors.
Related: How to write a business plan
Step 3: Select a Business Entity
The next step in starting a business in Alaska is selecting a business entity.
The business entity is sometimes referred to as a business structure or legal entity, which refers to how a business is legally organized. There are four primary business entities: sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). A brief description of each is below.
A Sole Proprietorship is the most simple and common type of business structure in the state of Alaska, where the business is owned and operated by a single individual. In a sole proprietorship, there is no legal distinction between the owner and the business, meaning the owner is personally responsible for all aspects of the business, including liabilities, debts, and taxes.
Unless the business will operate under the name of the owner, a DBA (also referred to as Doing Business As, Fictitious Business Name, Assumed Name, or Trade Name) can be, but is not required to, register with the state. This registration provides exclusive use for 5 years and can renew.
General Partnerships are a type of business structure where two or more individuals agree to share the ownership, profits, and responsibilities of managing the business and are personally liable for the partnership’s debts and liabilities. A General Partnership can be created through an oral or written agreement, though it is highly recommended to have a written partnership agreement to outline the rights, responsibilities, and expectations of each partner.
A partnership can choose to register a DBA if desired.
Related: What is a partnership?
A Corporation is a type of business structure that is legally separate from its owners (shareholders). It is formed under state law by filing Articles of Incorporation with the Alaska Division of Corporations, Business, and Professional Licensing. A corporation provides limited liability protection to its owners, meaning they are not personally responsible for the corporation’s debts and obligations. Though in many cases, they will be personally liable for a business loan as banks typically require a personal guarantee.
Related: How to form a corporation in Alaska
The Limited Liability Company (LLC) is a type of business structure that combines the limited liability protection of a corporation, where the LLC members have personal liability protection, with the flexibility and simplified taxation of a sole proprietorship or partnership. An LLC is formed under state law by filing Articles of Organization with the Alaska Division of Corporations, Business, and Professional Licensing.
Related: How to form an LLC in Alaska
Forming a corporation or LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular formation services include:
IncFile - Great service and free registered agent the first year.
Northwest - Privacy-Focused: Free registered agent and private business address for 1 year!
ZenBusiness - Easy to use and free registered agent for 1 year!
Step 4: Register the Business
Certain licenses and permits will be needed to operate a business in Alaska, and the ones needed will vary on the business’s activities and location. Some common business registrations include:
State of Alaska Business License – The State of Alaska requires anyone conducting business in the state to obtain a state business license from the Alaska Department of Commerce, Community, and Economic Development.
Employer Identification Number – Employer Identification Number – The Employer Identification Number or EIN (sometimes referred to as the Federal Employer Identification Number, FEIN, or employer ID number) is a nine-digit tax identification number issued by the Internal Revenue Service (IRS). This number identifies a business operating in the U.S. and is used for paying payroll taxes, filing tax returns, and more. Much like what a social security number is to a person, the EIN is a unique number for a business. While most businesses will need to get an EIN, some do not.
Partnerships, corporations, and most LLCs OR sole proprietorships with employees MUST register for an EIN.
Sole proprietorships or single-member LLCs with no employees are NOT required to get an EIN. In these instances, the owner’s social security number can be used to identify the business; however, an EIN can still be requested.
Filing the EIN can be done online at no cost through the IRS website, which takes only a few minutes, and the number is available immediately. Alternatively, an EIN can be registered by mail or fax by submitting IRS Form SS-4.
Professional Licensing – Some services, such as acupuncturists, barbers, home inspectors, accountants, and others, require professional licensing in Alaska. While this isn’t a license on the business, occupational licensing is required to offer the service.
City Business Licenses – In addition to the statewide business license, some cities also require businesses to be licensed by the city to operate.
Step 5: Open a Business Bank Account
Keeping your business and personal finances in separate business bank and credit card accounts makes it easier to track the income and expenses of the business. Every bank is different, but in general, they will request the following:
Sole proprietorship & partnership – Trade Name Certificate, EIN or SSN, and the owner(s) driver’s license
Corporation – Articles of Incorporation, bylaws, Certificate of Good Standing, EIN, and the owner(s) driver’s license
LLC – Articles of Organization, Operating Agreement, Certificate of Good Standing, EIN, and the owner(s) driver’s license
Step 6: Find Financing
Securing funding to start a business in Alaska involves exploring various financing options and determining the most suitable sources for your new business.
Begin by creating a comprehensive business plan, outlining your business objectives, financial projections, and strategies for growth. A well-prepared business plan, which was covered earlier, is essential for attracting investors or obtaining loans.
There are a number of small business financing options, which may include personal savings, loans from friends or family, conventional bank loans, or Small Business Administration (SBA) guarantees.
Step 7: Hire Employees
Hiring employees is a complex and often overwhelming process for new small business owners, as there are Alaska and federal labor laws to be aware of, such as minimum wage, overtime, workplace safety, and anti-discrimination regulations.
In addition, employers are responsible for reporting new hires, verifying employees are eligible to work in the U.S., income tax withholding, unemployment insurance, and payroll withholding taxes, including Social Security, and Medicare.
Step 8: Obtain Business Insurance
Business insurance is never at the top of anyone’s list of things they want to do when starting their new venture, however, business insurance may be critical to protecting your business.
Most types of business insurance are optional, except for workers’ compensation insurance. The Alaska Workers’ Compensation Act requires every employer with one or more employees to obtain workers’ compensation insurance unless the employer has been approved as a self-insurer by the Alaska Workers’ Compensation Board.
Even if insurance isn’t required and there is a fire, theft, or personal injury lawsuit, the business owner may have to pay out-of-pocket for damages and legal fees. Home-based businesses may want to consider business insurance, too, as personal home and vehicle policies may not cover a business loss.
Step 9: Set up an Accounting System
Businesses operating in Alaska have various tax responsibilities, and while Alaska does not impose a state sales tax or a personal income tax, businesses are still subject to certain taxes and filings. As a result, setting up an accounting system for your business is one of the most important things you can do for your company to ensure long-term success.
This material is property of StartingYourBusiness.com
Common questions when starting a business in Alaska
Is Alaska a good place to start a business?
Whether Alaska is a good place to start a business depends on various factors, including the type of business, your target market, the availability of resources, and your personal preferences.
Some of the pros of starting a business in Alaska include the following:
– Natural resources: Alaska has abundant natural resources, such as oil, natural gas, seafood, and timber. Businesses in these industries may find it advantageous to operate in the state.
– Tourism: Alaska’s breathtaking landscapes, wildlife, and outdoor recreational activities attract tourists from all over the world. Businesses in the tourism and hospitality industries may benefit from this steady stream of visitors.
– Small business support: Alaska offers various programs and resources for small businesses, such as the Alaska Small Business Development Center (SBDC) and the Alaska Department of Commerce, Community, and Economic Development.
– Unique market opportunities: The state’s remote location and harsh climate create market gaps that other businesses aren’t willing to fill.
Is an LLC better than a sole proprietorship?
Choosing the business entity is a very difficult decision and we get a lot of questions about whether the sole proprietorship or Limited Liability Company is the best option. The benefits are different for each business owner, but here are a few things to consider when considering the two.
The sole proprietorship is a popular business entity and has advantages such as ease of setting up, fewer administrative requirements, and lower cost than the Limited Liability Company. The biggest downside of the sole proprietorship is that the owner’s personal finances and the finances of the business are tied together. This means if the business is sued or the business can’t pay its debts, the owner is personally responsible.
The LLC is a legal entity that separates the assets of the business and its owners. If the business is sued, the owners are typically not personally liable. Another significant advantage of the LLC comes from its tax flexibility. Once the LLC is profitable enough, it can provide distributions to the owners which are taxed much less than the self-employment taxes of the sole proprietorship.
What are the steps to starting an LLC in Alaska?
The main steps that most Alaska LLC need to complete include:
1. Making sure the LLC name is available
2. Appointing a Registered Agent
3. Filing the Articles of Organization
4. Creating an LLC operating agreement
5. Within 6 months of forming the LLC, the Initial Report needs to be filed
There are a few more details to consider depending on the business. Learn more about starting an LLC in Alaska.
How much does it cost to start an LLC in Alaska?
The cost to start an Alaska LLC is $250 to file the Articles of Organization with the Alaska Department of Commerce.
What licenses do I need to start a business in Alaska?
In addition to the business license required by the state, there are also potentially several different licenses and permits a business will need to obtain before starting, depending on where the business is located and what it does.