The Limited Liability Company (LLC) is a popular business entity choice 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 a sole proprietorship or partnership where the small business owner can be held personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting for the business owner’s personal assets.

LLCs in Alaska have some of 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. In Alaska, even if a creditor obtains a charging order against an LLC, they cannot access the business income or assets.

Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.

Forming an LLC in Alaska can be both affordable and is simple enough for most people to start on their own.  That said, it’s not a bad idea to have a legal professional like IncFile or IncAuthority.

Related: Should you use a Business Formation Service, Hire an Attorney or Do it Yourself?

To form a Limited Liability Company in Alaska, the Articles of Organization are filed with the Alaska Department of Commerce, Community, and Economic Development.  The state filing fee is $250, whether submitting online or through the mail.

The LLC is approved right away with online filing versus 10-15 business days of mailing.

If you have questions, contact the Alaska Division of Corporations, Business, and Professional Licensing.

907-456-2550 (phone)
corporations@alaska.gov
https://www.commerce.alaska.gov/web/cbpl/Corporations.aspx

HOW TO FILE THE ARTICLES OF ORGANIZATION AND FORM AN ALASKA LLC

The steps for filing online or by mail are largely the same.  The screenshots show the online application.

To get started, either register with the Alaska Department of Commerce, Community, and Economic Development or download the Alaska LLC Articles of Organization Form AS 10.50.075.

Step 1: Name the LLC

There are a few name requirements for an LLC in Alaska.

The legal name of the LLC must include:

  • Limited Liability Company
  • Limited Liability Co.
  • LLC
  • L.L.C.
  • Ltd.

The LLC name may include the name of a city, borough, or village; however, the name cannot include the word “city,” “borough” or “village” or any word that could refer that the business is part of a municipality or government agency.

The company name of the LLC also has to be unique to other registered entities in the state of Alaska.  Check the availability of LLC names in Alaska through the state’s Corporations Database. 

If you find the business name you want, but are not ready to register the LLC, a name may be reserved for up to 120 days by filing a Business or Corporation Name Reservation Application. A $25 fee must be paid to reserve a name.

Before selecting a business name, you may also want to see if the domain name is also available.

How to Form an Alaska LLC - Articles of Organization

Step 2: 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.”

Alaska LLC - Purpose Statement

 

Step 3: NAICS Code

NAICS (North American Industry Classification System) is a six-digit number that classifies and categorizes the different businesses.  This information is used in reporting statistical data for each of the industries in the U.S.  Remember this number as you will need it when filing annual tax returns.  See how to do a NAICS search here.

If the activities of your business aren’t specifically listed, choose the closest activity.

LLC in Alaska - NAICS Code

 

Step 4: Registered Agent

A requirement of an LLC in Alaska, a Registered Agent must be identified.  The Registered Agent is either an Alaska resident (select individual in the type field) or an Alaska corporation, registered to transact business in the state (select entity and enter their Entity Number).

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.  To be an agent in Alaska, they have to be available to receive service of process during normal business hours and have a physical address (no PO Boxes are allowed).

Even though the business owner can be the registered agent, their name and address become public record, and with that comes a loss of privacy. Privacy is an essential consideration for some entrepreneurs, especially when they are doing business from home. If this is the case, a commercial registered agent service can be hired and use their address.  The cost is usually around $100-$125 per year. 

Related: Do I Need a Registered Agent in Alaska?

LLC in Alaska - Registered Agent

 

Step 5: Entity Address

Include the mailing and physical address of the LLC.  The physical street address and the mailing address may be the same, and if so, fill out both fields.

Remember, the physical address can’t be a PO Box.

Alaska LLC - Entity Address

 

Step 6: Management

This 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.

 

Step 7: Organizers

An LLC Organizer is someone involved with the formation of the Articles of Organization.  The Organizer may or may not become a member, such as a mentor, attorney, or accountant, but the initial members will all be listed as organizers.

Alaska LLC Add Organizers

 

Step 8: Optional Provisions and Additional Articles

This is an optional section and not used by most LLCs.  Here you would include additional rules for the operation of the LLC.   Many filers include these items in the Operating Agreement, which is easier to change than in the Articles of Organization.

Alaska LLC - Optional Provisions

 

Step 9: Contact Information

The contact information is for the person completing the application and provides a central point of contact should the state have questions regarding the filing of the LLC.

Alaska LLC - How to Form

 

Step 10: Pay and File

If filing online, the application is processed immediately, and you will receive the Articles of Organization and LLC Entity Number. Payment can be made with a credit card.

If mailing, send the form and a check or money order for $250 to:

State of Alaska Corporations Section
PO Box 110806
Juneau, AK 99811-0806

In 10 – 15 business days, assuming there are no questions on the form from the State, the LLC will be officially filed.  An approved copy of the Alaska Articles of Organization will be mailed back along with the LLC Entity Number.

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Tasks after forming your LLC

Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

File the Initial Report

After the LLC is formed, an Initial Report will need to be filed with the State of Alaska Division of Corporations within six months of organization.  Filing can be done online or by mail and the filing fee is $100 for Alaska LLCs, $200 for foreign LLCs.

Prepare an Operating Agreement

The operating agreement is a legal document that governs the framework of an LLC.  This document covers items like ownership rights, capital contributions, member responsibilities, how profits and losses are distributed, and more.

Most states do not require an LLC to have an operating agreement 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
  • Members may not have a full understanding of their roles and responsibilities which could lead to costly disputes in the future

Learn more about when an LLC needs an operating agreement and download an  Alaska LLC operating agreement template

Obtain an EIN

The EIN or Employer Identification Number (also called a Federal Employer Identification 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.

The EIN will be needed in order to open a bank account, register for business licenses and permits, file tax returns, pay payroll taxes, and more.

Related: How to Apply for an EIN

Elect the LLC’s Form of Federal Income Taxation

One of the major benefits of the Limited Liability Company is the tax flexibility it provides.  When applying for the Employer Identification Number, you will choose how the entity will be taxed for federal income tax purposes. While there are some limitations, an LLC may be classified for federal income tax purposes as a:

  • Sole proprietorship
  • Partnership
  • C-corporation
  • S-corporation

While this may sound confusing, this is referring to the way the LLC is taxed, not the legal structure.

Related: How can an LLC be taxed?

By default, LLCs are pass-through entities. This means instead of the LLC paying taxes on profits, the profits or losses flow through to the members.

Single-member LLCs will by default be taxed as a sole proprietorship. The members can elect to be taxed as a C-corporation or an S-corporation.

Multi-member LLCs will be default be taxed as a partnership. The members can elect to be taxed as a C-corporation or an S-corporation.

In general, the difference between being taxed as a corporation and being taxed as a sole proprietorship or partnership the profits and losses are passed to the member’s federal income tax returns based on their percentage of ownership.  As a result, the owner will pay net income tax and self-employment taxes on all business profits.  As an alternative, electing to be taxed as a corporation allows the members to take a reasonable salary and then pay payroll taxes.  Any remaining profits are distributed and aren’t subject to payroll taxes, resulting in potential tax savings.  

Before electing how your LLC will be taxed, be sure to talk with an accountant to assess which one will be best for you, especially since Alaska doesn’t impose a state income tax. 

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 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.

Related: How to Open a Business Bank Account for your LLC 

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be a variety of business licenses and permits to register before starting. Some common registrations include:

  • Business License – In addition to a state business license that is required for all businesses operating in Alaska, many cities also require businesses to be licensed in order to operate.
  • Professional License – Certain services such as barbershops, accountants, home inspectors, and others must be licensed.

Related: What Business Licenses are Needed in Alaska?

File Annual Reports

In addition to the Initial Report, LLCs are also required to file a Biennial Report 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 an Alaska LLC Biennial Report