Forming an LLC in the United States is based on certain guidelines and regulations. These regulations differ from one state to another, and it requires you to abide by them the right way to ensure a smooth LLC formation process.
If you want to form an LLC in the state of Alaska, keep reading.
Steps to Form an LLC in Alaska
- Select a Name for your Company
- Select a Registered Agent
- File Articles of Organization
- Submit an Operating Agreement
- Obtain EIN & Business License
- File an Initial & Biennial report
- Comply with Taxes
Select a Name for your Company
The first step to form an LLC in Alaska is to choose a name for your company.
Going with the right LLC name can be a little tricky, as far as approvals are concerned. There are certain parameters that you need to consider here.
Name Availability
To make sure your desired name is available, you can search the Corporations Database on the official website of Alaska Department of Commerce, Community and Economic Development.
Alaska LLC Name Rules
According to Alaska law, below are the LLC name requirements:
- Should be unique and easily distinguishable
- Must include ‘Limited Liability Company’ or the abbreviation ‘LLC’ or ‘L.L.C.’
- The word ‘Limited’ can be abbreviated as ‘Ltd’
- The word ‘Company’ can be abbreviated as ‘Co.’
- Should not include any other designator that sounds like a different legal entity (for example Corp., Inc., LP, etc.)
- Should not include the words ‘city’, ‘village’ or ‘borough’. However the actual name of a city, village or borough can be used.
Select a Registered Agent
The state of Alaska requires you to appoint a registered agent for your LLC.
What is a Registered Agent?
A registered agent is an individual or a corporation that accepts legal documents on behalf of the LLC. In short, the registered agent is the mode of contact with the state. The LLC is not allowed to serve as its own registered agent.
Registered Agent Requirements in Alaska
The registered agent has to be a resident of Alaska and must be at least 18 years old. You, your friend or a family member can be your LLC’s registered agent with a valid physical street address.
If you prefer to not to nominate yourself (or any individual from your friends or family), you can hire a commercial registered agent who will get the job done on the LLC’s behalf.
File Articles of Organization
Once you have chosen your registered agent, the next step would be to file the Articles of Organization with the State of Alaska Division of Corporations.
What Does It Include?
In the state of Alaska, the Articles of Organization for an LLC is a legal document that officially registers a company. It includes information such as the LLC’s name, purpose, registered agent’s information, etc.
How to File?
This can be filed online, by mail, fax or in person and it will cost you $250. If filed by mail, the approval time is between 10-15 business days. If filed online, it is approved right away.
Prior to filing the Articles of Organization, you will also need to mention whether your LLC is member-managed or manager-managed. You can read about the differences between these two structures here.
Prepare an Operating Agreement
Although not a required document in the state of Alaska, it is advised that you still go ahead with it. The operating agreement is a document that outlines the operating processes and the ownership of the LLC.
Why is an Operating Agreement Important?
This is an internal document and might be required by non-governmental institutions or individuals such as banks, lenders, lawyers, accountants, etc.
Moreover, it assists in making sure all owners are on the same page and decreases the risk of any conflict or dispute.
Obtain an EIN & Business License
The next step would be to obtain an EIN and a business license for your LLC.
EIN
EIN (Employer Identification Number) is a federal tax ID that is assigned to the LLC by the IRS (Internal Revenue Service). It consists of 9 digits and is used to identify an LLC for tax purposes, open a bank account on behalf of the LLC or to hire people.
EIN is also referred to as a FEIN (Federal Employer Identification Number) or a FTIN (Federal Tax Identification Number) FTIN.
Business License
The state of Alaska requires an LLC to have a business license in order to perform its business activities. It costs $50 to obtain an LLC business license and can be applied online or by mail.
Online approval is done right away, while mail applications can take up to 10 to 15 business days.
File an Initial & Biennial report
Once the LLC is formed, next comes the filing of an initial report with the state of Alaska within six months of your LLC registration. There can be done free of cost here.
Additionally, the LLC is required to file a biennial report after every two years. However, this report will cost $100 if it is an Alaska LLC, and $200 if it is a foreign LLC.
What Do These Reports Include?
These reports should have the following information:
- Name of LLC
- Name of state or country where the LLC is organized
- Registered agent’s name and office address of the LLC (for Alaska LLC)
- Address of the principal office in the state or country where the company is organized (for Foreign LLC)
- Names and addresses of LLC Managers (if there are none, then the names and addresses of the members of LLC are required)
- Names and addresses of all those who own more than 5% interest in the company (along with the percentage of interest they own)
Penalties for Late Filings of Reports
If these reports are not submitted within the allowed time, the state of Alaska has the power to impose penalties.
For missing an initial report, the state has the power to shut down the LLC since it won’t be in compliance. For missing a biennial report, the state will impose a $37 fine. If it is continually missed, the state has the power to shut down the LLC.
Taxes in Alaska
Below is a summary of various types of taxes with regards to an LLC:
Federal Tax
In Alaska, LLC is treated as either a Sole Proprietorship (LLC with a single member) or a Partnership (LLC with multiple members). This means the profits generated from the LLC will reflect on your personal tax return.
Sales Tax
The state of Alaska does not impose sales tax at state level. However, individual boroughs and cities are permitted to collect sales tax up to 6% and 7% respectively.
To get more information on applicable sales tax at local level, it is best to contact the municipality here.
State Income Tax
The State of Alaska also does not impose a personal income tax at the state level.