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According to the IRS, a Limited Liability Company (LLC) is a business structure allowed by state statutes. Although all 50 states have provisions for LLCs, not all states have the same regulations. You need to check with your particular state laws before beginning your LLC.
One thing all states have in common is that the owners of an LLC are called members. There is no maximum number of members, and there can even be single-member LLCs. All states also prohibit banks and insurance companies from forming LLCs.
If you plan to start a business in Alaska, you can register an LLC to aid in protecting your personal assets from your business debts and liabilities. Other benefits include making it easier to manage your business and stay in compliance with state and federal regulations.
LLCs have some characteristics of corporations, sole proprietorships, and partnerships. One advantage is that an LLC is generally taxed at a lower rate than a corporation.
You must comply with all federal and State of Alaska regulations for establishing an LLC. Although Alaska follows standard procedures, the filing fee is higher than most states and will cost you $250 to file your Articles of Organization with the State of Alaska Division of Corporations.
There are six steps you must take to create your LLC in Alaska:
Each step is discussed in more detail below.
Although Alaska has specific guidelines for choosing a name for your LLC, those guidelines are not as stringent as in other states. The guidelines do say you need to do a name search to confirm there is no other Alaska business already using the exact name you choose.
This will keep you from legal issues that may arise from infringing on the rights of an already established business. Alaska makes it clear that its approval of a name that is requested is not a determination of an entity’s legal right to that name.
If the LLC is composed of professionals who are required to have a license to practice the profession, the LLC can only have the name of the profession in the name of the LLC if all members of the LLC have the appropriate license. For example, it cannot contain the name “engineers” unless all members are licensed engineers.
You can conduct a name search at the Alaska Department of Commerce, Corporations, Business, & Professional Licensing site.
On the other hand, Alaska has no restrictions on how many businesses can operate under the same name with different owners. There may be multiple businesses with the same name owned by different people.
This does not protect you from all legal liability from using a name that is already being used by another business if a business that already is operating with your selected name decides you have infringed on them in some way.
You can obtain exclusive rights to a name by filing for a Business Name Reservation which costs $25 and will protect the name for 120 days. You can also fire for a Business Name Registration which gives you exclusive rights to using the name for 5 years and also costs $25. You can renew the name registration when the 5 years expired.
To register your business name, you need a Current Business License. Additionally, a business license is required for the privilege of doing business in Alaska.
When you file your Articles of Organization and your LLC is officially recognized by the State of Alaska, this automatically registers your business name.
The name of your business must not be one that can be confused with a government agency with a similar name. Avoid any words that might lead someone to believe your business is in any way affiliated with the government.
The name you choose must also include the term Limited Liability Company or abbreviation LLC. You can abbreviate “Limited” to “Ltd” and abbreviate “Company” to “Co.”
You can reserve or register the name by using the online provisions of the State of Alaska Division of Corporations.
If you will be doing business under a name different from the name of your LLC, referred to as “Doing Business As” (DBA), you need a separate business license for every name under which you plan on doing business. Each business license costs $50 a year.
Registering your name for trademark
Alaska provides that “Any word, design, logo, or combination of these used by a manufacturer or merchant to identify goods made or sold, or services provided in Alaska, may be registered by filing an application for state trademark registration. The filing fee is $50.00 per class of goods or services being registered.”
Alaska requires you to file articles of organization with a filing fee of $250 and the following information included:
Name: The name you have selected for your LLC. The word “limited” may be abbreviated as “Ltd” and the word “Company” abbreviated as “Co.”
Purpose: This describes the activities of the company at the time of the filing. The North American Industry Classification System (NAICS) code should be included where indicated. A list of codes can be found on the State of Alaska Department of Corporations website.
Registered Agent: This must include the name, physical address and mailing address, and other contact information of the agent of the LLC who must be a resident of Alaska and of only Alaska. The registered agent may be a corporation that is in good standing in Alaska, but an LLC may not be a registered agent.
Management: You must include how the LLC will be managed. Managers have sole decision-making power within the LLC.
Optional provisions: Any optional provisions you determine are required.
Signatures: The signature of the organizer or signatures of the organizers must be included.
The Articles of Organization must be mailed to:
State of Alaska
P.O. Box 110806
Juneau, AK 99811-0806
The filing fees for all required documents for an LLC in Alaska include:
Reservation of Business Name: $25
Filing Articles of Organization: $250
Business License: $50 per year (As of November 2020, renewal of the license is $0)
Trademark Registration: $50
All required documents may be filed online with fees being paid by Visa, Master Card, Discover Card, or American Express. If you prefer not to file online, mail the appropriate forms to:
The State of Alaska, Department of Corporations
P.O. Box 110806
Juneau, AK 99811-0806
The forms must be mailed to the P.O. address and not to the Juneau Street address.
Alaska requires you to appoint a registered agent who can accept service of process when necessary and other notices. If an individual, the agent must be a resident of Alaska, and only Alaska, with a street address in Alaska. The agent cannot arrange for his or her mail to be forwarded or held. If the agent will be out of the state, notice must be given to the State of Alaska of a new registered agent. There is a fee of $25 for naming a new registered agent.
Your registered agent may be a corporation authorized to transact business in Alaska. An LLC cannot be a registered agent and an entity cannot be its own registered agent.
Attorneys and incorporated law firms can be registered agents.
Alaska does not want you to send it an operating agreement for your LLC. In fact, if you send an operating agreement to the State of Alaska, it will be sent back to you.
While Alaska doesn’t require an operating agreement to run your LLC, the Small Business Administration (SBA) of the federal government strongly urges LLCs to have an operating agreement that should include:
An EIN is your Employer Identification Number which is required and issued by the Internal Revenue Service (IRS) for business entities. It is a 9-digit number similar to your Social Security Number (SSN) but is used only for business purposes.
Some benefits to having an EIN and ways you will use it are:
Applying for your EIN is free and easy. Fill out form SS-4 at the IRS site. You will need the physical address for your LLC, which may be that of the principal or the registered agent. You will need the SSNs of all the principals.
You can do this yourself, or we can do it for you here at Tailor Brands.
The State of Alaska does not have a tax on personal income. Therefore, the members of an LLC will not pay state taxes on the income they receive from the LLC. Alaska imposes no tax on LLCs for the privilege of doing business in Alaska.
You will pay federal income tax on the income you receive from your LLC, as will all LLC members. In addition to filing the LLC IRS tax returns, you will need to file your federal personal income tax return. As mentioned, Alaska has no personal income tax, so of course, there is no Alaska filing requirement for the income you earned from your LLC.
It is highly recommended that you hire a tax professional to assist you with tax preparation. You want to start off on the right foot with your LLC tax issues and maintain good tax records from the outset.
In addition to filing the LLC federal tax returns, you will need to file your personal income tax returns. You need to have a professional knowledgeable about tax law who will be able to maximize your income by minimizing your tax liabilities. This can only be done by taking all the deductions to which you may be entitled as a member of an LLC.
The State of Alaska imposes no sales tax. Some local governments have a sales tax, but it is generally less than 2 percent.
Members of an LLC are considered to be self-employed. As such, they must pay self-employment taxes to the federal government. The LLC members must pay this if they receive a net profit of $400 or more during any taxable year. This tax is to pay for the members’ Medicare and Social Security taxes.
The current rate is 15.3 percent and must be paid quarterly. You can make these payments by downloading Form 1040-ES, filling it out, and sending it to the IRS by mail.
If your LLC has employees, you must withhold payroll taxes for each one of them. You need to set up a withholding account for each one of them which is not transferable to any other business. These Alaska payroll taxes include:
You must comply with all payroll tax deduction requirements or will be fined by the IRS.
You may breathe a quick sigh of relief after you have gotten this far. However, make it quick since there are still tasks you need to complete to make your LLC a success.
It is important to maintain separate bank account for your personal and business income. This establishes your business credibility, and you should do this as soon as your business name has been approved.
To open this account you will need:
Accounts you need to have for your business include:
Never succumb to the temptation to commingle business and personal funds. All debts of the LLC should be paid from your LLC business bank account. This includes taxes, all business supplies, all business operating expenses, all federal, state, and local fees, including legal fees and payments to the registered agent.
All payments to LLC members must be made from the business account. When you pay LLC members the income they have earned from the LLC, you must also provide them 1099s at the end of the year that they use to file with their federal income tax returns.
Alaska requires LLCs to file biennial (every other year) reports by January 2. There will be a late fee for those postmarked after February 1. The report can be filed online or mailed.
If you initially filed for your LLC in an even-numbered year, the report will be due in even-numbered years. If you initially filed in an odd-numbered year, the report will be due in odd-numbered years.
Filing the initial report is free. After that, it is $100.
You will need to meet financial obligations to keep your LLC in compliance with state and federal regulations. To help you do this, you need to consult with a tax advisor. Choose either a tax attorney or a certified public accountant (CPA). You may want to interview several tax professionals and choose one with which you have a rapport and good communication because you are likely establishing a long-term relationship.
Identify your goals and determine your needs for things like how to keep the cash flow flowing, how much insurance do you need and what types of insurance, and how best to optimize your income. Your tax professional will make sure you comply with all state and federal tax requirements.
All Alaska businesses must obtain an Alaska business license to legally operate in the state. The fee is $50 per license and must be renewed every two years with the $50 renewal fee.
Since November 2020, the fee for the renewal of a business license has been waived. Check back to see whether the fee is reinstated as the pandemic winds down.
There may be local ordinances concerning business licenses and permits, so it is important to check with the municipality where you are doing business to be sure you are in compliance. A list of Alaska Municipalities can be found here.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.