How to Start a Business in Alaska
How do you start a business in Alaska? The short answer: sell something. Bang, you’re a sole proprietor in Alaska—the only state in the country with both no personal income tax and no sales tax. But some better questions may be these: How can you make money with your business? What should you do to protect that money? And what legal requirements do you need to meet? In this beast of a guide, we’ll show you.
Ready to Start a Business in Alaska?Let's Get You Started
Pick a Business Structure
Name Your Business
File Formation Paperwork
File an Alaska Initial Report
Draft Internal Records
Get Alaska Business Licenses
Organize Your Money
Get Business Insurance
Understand Your Tax Burden
Build Your Business Website
Apply for Trademarks
1. Pick a Business Structure
If you’re out there hawking t-shirts or tutoring services on your own, and you haven’t registered with the state, you’re a sole proprietor. If you’re doing it with partners, you’re operating a general partnership. In either scenario, you have no liability protection. This means that the business debt is your debt. If someone sues your business, they sue you. Your personal assets—like your car, house, and the money in your personal checking account—are potentially all fair game.
If you want liability protection, you have to form a separate entity. An entity is just a thing with its own independent existence, and in the case of a business entity, its own liability. The two most common entity types with limited liability are LLCs and corporations.
Alaska Limited Liability Company (LLC)
LLCs are flexible business structures. You can hire a manager or managers to run the LLC, or do it yourself. You also have more tax classification options than other entities. For their adaptability and strong liability protection, LLCs are a popular choice among small businesses. To start an Alaska LLC, you’ll need to file paperwork with the Division of Corporations.
Corporations are less flexible than LLCs. They have to follow strict record-keeping rules and adhere to a rigid management structure—shareholders appoint a board, and the board elects officers to run the corporation. Investors and donors often view corporations as more accountable than other entity types, thanks to these rules. To form an Alaska corporation, you’ll need to file paperwork with the Division of Corporations.
Can an LLC be just one person?
Yes! A one-person LLC is called a single-member LLC. Single-member LLCs are one of the most common kinds of businesses in the country. For the most part, single-member LLCs are just like multi-member LLCs, but there are some slight differences in how they file taxes and protect personal assets.
Read all about Single-Member LLCs.
What about an Alaska nonprofit?
In Alaska, you can start an Alaska nonprofit corporation if your business will exist to benefit the public or serve a group’s shared interests. You can also form something called a Nonprofit Community Association, which is a kind of corporation used by communities with no municipal government to receive state funds. To start an Alaska nonprofit corporation, you’ll have to file Articles of Incorporation for a Domestic Nonprofit Corporation with the Alaska Division of Corporations.
Want to learn more? Check out our Nonprofit Guide.
2. Name Your Business
Naming a business in Alaska isn’t as straightforward as it may seem. Without a separate entity like an LLC or corporation, you’re stuck using your own first and last name for your business (Jamie Garcia) or getting a DBA for something more descriptive (like Jamie’s Organic Ice Cream).
For an LLC or corporation, you’ll need a business name that will meet Alaska’s requirements. It must:
- Use an appropriate identifier, like “LLC” for a limited liability company or “Inc.” for a corporation.
- Not use words that describe government agencies like “police” or “department of state.”
- Not use words that suggest a false business purpose, like “charity” or “nonprofit” (unless your business is a nonprofit).
- Not use words that describe a service that requires a professional license, like “architect” or “doctor.”
- Be unique in the state of Alaska.
Find out if your desired name is available in Alaska by searching the Alaska Corporations Database.
Can I reserve a business name in Alaska?
Yes. If you have a business name in mind but you’re not ready to file paperwork to form your business, you can reserve it in Alaska for up to 120 days by filing a Certificate of Reservation.
But beware—reserving a business name in Alaska adds an extra step to forming your business. That’s because before you can form an LLC or corporation, you’ll have to get in touch with the Division of Corporations to cancel your name reservation. Usually they’ll cancel your name reservation in 1-2 days.
What's a DBA?
A DBA is any name your business uses other than its legal name.
If you have an LLC or corporation, your business’s legal name is the one you list on your formation documents. If you’re a sole proprietor, your business name is your legal name. Either way, you’re required by Alaska law to do business under your legal name—unless you register a DBA.
For every DBA you register, you need a separate business license. You’ll need to get the business license first. Then, you’ll file a Business Name Registration form ($25) with the Alaska Division of Corporations.
What about trademarked names?
It’s a good idea to check with the US Patent and Trademark Office (USPTO) to make sure your business name hasn’t been trademarked by someone else. If it has, and you use it anyway, there’s a chance that the business could come after you for infringement.
3. File Formation Paperwork
If you’re a sole proprietor or part of a general partnership, you don’t need to file formation paperwork with the Division of Corporations, because you’re not creating a separate business entity. (You do, however, need to get an Alaska business license.)
But to start and Alaska LLC or corporation, you’ll need to file paperwork with the Alaska Division of Corporations. This is the step that officially brings your business entity into existence.
- To form an Alaska LLC, file Alaska Articles of Organization.
- To start an Alaska corporation, file Alaska Articles of Incorporation.
To fill out these forms, you’ll need to list an Alaska registered agent to handle your legal mail. Once you’ve completed the form, you’ll need to send it to the Alaska Division of Corporations. You can submit it online, by mail, or in person.
Note: The information you list on this form will become part of the public record. This means that the names and addresses you provide will be posted online on the Alaska Corporations Database for anyone to find.
What is a registered agent?
A registered agent is the person or entity responsible for receiving legal mail on behalf of your business. Your registered agent must have a physical address in Alaska where they’re present during business hours to accept service of process. Of course, not all business owners do the kind of work that allows them to be present at a physical address all day—you can’t exactly accept service of process from a seiner. For this reason, many businesses opt to hire a registered agent to serve as their business’s point of contact.
How can I keep my information off the public record?
The best way to keep your private information off the public record is to keep it off public documents altogether. To do that, you’ll need a registered agent who will list their address on this form instead of your own. (Hint: we do that!)
4. File an Alaska Initial Report
Alaska requires LLCs and corporations to file an initial report within their first six months. This filing just requires providing a little more information about your business, including the names and addresses of your members/managers or directors/officers. It’s free to file and you can do it online.
Since you have to file the initial report within your first six months, we recommend just doing it when you file your formation paperwork. When we form your LLC or incorporate for you, we file your initial report at the same time.
After your initial report, you’ll have to file a biennial report every other every year by January 2nd. If you started your business in an even-numbered year, you’ll always file your biennial report in an even-numbered year.
Read more about How to File an Alaska Biennial Report.
What if I don’t file a biennial report in Alaska?
In Alaska, there’s a one-month grace period before the state hits you with late fees. And if you continue to fail to file, the Alaska Division of Corporations could involuntarily dissolve your business. To reinstate, you’d have to pay double the filing fee for each missed report.
5. Draft Internal Records
So far in this guide, we’ve dealt with public forms that you’ve had to file with the Alaska Division of Corporations. Now, it’s time to organize your internal records. These are the documents your business will keep on record within your company. Though these documents are internal, you’ll likely need to show them to third parties like the bank or—if you start a nonprofit—the IRS. Here are the major documents you’ll need.
Alaska LLC Operating Agreement
This is your LLC’s rule book. It defines how your LLC will do things like make decisions, distribute money, manage operations, and appoint officers. Your operating agreement plans for every big picture scenario your LLC is likely (or unlikely) to face, including dissolution.
Drafting an operating agreement is hard, and the internet is full of shabby templates that have been copy and pasted from who knows where. So we had our attorneys draft an Alaska LLC Operating Agreement template that you can use as a solid foundation.
Alaska Corporate Bylaws
Bylaws are the rules your corporation will adopt and follow internally. Bylaws detail how your corporation will appoint directors and officers, hold shareholder and board meetings, and handle emergencies, among other things. Unlike operating agreements, corporate bylaws are required by law in Alaska (see AK Stat § 10.06.223).
As with operating agreements, you can find plenty of bylaws templates online. But bylaws are pretty serious, so you don’t want to just use the first template you come across. Our attorneys drafted an Alaska Corporate Bylaws template you can use to get started.
Starting a nonprofit? Learn about Alaska nonprofit bylaws.
6. Get Alaska Business Licenses
All businesses in Alaska need a business license—even sole proprietors. Some businesses will need additional licenses.
Alaska State Business License
Aside from a handful of exceptions, every business in Alaska needs a state business license. Those that don’t—fisheries, insurance companies, mines, and anyone selling liquor—need a more specialized license from the department regulating their industry. And if you register any DBAs, you’ll need a separate license for each one.
Professional Alaska Business Licenses
Professional services are ones that require specialized training or education to perform safely. Think architecture, midwifery, counseling, construction, or dentistry, just to name a few—see the Alaska Professional Licensing section of the Division of Corporations for a full list. To get a professional license, you have to apply with the board that regulates your industry in Alaska. Each board has its own licensing process.
Local Alaska Business Licenses
Depending on what kind of business you’re doing and where you’re doing it, you might need a city or a borough business license. In Haines Borough, for example, all businesses need a city license in addition to the Alaska state business license. In Anchorage, only some businesses do—like private investigators or pawnbrokers.
Learn more about How to Get a Business License.
How do I get an Alaska business license?
You just have to do more paperwork. You’ll fill out an application that requests basic information about your business, like its name, entity type, and address. You can submit the Alaska business license application online or by mail.
How much does it cost to get an Alaska state business license?
For now, it’s free. Normally, a business license in Alaska costs $50. But in 2020, the governor waived business licensing fees to ease the burden placed on small businesses during the pandemic. It’s unclear how long this will last, but for now, it’s free to apply for and renew a business license.
How do I get a professional license in Alaska?
The process for applying for a license will vary depending on your service. Professional licenses are issued by the board that regulates your industry in Alaska. For example, pharmacists apply for a license from the Alaska Board of Pharmacists, while counselors apply with the Board of Professional Counselors. Each board is usually made up of professionals and members of the public appointed by Alaska’s governor.
How do I get a local business license?
Every borough or city has different requirements. In Juneau, for example, businesses fill out a Business Registration form and turn it into the Finance Department, Sales Tax Office for free.
7. Organize Your Money
The liability protection you get from forming an LLC or corporation is only as strong as the separation between you and your business. At a minimum, you’ll need to open a bank account for your business. And if you’re going to hire employees, you’ll need to tackle payroll, too.
Open a Business Bank Account
To keep your business spending separate from your personal spending, you’ll need to open a business bank account. If you don’t, a court could find that your business is not actually separate from you, the owner, under the Alter Ego Doctrine. Also known as piercing the corporate veil, this is the outcome when a judge finds that a company is not a separate entity but rather an alter ego of the owner. If this ever happens, you could lose your limited liability status.
Opening a business bank account as a sole proprietor is important, too. Though sole proprietors and general partnerships have no limited liability status to protect, both will benefit from organizing their business finances come tax season.
How do you set up a business bank account?
Do I need a business bank account to accept credit card payments?
Probably. Payment processors require you to provide them with a bank account. This is where they’ll deposit funds from transactions. Most of the time, this needs to be a business bank account.
Some payment processors may let you get away with listing a personal bank account, but it’s not a great idea. Mixing your business finances with your personal finances erodes the separation between you and your business, weakening your liability protection. It also turns tax season into a nightmare.
Learn more about Payment Processing.
Set up Payroll
If you’re planning to hire employees or independent contractors, you need to set up payroll. To do so, you’ll need to:
- get an EIN
- register for an Alaska Employer Account Number
- find your Employer Unemployment Insurance (UI) Contribution Rate
- determine whether you’re hiring employees or independent contractors
- prepare the forms your employees will fill out
- choose a payroll service or software
- decide on a payroll schedule
Setting up payroll in Alaska is complicated, but a solid payroll service or software will automatically withhold payroll taxes, file state and federal returns on your behalf, and pay your employees either by check or direct deposit—whichever you choose.
What forms do my employees need to fill out?
Your new employees will need to fill out a W-4 to determine how much you’ll withhold and an I-9 to verify that the employee is eligible to work in the US.
What’s the difference between an independent contractor and an employee?
It’s important to understand the difference between an independent contractor and an employee. That’s because for employees, you’ll need to withhold and pay income, social security, and Medicare taxes. Independent contractors pay these taxes on their own.
An independent contractor is self-employed—how they complete their work is not directly controlled by an employer. An independent contractor may perform the same kind of work for other businesses, and can do the work when and how they choose.
An employee, on the other hand, performs their work how and when their employer chooses.
If you’re unsure, you can file Form SS-8 with the IRS and let them decide.
How do I get an Alaska Employer Account Number?
You can register for an Alaska Employer Account Number via the Alaska Department of Labor and Workforce Development’s online system, myAlaska. When you register, you’ll also receive your business’s Employer Unemployment Insurance (UI) Contribution rate, which you’ll need to set up payroll.
8. Get Business Insurance
Forming an LLC or corporation protects your personal assets. But if anything disastrous befalls your business—like a lawsuit, burglary, flood, or fire—your business is on the hook to pay. Business insurance can help cover the costs.
But do you really need business insurance? Maybe, maybe not. Certain coverage is required by law in Alaska, but whether or not you should purchase additional insurance depends on the level of risk you’re comfortable taking on.
Here’s a breakdown of the most commonly purchased business insurance:
Workers’ Compensation Insurance
If you have one or more employees, this one is required by law in Alaska. Unlike most states, Alaska has no state fund to compensate workers’ who are injured on the job for lost wages or medical bills. If you don’t purchase workers’ compensation insurance, the consequences are pretty grim—your business could be ordered to stop immediately and could eventually face fines of up to $1,000 per day. You can buy a workers’ compensation insurance plan through an insurance company.
This covers the costs of claims against your business for injuries or damages to the property of others, like clients or customers. This includes medical expenses, legal fees, settlements, and judgments. Whether or not you need it depends on whether your business is likely to be sued and how many assets your business needs to protect. If it’s just you and your computer in your basement, you might feel comfortable skipping liability insurance. Or maybe you won’t. Beyond general liability insurance, you can purchase or add on more specific types, like professional, cyber, commercial, home-based business, or product liability insurance.
Do business owners need workers' compensation insurance in Alaska?
Workers’ compensation insurance is only required by law in Alaska for employees. Corporate officers and LLC members who own at least 10% of their business aren’t considered employees in Alaska and don’t need to be covered. However, your health insurance plan could deny a claim for a business-related injury, so it’s not a bad idea to include yourself on your business worker’s compensation insurance plan.
Do I need business insurance for my home-based business?
Probably. That’s because you can’t count on your homeowners’ or renters’ insurance policy to cover damages related to your business. Most insurance companies offer a home-based business insurance plan.
9. Understand Your Tax Burden
Alaska is the only state in the country with no personal income tax and no sales tax. Corporate tax rates in Alaska are fairly low, and the state even pays out an annual dividend to all residents who have lived in the state for over a year. But your tax burden isn’t determined by the state alone. You’ll also have federal and local taxes to consider.
- LLCs. Single-member LLC? By default, you’re taxed similar to a sole proprietor. More than one LLC owner? You’re taxed as a general partnership. Either way, your default tax status is “pass-through,” which means you don’t pay corporate taxes. Instead, your LLC’s owners report profits and losses on their personal tax returns. Good news: because there’s no state income tax in Alaska, you’ll only have to pay the 15.3% federal self-employment tax rate. An LLC can file paperwork with the IRS to be taxed as an S-Corp or C-Corp instead.
- Corporations. Corporations are taxed as C-Corps by default. This means that corporations pay the 21% federal corporate tax rate and the applicable Alaska corporate tax rate.
To pay your federal taxes (and take a good deal of other steps required to start a business), you’ll need to get an Employer Identification Number (EIN). You can apply for one with the IRS or hire us to get one for you.
Do I need an EIN if I’m self-employed?
If you’re operating a sole proprietorship or single-member LLC that doesn’t employ anyone else and you don’t need to file excise or pension plan returns, you don’t legally need an EIN.
However, you can still get one—and you probably should. Otherwise, you’ll have to use your own social security number to do business. Plus, you’ll likely need an EIN to open a business bank account.
How do I get an EIN?
To get an EIN, you can either apply online or file form SS-4 by mail with the IRS. Getting an EIN is free.
Check out our guide to applying for an EIN.
What is an S-Corp?
An S-Corporation is a federal tax election. Registered business entities like LLCs and corporations start out with a default tax status, but can file paperwork with the IRS to be taxed as an S-Corp. Like LLCs, S-Corps are taxed as pass-through entities. Like corporations, S-Corps can make distributions that aren’t subject to the 15.3% self-employment tax.
Learn more about the S-Corp tax election.
What is a C-Corp?
A C-corporation is the default federal tax election assigned to corporations. Most corporations are taxed as C-Corps, but LLCs can also apply for C-Corp tax designation by filing paperwork with the IRS. C-corps file federal corporate income taxes and state corporate income taxes (in Alaska, the corporate tax rate ranges from 2 to 9.4%). C-corps can pay their shareholders in distributions, and the shareholders report those profits on their personal tax returns.
Learn more about the C-Corp tax election.
Alaska State Business Taxes
Alaska has no sales tax and no personal income tax. This means that unless your business is a C-Corp, your business won’t owe any state taxes.
Corporations pay the the Alaska corporate tax rates based on taxable income, as follows:
Alaska Corporate Tax Rate
Less than $25,000
$25,000 – $48,999
2% of the amount over $25,000
$49,000 – $73,999
$480 + 3% of the amount over $49,000
$74,000 – $98,999
$1,230 + 4% of the amount over $74,000
$99,000 – $123,999
$2,230 + 5% of the amount over $99,000
$124,000 – $147,999
$3,480 + 6% of the amount over $124,000
$148,000 – $172,999
$4,920 + 7% of the amount over $148,000
$173,000 – $197,999
$6,670 + 8% of the amount over $173,000
$198,000 – $221,999
$8,670 + 9% of the amount over 198,000
$222,000 or more
$10,830 + 9.4% of the amount over $222,000
Local Alaska Business Taxes
Yeah, you’re not done yet. You may also need to pay a local business tax in your municipality or borough.
In Anchorage, for example, businesses with more $20,000 worth of tangible assets (not including property) must pay a business personal property tax. And while there’s no state sales tax in Alaska, some boroughs—like Haines—collect a sales tax. So you’ll need to get in touch with your local municipality or borough to ask about your local tax obligations.
10. Build Your Business Website
If you want Alaskans to find your business, they have to be able to find you online. This means you’ll need a website, a business email account, and social media accounts. Don’t worry if you’re not especially tech-savvy—you don’t have to be a web developer or an influencer to establish a robust online presence. You’ll just need the following:
- Domain name. Your domain is the address where your website will live. You’ll want a domain name that is short, unique, local, and—most importantly—available. If your domain is trademarked, you could face legal trouble.
- Domain registrar. Once you’ve decided on a domain name, you’ll want to register it with a domain registrar. Some domains are more expensive than others. Some domain registrars also offer hosting and most will provide you with a business email that includes your domain name (“[email protected]”).
- SSL certificate. An SSL certificate signals to your users that your website is secure. If your website will use forms—like a sign-up form or a “contact us” form—an SSL certificate is critical. But even if you don’t you use forms, you’ll still probably want one—it allows an encrypted connection, which means your users’ data is transported securely. There are several types of SSL certificates, and you can often get one through your domain registrar.
- Site design. The easiest option is to use a free website creation tool—there are a number of free options available. Most are easy even for a newcomer to use, with styles and built in templates. For a more custom design, you can hire a web designer to work on your website, but this will be much more expensive.
11. Apply for Trademarks
A trademark is a design, symbol, word, phrase—or any combination thereof—that represents a brand’s goods or services exclusively. Only some businesses register trademarks.
You can apply to register your trademark with the State of Alaska or federally with the U.S. Patent and Trademark Office (USPTO). Registering your trademark in Alaska is cheaper and easier than registering with the USPTO, but doing so only protects your trademark in Alaska.
You can only register a trademark once you’ve started using it (so slap it on that website you just made), and not all applications are approved. Trademark law is complex, and the strength of a trademark application (and the trademark itself) depends on many factors.
Our attorneys can review your application, offer advice, and prepare and submit the application for you—Check out our Trademark Service.
How do I register for a trademark in Alaska?
To register a trademark in Alaska, you’ll need to file an Application for Registration and pay the $50 filing fee. You’ll have to attach three examples of your business using the mark to prove that you’ve established a connection between the mark and the goods or services you’re selling. You can’t register a trademark before you use it.
Registering your trademark with the Alaska Division of Corporations only protects your trademark in Alaska.
Can I register a trademark before I use it?
No. But you can file an application with the USPTO under Intent-to-Use status. This gets your application in line before you’ve actually used the mark, which could be helpful if you’re worried someone else might register your mark before you’ve had a chance to use it.
For your trademark to become official, you’ll eventually need to show proof that you’re using it. An Intent-to-Use application buys you some time to do that.
Learn more about filing an Intent-to-Use Trademark.