Starting your own business can be a satisfying and highly rewarding experience. This takes effort and persistence, though. A lot. If you're planning on starting a business in Alaska, great!
However, every state has its own set of laws on regulations you'll need to follow. In addition, every state has different legal entities and, depending on a particular state; things can get even more confusing. That's why it's good that you find answers to any questions before you start planning to open your company in Alaska.
In this post, we'll explain how to open your company in Alaska, two basic types of business you can start, and their pros and cons. If you want to know more, keep on reading.
What is an LLC?
There are many different entities you can choose from, but LLC is the best choice for lots of people who are planning to start a small business. LLC is more flexible than other legal entities. Moreover, it offers you financial and legal protection without double taxation. In case your business owes money, you, as an owner, won't have any liability. Instead, your legal entity will.
One of the reasons many people choose to form an LLC is to open it in any state, regardless of your physical presence. However, some states are more favorable about forming an LLC than others. Before we get to that, there's another issue we need to discuss.
LLC or Incorporate?
There are differences between them, and in Alaska, LLC seems more favorable, especially when you consider taxes.
An LLC will only get taxed once in the form of personal income taxes. On the other hand, corporations receive double taxation through the state corporate tax and individual tax returns. Here's why the goal of your business and your goals play a big role in deciding between the two:
Corporations are great if you're planning to grow your business on a bigger scale.
LLC is a perfect choice if you require liability protection, especially in Alaska.
Here, we'll focus on small businesses and LLC.
Alaska LLC
Unlike some states that make it difficult to form a legal entity, forming an LLC Alaska comes with many small business owners' perks.
Alaska doesn't have an income tax or sales tax. That's why cities are allowed to form their own rates locally. Make sure to check these before making any decisions.
Before you form an LLC, you have to choose its name. It should be a unique name that's not already registered. Restricted words require additional paperwork. While other words, such as the federal or state agency names, are strictly prohibited.
Make sure to check if the domain name for your website is available, too. Your LLC should have an appropriate website and online presence.
Registered/Statutory Agent and Documentation
A registered agent is a person or entity authorized to manage official correspondence and legal affairs. This can be a person within the LLC or even the owner of the company with a residency in the state.
Next, you'll need to file in some paperwork:
The Article of Organization. You'll need to file it to the State of Alaska, along with a $250 fee.
You'll need EIN (IRN issues them), open a business bank account, file taxes, and hire employees.
Sales tax license at Sales Tax Registration if you're selling taxable goods or services.
Register your business for applicable federal, state, and local permits.
Workers compensation insurance and general liability insurance.
Biennial report with the Alaska Secretary of State with a $200 fee.
With EIN, you can open your business bank account. Don't forget to keep your personal and business bank accounts separate. That way, you'll secure your personal assets from potential lawsuits and creditors.
If you want to track and organize your finances, you'll want an accountant. Or, you can do this yourself-your choice. You'll also need software that will help you keep your income and expenses representative. Moreover, this will make filing income taxes easier.
Why Alaska Instead of Minnesota?
There's a simple reason for that. Some states, Minnesota included, are the worst nightmares for small business owners. Lots of them have high sales tax rates, startup fees, high state taxes, various reporting obligations, or bigger competition. However, that doesn't mean you can't succeed in these states, only that you'll need to put in more money and effort.
On the other hand, states like Alaska make it as easy as possible to start a business there. Moreover, what business owner doesn't select a more business-friendly environment? The friendlier to businesses it is, the easier it is to have a thriving company.
You're Ready to Go
We've covered all the main aspects of forming an LLC in Alaska, as well as all the benefits and perks that come with it. After you create a successful business plan, form an LLC, and invest the money necessary for starting your business, the fun can begin. Of course, it will be hard from time to time, but keep in mind that you're doing it for yourself!
Getting a permit bond may not be required in every business, but it is highly recommended for protection against any penalties from the states or municipal authorities.
