Entrepreneurship is exciting—the thrill of developing a winning product or service, bringing that idea to life, and making life better for your clients—it’s fun. But unfortunately, it’s not free. Long story short: starting a business has a price tag. LLCs are no exception.
If you’re hoping to start an LLC in Alaska, you’ll quickly learn that you’ll have a pretty long list of fees for forms, licenses, and applications that you’ll need to get started. Some of those are optional fees, and some are unavoidable. In this guide, we’ll walk you through all the costs you can expect when starting an Alaska LLC. By the end, you’ll have a clear picture of how your new business will impact your wallet.
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What’s the least amount I have to pay to form an LLC in Alaska?
If you’re crunching the numbers before diving right in, good on you! Planning ahead is a surefire way to start your business off on the right foot. But let’s make one thing clear: the phrase “cost to start an LLC” is a bit deceptive. That’s because you don’t want to get stuck focusing on the “day one” expenses of business.
That’s right—when budgeting for start-up costs, you need to account for the costs you’ll pay today and the costs you’ll pay a year or two down the road.
So let’s talk start-up costs and ongoing costs for your Alaska LLC. But to keep things simple, here we’ll cover the non-negotiable costs. Later on, we’ll talk about services that are nice to have (but you can live without if you have to).
AK LLC Start-up costs
There are two primary start-up costs in Alaska. The most important one (and one of the most substantial one) is the Articles of Organization. The fee is pretty substantial: $250. You can’t avoid this cost, either. The Articles of Organization is the document that officially forms your business in the state. Without it, you’re not a recognized business.
The other cost is business licenses: a general business license and professional licenses. Every single business needs to obtain a general business license from the Department of Commerce. This is an annual license, but you can buy a 2-year registration if you want. There is a $50 fee per year.
There’s also a good chance that your business will need to get a professional license. Alaska requires licenses for nurses, acupuncturists, professional counselors, and many other trades. We can’t list all of the different application fees for these licenses, though; each licensing board charges a different fee. You can find out more about these different licenses at Alaska’s Professional Licensing page.
Ongoing costs for an LLC in AK
If your business lasts (and we’re confident it will), then you’ll have several ongoing costs. These include license renewals, annual reports, and taxes. Let’s dig into those prices and fees.
License renewals
Remember how we mentioned that your business license is good for 1 to 2 years depending on the fee you pay when applying? You’ll need to renew it on a regular basis. The renewal fee is the same as the application fee. Your professional licenses (if applicable) will probably need renewals, too. Each Alaska board has its own renewal processes, though, so we won’t list all of them here. When you apply for your initial licenses, we recommend taking note of the renewal requirements for your industry so none of the fees surprise you.
Annual taxes
In Alaska, one of the biggest annual costs you’ll have will be taxes. However, the full amount of tax you’ll pay largely depends on your business’s taxation structure. That’s because Alaska does not charge an individual income tax, just a corporate one. The corporate rates are 9.4%. In most states, all businesses involved in retail sales have to collect and pay the state sales tax. But Alaska doesn’t have a statewide one. Instead, cities and counties are allowed to charge one if they wish. You can learn if your area charges one at Alaska Taxable.
There’s also a wide variety of miscellaneous business taxes that could apply to your LLC: fishing, mining, tires, and more. You can learn more about these miscellaneous taxes at the Alaska Department of Revenue.
Annual report
Most states require LLCs to file some version of an “annual report,” or a document that informs the state about the current standing of your business. This document is usually required in addition to annual tax reports, since it usually includes information about your business address, members, your registered agent, and so on.
In Alaska, the annual report is technically a biennial report that’s due every other year. But before we jump into the filing procedures for the biennial report, we should note that the state requires all businesses to file an Initial Report. You need to file it shortly after forming your business, but thankfully, there’s no filing fee for the initial one.
The biennial report, however, has a filing fee of $100. It’s due by January 2 every other year. You can file online or by mail, but the Department of Commerce recommends that you file online. Mail-in filing takes 10-15 business days, so you can ensure that you file on time by filing online instead.
What are the discretionary costs to form an Alaska LLC?
When you’re starting your business, your budget is usually pretty tight. Prioritizing costs can get tricky. The costs we listed above are unavoidable. Well, technically, you can avoid them, but you’ll be heavily penalized if you do. And there’s not much point to spending all that money on starting a business only to knowingly let it be dissolved because you didn’t pay your ongoing costs.
But if you can help it, doing the “bare minimum” is probably not the best way to start your business. There are plenty of discretionary costs you can pay for certain services that make life easier. Here, we’ll dig into those costs—and why you might consider paying them.
1. Name reservation application
Naming things can be a bit tricky; after all, sometimes inspiration is a little lacking! And since Alaska doesn’t allow you to use a name that someone else has already claimed, you have to work even harder to pick one that’s unique, memorable, and just right for your business.
It’s a multi-step process, really: you have to brainstorm name ideas, choose just the right words, meet state name requirements, and of course, ensure that the name isn’t already in use (you can check using a Corporations Database Search).
If you’re like a lot of people, you probably want to ensure that your hard work doesn’t go to waste once you’ve created the perfect name. So you have to lay claim to your new business name. You can do so either by filing your Articles of Organization, or by filing a Business Name Reservation Application. You should only file this form if you’re not yet ready to file your Articles. Otherwise, you’d be wasting your hard-earned cash. Alaska requires a $25 fee for this Reservation Application, but it protects your name for 120 days. Alaska allows you to renew a reservation twice, provided you file the reservation again. That gives you nearly a year to protect your name.
2. Obtaining a DBA
Wait—didn’t we just cover business names? Yes. But there’s a distinction: your business name, which you’ll write in on your Articles of Organization, is the legal name of your business. A DBA, sometimes called an assumed name or a trade name, is like a nickname for your business. For example, your legal name might Joseph Smith, but your friends call you Joe for short. Joe is a perfectly valid name, but you can’t put it on legal paperwork. You’d have to legally change your name to do so.
A DBA acts kind of like a nickname for your business; some LLCs and corporations also use DBAs to establish new product lines or new “businesses” under the LLC “parent company.” But regardless of why you use a DBA, if it differs from your legal name, you need to register it before you can use it.
Quick note: in Alaska, a DBA name’s owner is granted exclusive rights to that name. No one else can use it for long as your registration is valid. Getting a DBA is fairly simple, too: it’s actually a part of the business license application (Alaska requires you to list every business name you intend to use on your application). If you’ve already obtained a license, you can still file one using a Name Change Form. The registration fee is $25.
Your DBA registration is good for five years. If you intend to keep using it, you need to renew it between October 1 and December 31 on the year it expires. The renewal process is fairly similar to the registration: you file the appropriate form, pay the $25 fee, and that’s that.
For more information on how to get a DBA in Alaska, check out this guide.
3. LLC formation services
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Paperwork is a massive hassle. And unless you’re starting an LLC to help other Alaskans with their paperwork, odds are you don’t want to deal with much paperwork yourself.
The bad news? Paperwork is an unavoidable part of starting an Alaska LLC: the Articles of Organization, business and professional licenses applications, biennial reports—the list goes on and on. The good news? You can hire an LLC formation service to do the pesky paperwork for you.
Of course, there’s some cost involved. And while there are a lot of great LLC formation services, they aren’t all created equal. And they all have different price points.
Many LLC formation services offer a wide variety of options, with ZenBusiness offering packages starting at $0 + state fee. You can also take a look at other well known services like LegalZoom, Northwest, and Incfile that have other types of pros.
These services are completely optional; you can DIY your Alaska LLC formation. But many entrepreneurs find the time saved is worth the money. If you do opt to hire a service, please make sure you take the time to understand what you’re buying.
4. AK Registered agent services
Alaska law clearly states that every LLC must designate a registered agent to act as a middleman between your business and the state. Long story short, the registered agent accepts service of process (and any other official communication from the state) on your behalf.
Technically, this is another thing you can DIY; Alaska allows you to serve as your own registered agent. However, in our opinion, it’s worth the expense to hire a registered agent.
Why? For starters, a registered agent’s address becomes part of the public record; anyone in the state can find that address. That leads to spam mail (sometimes worse). Plus, a registered agent must be present at the registered address during all standard business hours. If you serve as your own, you’d be tied down to your location constantly. A registered agent service prevents those annoyances. A service will also help you keep track of annual filing requirements, license renewals, and more.
These services typically charge an annual fee. For example, annual fees for our top 4 Alaska registered agent services range from $99 to $299 per year depending on the service you choose. That said, some offer the first year free if you use them as an LLC formation service.
Quick Note: If you need to later down the line, you can always change your registered agent.
5. Expedited filing fees
In Alaska, it takes approximately 10-15 business days (upon receipt) for the Department of Commerce to process your Articles of Organization. Granted, that processing time varies based on order volume. For example, the state website clearly states that filings processed between October-February can expect to wait more than 15 business days for filing. The other months have the usual 10-15 business day window.
If that sounds like too long to wait, Alaska allows you to expedite your form for a $50 fee. Expedited orders aren’t guaranteed a specific processing speed. Instead, paying for expediting puts your files “on top of the pile” so it will be processed sooner.
6. Business attorneys
Starting a business is a complicated process. And it’s a legal one. We do our best to make the process seem less daunting with guides like this one. But at the end of the day, we can’t write a guide that would cover every single question every business will ever face. That’s because your business is unique.
Business attorneys, however, can talk you through all the nuances of forming and running your business. In many cases, the advice of an attorney can save you thousands by helping you avoid expensive legal mistakes.
However, the upfront costs of hiring a business attorney can be pretty pricey. For example, many attorneys charge per hour, with rates ranging between $150-$350. Others offer “LLC formation packages” for flat rates that fall between $500-$2000. And of course, those fees vary based on the attorney’s experience, location, and so on.
If you’d like to hire one, we recommend checking out sites like Avvo.com. Their database is nearly comprehensive, so it’s a great way to search Alaska business lawyers. You can also narrow results by location, cost, overall satisfaction rating, and more. It’s the best place to look to find the right legal consultation for your business.
Conclusion
Long story short: starting an Alaska LLC can be a pretty pricey endeavor. If you look at each cost separately, it doesn’t seem too bad (perhaps with the exception of the $250 Articles of Organization fee). But when you add them all up or tack on some additional services, the total price tag grows pretty quickly.
Thankfully, since you’ve read this guide, you know what you’re up against. And sometimes, knowing is half the battle—and now you’re armed with all the information you need to budget the start-up costs so you can start your Alaska LLC off on the right foot. We wish you and your new business the best!