Before you try to start an Alaska limited liability company (LLC), make sure you know how much it will cost. This can be more involved than it should be, especially when you aren’t sure where to start.
In this article, we’ve explained the potential expenses of starting a limited liability company in Alaska.
Keep reading to discover:
- The required expenses of forming an Alaska LLC
- Optional costs that could help your business
- How to choose the proper LLC formation method
By the time you reach the end of this article, you’ll be ready to make a budget for your Alaska LLC formation costs.
Total Alaska LLC Cost – Starting at $300
According to the Alaska Alaska Department of Commerce, Community, and Economic Development’s Forms & Fees, the bare minimum cost to start an LLC in Alaska is $300
This includes two items:
- Alaska Articles of Organization filing fee: $250
- Alaska Business License annual fee: $50
Your LLC might also need to obtain professional or local business licenses, the costs of which vary.
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Alaska LLCs – the Basic Costs
The total cost of an Alaska LLC will vary. But no matter what, the lowest amount possible is $300. In the section below, we’ve outlined what your mandatory expenses might be.
Articles of Organization Filing Fee — $250
Articles of Organization are official legal documents that create LLCs. To start an LLC in Alaska, you must submit this document to the Department of Commerce, Community, and Economic Development (DCCED). It’s easier than you might think. All you really need to do is list basic information about your business.
Alaska Business License — $50
Alaska requires every company in the state to obtain a business license. You can apply online or submit a paper Business License Application form. For more details, check out the DCCED’s business licensing page.
Professional Licenses and Business Permits — Variable
Alaska requires people who work in certain professions to obtain a professional license. You can learn more on DCCED’s Professional Licensing page.
You might also need a local permit or business license for your LLC. For instance, the city of Anchorage requires some companies to apply for business licenses.
Alaska LLCs – Optional Costs to Consider
On top of the required expenses of starting an LLC, you should consider investing some more cash. You can legally operate without making these expenditures. But doing so can benefit your Alaska limited liability company.
Expedited LLC Filing Fees — N/A
Alaska does not offer expedited filing. However, online filings are processed immediately. For this reason, we suggest you file online rather than submit a paper form. Paper filings will typically be processed in about 10 to 15 business days from receipt.
Registered Agent Fee — about $100 per year
Alaska mandates that all LLCs have a registered agent to accept legal documents sent to the business. You will include your registered agent’s details on your Alaska LLC Articles of Organization for no additional cost. However, there is a $25 fee if you change your agent.
Newer entrepreneurs might think it makes sense to name themselves as their LLCs' registered agents. And while this appears to be the simplest and most cost-effective choice, it can cause serious problems.
First, registered agents must always be available during standard business hours to receive papers. If you’re your LLC’s registered agent, this can prevent you from taking a vacation or even a lunch break. Agents also have their addresses listed online. So, you might have to deal with excessive junk mail or having your privacy invaded.
For these reasons, we suggest that every LLC hire a professional registered agent service instead. Your professional agent will meet all your LLC’s registered agent requirements. Plus, they only cost about $100 per year.
Check out our Best Registered Agent Services article for some of our recommendations.
Operating Agreement — Variable
An Alaska operating agreement is a legally-binding contract that sets the rules for an LLC. It includes essential details such as the rights and duties of each member and how to join or exit the business.
While Alaska law doesn’t require an operating agreement, we still recommend having one. There is also no rule that you can’t make your own LLC operating agreement. But it is much more advisable to hire a professional.
One option is to retain an attorney. If you do so, you will get a comprehensive and accurate document. But lawyers can be pricey. So, if you need to save money, a business formation service will draft an LLC operating agreement for your LLC for as little as $39.
DBA Fee — Starting at $50 per year
Many business owners choose to run their LLCs using “doing business as” or “DBA” names. A DBA is a name that a business uses that is not its official name. For instance, it’s common for entrepreneurs to drop the “LLC” from their company’s legal name for its day-to-day operations.
In Alaska, DBAs are called “trade names.” If you want to use a DBA for your LLC, you must obtain a business license under the trade name as the name your business will use.
You need to get a separate business license for every name you intend to use when running your LLC. Each license will cost $50 per year.
Getting a business license for your DBA does not guarantee you exclusive rights to the name. It also does not prevent anyone else from getting a business license under the same name. If you want exclusive use of your DBA, you will need to file a Business Name Registration with the DCCED. There is a $25 fee, and you will need to renew every five years.
However, it is not required that you do this. You can legally operate your business under a DBA as long as you have a business license for that DBA.
Name Reservation Fee — $25
Once you have decided on the name you want to use for your Alaska LLC, you can reserve it for 120 days. If you are ready to file your articles of organization, you aren’t required to reserve the name. But if you aren’t ready just yet, reserving a name will keep someone else from claiming it first.
Domain Name — about $20 per year
A website is an essential part of the average marketing plan. If you want to make a website for your LLC, you will need to purchase a domain. Fortunately, domain names are affordable and easy to get.
Still, we suggest that you get your domain as soon as you can. If you wait too long, it might already be claimed. And watch out for “domain squatters.” They buy domain names they think new LLCs will want. Then, they resell them for a profit.
You can buy your domain at GoDaddy.com or a similar website for about $20 to $50 per year. Plus, you can usually find sales and discounts to save some extra money.
Getting an Employer Identification Number (“EIN”) — Free
EINs are 9-digit ID numbers that the Internal Revenue Service assigns to businesses. An EIN is similar to a social security number for a company. The IRS requires certain types of LLCs to apply for EINs. But other LLCs don’t have to get them.
Even if it’s not mandatory, we suggest you obtain an EIN for your LLCs. This will be beneficial since most banks require an EIN to open a business account. Using an EIN can also help you protect against identity theft since you won’t need to use your SSN to do business.
Foreign LLC Qualification Fees — about $100 per extra state
If you plan to expand into other states, you will have some additional expenses. While you aren’t required to form a new LLC in each state you operate, you do need to register as a foreign limited liability company.
Foreign LLC filing fees vary between states. They are often in the $100 range.
Writing Formation Costs Off
You can usually deduct your LLC formation expenses as business startup costs on your federal income taxes. The IRS provides substantial guidance on this topic. We suggest that you check out the IRS website for more info about tax deductions.
By default, LLCs are classified as “pass-through” tax entities. For this reason, LLC owners can deduct up to $5,000 in startup costs on their federal income taxes in the year they start the company.
Zoey decides to start a single-member LLC and open a private detective agency in Anchorage, Alaska. Her formation costs are as follows:
- Alaska LLC Articles of Organization: $250
- Alaska Business License: $50
- Anchorage Private Detective Agency License: $100
- Alaska LLC Operating Agreement: $50
- Alaska Registered Agent Service Fees: $100
- DBA (trade name) Business License: $50
- DBA (trade name) Business Name Registration: $25
- LLC Name Reservation Fee: $25
- Web Domain Costs: $25
As a pass-through business entity, the LLC itself doesn’t pay income taxes. Rather, Zoey herself will report the profits from the LLC and any deductions on her personal federal income taxes. (Alaska does not have a state-level income tax.)
Zoey's total formation expenses were $675. Before she deducted these costs, Zoey’s total taxable income was $42,000. But with deductions, her taxable income drops to $41,325. This will reduce her 2022 federal income taxes from $4,989 to $4,840.
While this might not seem like a substantial decrease, LLC owners who regularly deduct their costs will realize significant tax savings over time.
Cheapest Way to Start an LLC in Alaska
It can be hard to decide how you want to start your LLC. To assist you through the process, we’ve summarized the pros and cons of three common formation strategies in the sections below.
Formation Service – $39 + state fees
LLC formation services are a popular option, especially among first-time business owners. Although you won’t be represented by an attorney, formation services specialize in forming business entities like LLCs.
LLC formation services are an ideal choice for many entrepreneurs. The advantages of this approach include:
- They’re easy. In most cases, a formation service will have helped hundreds of people through the exact process you are struggling with now. They have all the documents, information, and expertise you need right on hand.
- They don’t cost much. Because formation services have such a large volume of business, they don’t have to charge their clients that much money.
- They’re reliable. All of the formation services’ products and procedures have been tested hundreds of times over in the real world. That kind of experience should give you peace of mind and confidence going forward.
- They’re fast. Formation services have seen almost every business formation situation already. Chances are, they have many solutions for you that are ready right now before you even know you need them.
However, formation services aren’t a good fit for every business. The drawbacks to this method include:
- They’re not the best solution for complex LLCs. If you are forming a complicated company or one in a heavily regulated industry, you will have concerns that probably need more focused expertise in that area of business.
- Even if a formation service is a good fit, you can expect upselling. Formation services have to make money too, and some of them may pressure you to buy formation products or business services you don’t need. Even when you are using a formation service, you need to be a smart and informed consumer.
Using a professional LLC formation service can be a great way to set up a business. Check out our Best LLC formation services article for some of our suggestions.
If your LLC will have a complex legal structure, engaging a lawyer might be the right decision. Just keep in mind that attorneys can be pricey. They often charge an hourly rate for their services, frequently several hundred dollars per hour.
Despite the cost, retaining an attorney offers significant advantages:
- Lawyers help you manage risk. If you are starting a business with complicated legal issues, hiring a lawyer would be the best choice.
- Lawyers offer more customization when you need it. Do you need specific things put in an operating agreement? Is your company going to have a unique ownership structure? You may need an attorney to make sure these issues are handled properly.
Still, the disadvantages of this approach often outweigh the benefits:
- Lawyers cost more than any other option. The price tag alone should convince you that if you don’t need a lawyer, it’s not worth hiring one.
- Finding a lawyer takes a long time. Getting a lawyer who specializes in what you need, costs what you’re willing to pay, and can work with you well is a tall order.
- Lawyers also take longer to form a business than a formation service. Because lawyers are also very careful people, they will generally take much longer to form your company than non-lawyers would. Fortunately, most people don’t need a lawyer. In 90% of cases, a formation service will do just fine.
Do it Yourself
Another alternative is to manage the LLC formation process yourself. But don’t forget that your time is valuable. A DIY strategy might not be the best option if you are already stretched too thin.
Of course, there are benefits to doing it yourself:
- Personal knowledge. A DIY business owner will learn a lot about the process while forming their own business, and they probably will retain that knowledge for years to come.
- It costs less upfront. If you don’t account for the value of your time, a DIY solution is the cheapest option.
But don’t ignore the drawbacks:
- You’re losing money when you consider how much time it takes to DIY. If you figure out that your time is worth $30 per hour, and you take 20 hours to complete your business formation, you have essentially spent $600 on business formation.
- There’s the risk of making a mistake. DIY business owners can easily make a mistake with all the paperwork that can cost them even more time and money.
- It’s a headache. State workers are very helpful, capable people. But they will also tell you that the laws and rules governing business formation are not easy, and they follow those rules for a living. It’s going to be even harder for you.
Annual Alaska LLC Fees: How Much Will it Cost to Maintain your LLC?
Alaska law requires LLC owners to submit a biennial report to the DCCED every other year. You can file online or obtain a paper form on the Biennial Report Application / Database.
There is a $100 filing fee.
Your LLC's business licenses or permits may also need to be renewed periodically. For instance, your Alaska business license will cost $50 each year.
Additionally, some additional costs will be due annually. For example, you might be responsible for the following expenses each year:
- Registered agent service fee: approximately $100
- Domain name registration: $20 to $60
How Much are LLC Taxes in Alaska
Alaska does not have state-level income or sales taxes. This means you will not need to pay Alaska taxes on your LLC earnings. However, some localities assess sales taxes, and you may need to collect sales taxes from out-of-state customers.
Alaska LLC Formation Costs Quick Links
- Alaska Online Filing
- Alaska Business License Application
- Alaska Forms & Fees
- Alaska Department of Commerce, Community, and Economic Development
- IRS — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
Alaska LLC Formation Costs FAQs
How much does it cost to start an LLC in Alaska?
The lowest possible cost is $300. But, you might need to spend more depending on your location and industry.
What is the cheapest way to start an LLC in Alaska?
A do-it-yourself formation approach is the least expensive in terms of money spent. But if you consider the value of your time, an affordable LLC formation service is frequently the most cost-effective option.
Do I need to hire an attorney to form an LLC in Alaska?
No. Most LLCs can be started without help from an attorney. A DIY technique or a formation service will be more than adequate for the average LLC.
Can I pay to form an LLC more quickly in Alaska?
No. Alaska does not offer expedited filing. However, online filings are processed immediately, so we suggest you register your LLC online if you need it formed quickly.