How Much Does an LLC Cost in Alaska? (Filing Fees Explained)
If you're an entrepreneur, forming an LLC in Alaska is an excellent decision if you want to benefit from the state tax credit programs and microloans for small businesses.
As a Mergers and Acquisitions specialist and a Master's Degree holder in tax law, I assisted multiple entrepreneurs with business formation.
To help you know what to expect and plan ahead budget-wise, I consulted our team of experts in the state to provide a detailed guide on the cost of forming an LLC in Alaska.
Quick Summary
- An LLC in Alaska costs $250 to file the Articles of Organization and $50 to obtain a state business license.
- Upon approval of the business, additional expenses you may incur are licenses and permits, registered agent service, biennial report, and other documentation.
- According to the Alaska Small Business Development Center, about 80% of LLCs in Alaska draft operating agreements to define internal governance and member roles.
- In my experience, Alaska is one of the few states that require an initial report to be filed after 6 months in operation.
Cost to Start an LLC in Alaska
There are mandatory fees and optional expenses associated with forming an LLC in Alaska. These include the following:
1. LLC Formation Filing Fee ($250 - Mandatory)
An LLC in Alaska costs $250 which covers the Articles of Organization.
The state does not offer expedited service. To streamline the process, I file online since the application is approved immediately.
"The Articles of Organization are submitted to the Alaska Division of Corporations, and upon approval, they establish your LLC."
- Jon Morgan, CEO, Co-Founder & Editor-in-Chief of Venture Smarter
2. State Business License Fee ($50 - Mandatory)
Before launching a company, Alaska LLCs must get a $50 business license from the Division of Business Licensing [1].
Also, your Alaska business license needs to be updated annually. This means a $50 renewal fee must be paid annually if you wish to continue doing business as an Alaska LLC.
It's a good thing that Alaska state offers a $25 discount for senior citizens or veterans.
In order to find out if your LLC needs any further licenses, you can visit the Alaska Department of Commerce Community and Economic Development website.
Now that you've learned how much it cost to start an LLC, let's see what additional costs may apply to your new business.
3. Registered Agent Services Fee ($80-$300 Annually - Optional)
In Alaska, you have two options for a registered agent: act as your own or hire a professional. There is no extra charge if you serve as your LLC's registered agent or choose a trusted third party to do so.
If you can't be your own registered agent, the alternative is to work with a professional registered agent service.
Depending on the company, some businesses impose fixed fees, while others impose yearly costs that range between $80 and $300.
According to the Alaska Division of Corporations, approximately 50% of business owners in Alaska choose professional registered agent services, indicating a balanced preference between personal and professional management of legal correspondences.
4. Name Reservation Fee ($25 - Optional)
Alaska LLCs business name reservation costs $25. You get exclusive use of the name for 120 days after reserving it.
To ensure the application is approved, I advise clients to check if the LLC name is available in Alaska and stay compliant with state naming regulations.
Expenses Following the Approval of Your LLC
Apart from the initial LLC registration fees, here are other Alaska LLC filing costs that you may incur through the LLC formation process.
1. Professional Licensing Fee (Depending on the Profession - Mandatory)
Several specialized occupations, such as pharmacists, engineers, and loan sharks, require a professional license from the Alaska body that regulates that field.
Professional licensing costs vary from industry to industry.
A client of mine had to file a Permanent Cosmetic Coloring License application fee for $150, plus $60 for the exam offered by the professional licensing office.
2. Initial Report ($0 - Mandatory)
You must submit an Initial Report within six months of forming your Limited Liability Company in Alaska. All authorized LLCs are required to comply with this.
It is crucial to maintain your company entity's contact information current with the state and on file with them. There is no filing charge for this first report, and submissions can be made online.
3. Biennial Report ($100/Domestic LLCs - $200/Foreign LLCs - Mandatory)
Every two years after submitting your first report, you must keep updating the state's records with information about your LLC.
As an LLC owner, you must submit an LLC biennial report which costs $100 for domestic LLCs and $200 for foreign LLCs. I remind my clients to file the biennial report on or before the due date to remain in compliant with state business laws.
4. Operating Agreement (Optional, but Recommended)
The operating agreement is a document that specifies the rules and regulations governing your LLC. It outlines the rights and responsibilities of the members, management structure, voting requirements, and how profits and losses are distributed.
According to a survey by the Alaska Small Business Development Center, approximately 80% of Alaska LLCs have formal operating agreements to clarify business operations and member expectations, reinforcing the document's critical role in effective business management.
There is no associated cost of drafting an operating agreement by yourself. However, you can hire a lawyer to ensure the document's legality or employ an online LLC formation service, which costs $100 to $200.
5. DBA Name ($25 - Optional)
A DBA registration costs $25. You'll need a DBA if you wish to do commerce under a name different from the statutory name of your company.
You must first have a business license in Alaska to apply for a DBA. After that, you may register your DBA title for five years by filing a business name application.
Each DBA you file in Alaska requires an additional business permit/license.
6. Employer Identification Number ($0 - Optional but Recommended)
You need an Employer Identification Number to submit income taxes, create a bank account for an LLC, and hire staff [2].
Obtaining an IRS Employer Identification Number for your LLC may be done for free, even though many companies charge a service fee for this.
I filed my application online through the Internal Revenue Service (IRS) website at no cost. The entire process only took a few minutes.
7. Certified Document Copies ($15 - Optional)
Certified copies cost a filing fee of $15 per document. As your firm grows, you might need a certified copy of your corporate records from the Alaska Division of Corporations.
It's advisable to keep certified copies of legal records on file for management purposes.
8. Certificate of Compliance ($10 - Optional but Recommended)
Obtaining a certificate of compliance or good standing costs $10, which can be requested online or by mail from the Alaska Division of Corporations.
A Certificate of Compliance is required if you ever need to prove to a financial institution, shareholder, or foreign government that your LLC is current on its taxes and state reporting.
I always keep one on file since investors and clients prefer businesses that are compliant with the state.
9. Premium Business Insurance ($55-$1,000 - Optional but Recommended)
Depending on the scale and demands of your company, business insurance filing fees can range in price from $50 to $1000+ monthly. Also, according to the law, you must obtain workers' liability insurance if your company has employees.
As there is no public program for workers' compensation in Alaska, you must get this insurance from a commercial provider. It's a good idea to compare prices because the cost of this insurance fluctuates.
FAQs
How Can I Pay My Alaska LLC Cost Filings To the Alaska Division of Corporations?
You can pay your Alaska LLC cost filings to the Alaska Division of Corporations through cash, credit card, or check.
Is There A Penalty For Paying My Taxes Late In Alaska?
There is a penalty for paying your taxes late in Alaska. You will be charged $25 and an additional 5% of the taxes due for the succeeding months.
References:
- https://www.commerce.alaska.gov/web/cbpl/BusinessLicensing.aspx
- https://www.sba.gov/blog/what-ein-why-it-important
