8 Essential Tips for Starting and Building a Successful Business in Alaska

If you want to form a new company and manage your business in Alaska, you'll need to know detailed information on how to start a business in Alaska. You must learn about the company, formation process, packages, filing requirements, associated fees, business banking account, and other details. You can find the advice alongside all the needed services and information right here.

1. Deciding on the types of businesses to set up in Alaska

In Alaska, several different ways exist to start a company or business. Some of the most common types of business are listed below:

Sole Proprietorship

A sole proprietorship is an unincorporated company owned and operated by just one person, with no separation between the owner and the company. A sole proprietorship business is not treated as a distinct legal "person" or entity because there is no legal, separate entity between the owner and the business.

Profits earned by the business owner are taxed at their personal tax rate. You can be required to pay self-employment taxes if you run the entire process of the firm daily. Visit the IRS for further details on federal taxes. Contact federal authorities for more information about local taxes, including sales tax. Consult a tax accountant or CPA for more advice.

Partnership

Unincorporated businesses with two or more "persons" (individuals or entities) who share ownership are known as partnerships. Without or with a partnership agreement, a partnership can be created. Every partner gives something to the firm, whether it be cash, assets, labor, or skills. In return, each partner will receive shares of profit and loss from the company and have the right to make important decisions such as hiring employees, changing work policies, etc.

Taxes are paid on each partner's portion of the firm income on their own individual tax returns. The partnership must inform the IRS of its operating income and losses. Visit the IRS for further details on federal taxes.

Limited Liability Company (LLC)

Unlike a company limited by shares and members, a limited liability company is a legally recognized commercial entity known as a "person" under the law. An LLC has management and tax benefits similar to a partner company with the limited liability protections of a corporation.

There are numerous tax choices for LLCs. Members can file their taxes as, among others, a single member LLC taxable as a sole proprietorship, an LLC with partners taxed as traditional partners or an LLC taxed as a corporation, including an S-Corp or C-Corp. You may check the IRS website for further details on how the IRS categorizes LLCs and Federal taxes. You may also visit your local municipality for more information about local taxes, including sales tax, or consult a tax accountant or CPA for more advice before LLC filing.

Corporation

A professional company performs one type of service that needs a professional license and is a legitimate business organization or "person" in legalese. A professional corporation's officers, directors, and stockholders must be licensed professionals. Such companies and businesses must declare their operations, profit and loss, and other details through annual reports each year.

In this state, a Professional Corporation (PC) may be formed by one or more individuals who have been granted a license by a regulatory authority (AS 10.45.050) for professional service. — AS 10.45.010

A professional corporation may provide a single type of professional service. — AS 10.45.020

All officials, directors, and stockholders must hold a professional license issued by an Alaskan regulatory authority and specific to the PC's line of business. — AS 10.45.030-.060

Visit the IRS for further details on federal taxes. Follow up with local authorities for more information about local taxes, including sales tax. Consult a CPA or tax consultant for more information.

Non-profit Corporation

Non-profit organizations are set up for reasons other than financial gain. Non-profit corporations may be set up under this chapter for any acceptable reason, including but not limited to a few of the following: purposes that are charitable, religious, benevolent, educational, civic, patriotic, political, social, fraternal, literary, cultural, athletic, scientific, or those are related to trade, business, industry, or trade associations. — AS 10.20.005

Tax-exempt status is granted by the IRS, not the State of Alaska. For the IRS to give tax-exempt status, it may be necessary for the articles of incorporation to comply with specific requirements about the organization's purpose, dedication, and distribution clauses. Visit the IRS for further details on federal taxes. Contact your local authorities for assistance with local taxes, including sales tax. Consult a tax accountant or CPA for more advice.

It's crucial to remember that every type of business formation process has advantages and disadvantages. So, before choosing the entire process, conduct your study and speak with a lawyer, registered agent, or accountant. It is better to opt for a registered agent service while investing in company formation packages.

2. How to create a business structure in Alaska

Business structure, or business form or type, describes how a new business entity is set up regarding management, strategy, liability, taxes, payroll services, operating agreements, etc.

Choosing the appropriate business structure based on your unique business idea demands is one of the essential choices you should make as a new business owner.

Understanding your company's needs and objectives is essential before selecting your business structure. Some things to think about are:

• Size of the company, including the number of owners, members, directors, and other employees.
• Type of commercial activity.
• Transferability of Business Control.
• Type of ownership (sole proprietor, limited liability partnership, a company limited by shares, nonprofit corporation, etc.)
• Liability.
• allocation of profits and losses.
• Taxation (income tax, payroll taxes, etc.)
• Additional services rendered.

Your choice of the business structure before starting a new company formation process will significantly impact the law and taxes. You are urged to consult a specialist, such as a CPA or an attorney, before making any significant business decisions. These experts will help you choose the new business structure best suits your unique business requirements.

3. How to start a business in Alaska with a fresh company name

Choosing a name for your company is like setting the foundation stone for a structure. When fixed, the entire business foundation (i.e., operations, advertising, banking, payroll taxes,, assets, etc.) aligns with it.

Requirements for business license names:

• A business license is necessary per 12 AAC 12.020(a) for each [different] company name under which the applicant wishes to conduct business.
• As per 12 AAC 12.020(g), a business must use the name listed on its license in all advertising and commercial operations.

Options for a company name and a DBA (doing business as) name:

Choice 1:

The same name as the business owner may be used for both advertising and operations, as in:

• Proprietor Business - Owner and only proprietor Bruce Wayne advertises and does business as "Bruce Wayne."
• Partnership Business - "Bruce and Selina Wayne" is the name under which Bruce and Selina Wayne (the owners) advertise and conduct business.
• Entity (Corporation) - Wayne Enterprises INC (owner), which uses the name "Wayne Enterprises INC" for advertising and business purposes.
• Others (trust, tribe, village, etc.) - Wayne Family Trust (owner) uses the name "Wayne Family Trust" in advertising and business.

Choice 2:

"DBA" (doing business as) refers to the decision by a business owner to run and market a business under a different name than their own as per an operating agreement.

• Proprietor Business - Owner and sole proprietor Tanjiro Lee operates "Lee Sports Shop."
• Partnership Business - "Lee Construction" is operated by owners Tanjiro and Nezuko Lee.
• Entity (Corporation) - Lee INC (owner), doing business as "Lee Sweet Treats" and has a separate business bank account on its name as a company limited.
• Other (trust, tribe, village, etc.) - "Lee Investments" is a business name operated by the Lee Family Trust.

You must ensure your LLC or corporation's legal name also differs from other companies already registered with the Alaska Division of Corporations, Business, and Professional Licensing (CBPL). On the CBPL website, you can conduct a business entity search to see if any names are now available. Submitting a Business Name Reservation with the CBPL allows you to reserve a name currently available for up to 120 days. LLCs and corporations must have particular words, such as "L.L.C." for LLCs or "Company" for corporations.

If you need to register your company name as a domain name, operating an online business could be a good idea. Additionally, you should make sure the name you have chosen for your business or company is not similar to a company’s already existing name. To prevent trademark infringement problems, you must conduct a federal and state trademark search.

4. How to get a business license in Alaska

Things to think about before beginning:

• Choose your business structure, such as a corporation, LLC, or sole proprietorship.
• Choose your industry and the Alaska NAICS code.
• Do some research and choose your company name.
• As a company (such as a corporation, LLC, LLP, or limited partnership) choose your registered agent carefully.
• Visit BusinessLicense.Alaska.Gov and scroll down to RESOURCES for more information.
• Seek the help of an attorney, or seek other qualified professionals for additional guidance.

Tax Registration

There is no problem registering for those taxes because The state sales tax or a personal income tax on wages are not applicable in Alaska. However, be aware that specific Alaskan communities may impose a sales tax.

EIN

You should work on getting an Employer Identification Number (EIN) from the IRS if your company hires people or is subject to separate taxation from you. Banks frequently require an EIN to open an account in a company's name for receiving and giving payments. By completing an online application, you can obtain an EIN. There isn't a filing charge.

Regulatory authorizations and licenses

These include aspects like:

• Safety and health.
• the environment.
• Architecture.
• Construction.
• Particular businesses or services.

In Alaska, a state business license is necessary for most firms. The CBPL is in charge of issuing licenses. You can pay for a business license that lasts one year or two years. Visit the New BL Online section of the CBPL website for further details. Additional state authorities issue permits for environmental protection or public health and safety.

Visit the Division of Environmental Health, the Department of Environmental Conservation's website, and other state authorities if you believe one of these permits may apply to your company. Look out for local licensing and permit requirements on the websites of any towns or counties where you plan to conduct business.

Professional and occupational licenses

These licenses are required for professionals in a variety of fields. Most occupations requiring state licensure are listed on the CBPL website under Professional licensure.

Steps to get these licenses are given below:

a. Professional License Section

You must get a professional license before engaging in a commercial practice governed under Alaska Statute Title 8 (AS 08).

If necessary, apply for an entity professional license for corporations, LLCs, LLPs, and LPs, or an individual professional license to the State of Alaska Professional License Section.

b. Corporations License Section

You need to register your corporation with the State of Alaska Corporations Section. It is necessary to get an Alaska entity number.

All organizations must have a registered agent with a physical and mailing address in Alaska. Potential foreign entity exemptions might be allowed by State of Alaska corporation laws. Still, they might not be permitted by laws governing professional licensing, procurement, or other programs that take precedence over corporation exemptions.

c. Business License Section

According to AS 43.70.020, a business license is required to start a business.

Submit an application to the State of Alaska Business License Section for a business license. The business license application will request the Alaska entity and professional license numbers.

Fees:

Under 12 AAC 02.010, 12 AAC 02.015, and 12 AAC 12.010(e), the licensing payments are non-refundable after a business license has been provided.

On December 31st, all business licenses expire. Whether you choose an annual (1-year) or biannual (2-year) license will determine the expiration year.

• Regular Business License Fee - $50 for one or two years, payable in advance.
• Senior Discount Fee - To be eligible for this discount, a business license must be held by a single person (a sole proprietor) who is 65 or older or who will become 65 during the licensing period the application is being submitted. Applicants must also supply the person's date of birth.
• Veteran Discount for Disabled Persons - To be eligible for this discount, the applicant must be a single, sole proprietor in military service but now disabled. The person must submit the NEW Application (form 08-4181) in hard copy (via in-person, fax, or U.S. Mail), along with the necessary fees and a copy of your "service-connected" disability determination letter from Veteran Affairs or "service-connected" military ID, to initially be eligible for this discount. Documents containing medical information should not be sent.

As per AS 43.70.030(a), a business license cost may only be reduced by one qualified discount (senior or disabled veteran discount).

Any credit card can be used to pay for online filing fees. Business License: NEW application (form 08-4181) and the necessary fees must be submitted in hard copy (through in-person, fax, or U.S. Mail) if payment must be made by check or money order. Avoid emailing payments or files. Do not email filings, payments, or other sensitive information for security reasons.

The Business License Section processes hardcopy applications in the order they are received. The typical hardcopy processing time from March to September is 10 to 15 business days. The processing period will be prolonged from October through February when there are a lot of business license applications.

5. Where to locate your business and how to check zoning

You must choose a business location for your business formation and research zoning laws in the area. Consider the costs of running a business in the selected region, hidden costs such as rent and utilities, before deciding on a site. To determine whether you could afford your ideal business location during the early stages of your firm, you might look back at your business strategy.

Confirming that the location is zoned for your specific company is essential. By looking into your local legislation and getting in touch with your town's zoning or planning department, you may find the zoning regulations for your town or city.

Operating your business from your house is an option for finding a new site. Study your local zoning regulations again before deciding to run a home-based business. Check your lease (if you rent your house) and any applicable homeowners association laws, as both may prohibit some or all home operations.

6. How to report and file taxes for your Alaska business

Like most states, Alaska has a corporate income tax, but unlike many others, it doesn't have a franchise or privilege tax generally imposed on firms. In addition, there is no personal income tax in Alaska.

• Only business income is subject to federal taxation for sole proprietorships.
• Typical partnerships solely tax their business income at the federal level.
• Members of standard LLCs only pay federal taxes on their business's income. The LLC itself must also submit a biennial report to the CBPL. For further information, see Alaska LLC Annual Report and Tax Requirements.
• Corporation income tax is due from Alaskan corporations. Individual shareholders must pay federal taxes on corporate dividends. A shareholder-employee who receives a salary must also pay federal income tax on their personal federal tax return. Corporations must also submit a biennial report to the CBPL.

There are also federal income and employer taxes in addition to Alaska taxes. Consult IRS Publications 583, Taxpayers Starting a Business, and 334, Tax Guide for Small Businesses.

7. How to obtain commercial insurance

Commercial insurance or business insurance is necessary for safeguarding your company and assets from the impact of unexpected issues. If your company faces any legal issues due to personal injury or financial crisis caused by natural disasters, your business insurance policy can save your soul. General liability insurance protects Your business against claims of property damage or bodily harm. You may get all details from an insurance agent as you consider your alternatives for coverage.

Depending on the nature of their operations and the risks they encounter, firms in Alaska may require one or more types of cost-effective commercial insurance. The following are some of the most typical commercial insurance types needed for your great company:

• A general liability policy - This kind of insurance covers third-party claims for bodily harm, property loss, and personal injury that may result from the conduct of your business.
• Property insurance - Insurance for physical damage to your company's property, such as its buildings, machinery, stock, and other assets, is provided through property insurance.
• Workers' compensation insurance - In Alaska, employers must carry workers' compensation insurance, which covers employee illnesses and injuries sustained at work.
• Commercial auto insurance - Many business owners consider this insurance coverage useful in different conditions. This kind of insurance covers automobiles, lorries, and vans used for business purposes.
• Professional liability insurance - An excellent example of such insurance is Errors and omissions insurance, which covers lawsuits brought against your company for giving expert advice or services.
• Employment practices liability insurance - This kind of insurance covers complaints of wrongful termination, harassment, and discrimination in the workplace.
• Business Owners Policy (BOP) - A BOP combines liability and property insurance into a single, straightforward policy. This is a good alternative for small to medium-sized organizations owning or leasing commercial real estate, such as a storefront, warehouse, or office building.
• Cyber liability insurance - It covers losses brought on by data breaches, cyberattacks, and other related occurrences.

8. How to open a business bank account in Alaska

Irrespective of what kind of business you establish, you should consider setting up a separate business account to simplify keeping track of your earnings and outgoings. To protect your liability, some business structures, such as LLCs and corporations, require a different bank account.

Documentation Required:

The paperwork required to open the account will vary depending on how your company is structured; for example, sole proprietorships call for slightly different paperwork than LLCs. Let's quickly examine the requirements for corporations, LLCs, general partnerships, and sole proprietorships.

• Proprietorship - A single proprietorship may require a social security number or a federal taxpayer identification number (TIN). You will also need the license or certificate displaying both the business name and your name if your company needs a government-issued license or if you've submitted a business name certificate because your company uses a name other than your own.
• Partnership - For a general partnership, you will require the TIN of the partnership, a copy of your partnership agreement that includes the names of your company and your partners, and a business name certificate that includes the names of both the company and the partners.
• LLC - A copy of the articles of organization (or, depending on the state where the LLC is founded, the equivalent document, such as a certificate of incorporation) and the company's TIN are required for a limited liability company. You can also want a supplemental LLC document that does so if the articles of organization are insufficient in stating who is permitted to sign on the LLC's behalf.
• Corporation - A copy of the articles of organization (or, depending on the state where the corporation is created, the equivalent document, such as a certificate of incorporation) and the TIN are required for corporations. You can also need an additional corporate document that does so if the articles of incorporation are insufficient in stating who is permitted to sign on the corporation's behalf.

The basic idea is that you must have the necessary legal documents to prove your company's authenticity, nature, and name and you need to register it with the IRS. Proper documentation denotes the legal right to open a business bank account during the company formation process.