Here’s an overview of the key steps you’ll need to take to start your own business in Alaska.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Check Choose Your Business Structure on Nolo’s website for more information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Alaska Division of Corporations, Business and Professional Licensing (CBPL). You can check for available names doing a business entity search on the CBPL website. You can reserve an available name for up to 120 days by filing a Business or Corporation Name Reservation Application with the CBPL. There are also certain name requirements for LLCs and corporations (like including a word such as “L.L.C.” for LLCs or “Company” for corporations). See How to Form an LLC in Alaska and How to Form a Corporation in Alaska for more information.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. Alaska does not have a state sales tax or a personal income tax on wages so there is no issue of registering for those types of taxes. Be aware, however, that individual Alaska municipalities may charge sales tax.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
Most Alaska businesses are required to have a state business license. The license is issued by the CBPL. You have the option to pay for either a one-year or two-year business license. For more information, check the New BL Online section of the CBPL website. Other state agencies issue permits for matters relating to, for example, the environment or health and safety. If you think one of these kinds of permits might apply to your business, check the websites for Division of Environmental Health, Department of Environmental Conservation, and other state agencies. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. The Professional Licensing section of the CBPL website lists most of the professions requiring state licensing.
You’ll need to pick a location for your business and check local zoning regulations. That includes if you work from home. You may be able to find zoning regulations for your town or city by checking municode.com.
Alaska is like most states in that it has a corporate income tax, but unlike many states in that it does not have any franchise or privilege tax generally applicable to businesses. Moreover, unlike most states, Alaska does not have a personal income tax. See Alaska State Business Income Tax for more information on state business taxes in Alaska.
Sole proprietorships. Sole proprietorships only pay federal taxes on business income.
Partnerships. Typical partnerships only pay federal taxes on business income.
LLCs. For typical LLCs, LLC members only pay federal taxes on business income. In addition, the LLC itself must file a biennial report with the CBPL. See Alaska LLC Annual Report and Tax Requirements for more information.
Corporations. Alaska corporations must pay the state’s corporation income tax. Individual shareholders must pay federal taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay federal income tax on his or her individual federal tax return. In addition, corporations must file a biennial report with the CBPL.
Apart from Alaska taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business, available at irs.gov.
Insurance is a good idea for most kinds of business. While insurance often is regulated at the state level, the types of business insurance available are usually similar across the fifty states. Check Obtaining Business Insurance for more information.