Incorporator The Journal of U.S. Formation
Start Free Quiz
Editorial 6 MIN READ

Alaska in February 2017: what the formation actually costs

A $250 filing fee, a $50 business license, and a biennial report cycle that trips up everyone who forms here expecting annual paperwork

The Editors
Staff, Incorporator.org
6 min read Updated
Contents 5 sections
  1. The mechanics
  2. The biennial report is the thing people miss
  3. Taxes: what Alaska does and does not take
  4. Who this state actually makes sense for
  5. Sources

n Alaska LLC costs $250 to form, $50 a year for the state business license you cannot skip, and $100 every two years for the biennial report. Alaska is the only state that runs its formation paperwork on a two-year cycle, which is the single fact most mainland founders get wrong in the first eighteen months.

This is a guide for someone forming in February 2017. It assumes you know why you are here — either you live in the state, you are doing work in the state, or the LLC owns property or a lease inside the state. Alaska is not a forum-shopping jurisdiction.

The mechanics

You file Articles of Organization with the Division of Corporations, Business and Professional Licensing ("DCBPL") inside the Department of Commerce, Community, and Economic Development. The statute authorizing the filing is AS 10.50.075, which lists the mandatory contents: the LLC's name, the purpose for which it is organized, whether it is member-managed or manager-managed, and the name and Alaska street address of the registered agent. The agent must be resident in Alaska, and the address cannot be a P.O. box.

The filing fee is $250. You can file online through the DCBPL portal for immediate processing, or mail the paper Form 08-484 with a check to the Corporations Section in Juneau, in which case the stated turnaround is ten to fifteen business days. There is no expedited paper tier; if you need speed, file online.

You then need a second document that mainland founders routinely forget: the Alaska business license. Under AS 43.70, every person conducting business in the state must hold a license issued by DCBPL, regardless of entity type. The fee is $50 per calendar year. The license requires a NAICS code describing your primary line of business, and some lines (tobacco, e-cigarettes, fisheries-related activities) require separate endorsements with their own fees. The license is not the LLC registration — it is a parallel filing, and the LLC is not authorized to transact business in Alaska until it has both.

After that you need an EIN from the IRS, which takes about ten minutes through Form SS-4 online, and an operating agreement, which Alaska does not require you to file but which the statute assumes you have. A single-member LLC is a disregarded entity for federal tax by default; a multi-member LLC is a partnership by default. Either can elect to be taxed as an S-corp or C-corp on Form 2553 or Form 8832 respectively.

The biennial report is the thing people miss

Alaska does not have an annual report. It has a biennial report, due January 2 every other year, on a cycle tied to the year your LLC was formed. An LLC formed in an odd year files its biennial reports every odd year; an LLC formed in an even year files every even year. The filing fee is $100 for domestic LLCs and $200 for foreign LLCs. The filing window opens on October 2 of the year before the report is due.

There is also an initial report, due within six months of formation, with a fee of $0. It is easy to dismiss as a formality and forget; the Division does not dismiss it.

If the biennial report is postmarked after February 1, the state adds $37.50 in late fees ($47.50 for foreign LLCs), for a total of $137.50 domestic or $247.50 foreign. Miss the deadline by much longer and the LLC is involuntarily dissolved under AS 10.50.800 for failure to file, which requires a reinstatement filing and additional fees to undo.

The two-year cycle is the trap. Founders coming from states with annual filings set a calendar reminder for January 2018 on their 2017 formation and breathe easy until the involuntary-dissolution notice arrives in late 2019. If you form in 2017 (an odd year), your first biennial report after the initial is due January 2, 2019, and then January 2, 2021, and so on. Write that down somewhere that is not your head.

Separately, the business license is annual. Every January 1 you owe another $50 to keep the license current, and operating without one is a misdemeanor under AS 43.70.020. The two filings are on different cycles and handled by different sections of the same division, which is how people who remember one forget the other.

Taxes: what Alaska does and does not take

Alaska has no state individual income tax and no statewide sales tax. For an LLC taxed as a partnership or disregarded entity, where income flows to the member's 1040, the member pays federal tax and nothing to Juneau. This is the genuine draw of forming here as a resident: the structure that would generate a state-level K-1 headache in California or New York generates none in Alaska.

Boroughs and municipalities do levy their own sales taxes, typically in the 3% to 7% range depending on locality, and some impose local business taxes. Anchorage has no general sales tax; Juneau has 5%; most Southeast and Bush communities run 3% to 6%. If you sell goods or taxable services, the relevant tax is local, not state.

C-corporations — and LLCs that elect C-corp treatment — do pay Alaska corporate income tax, graduated from 0% to 9.4% under AS 43.20. The top bracket applies above roughly $222,000 of Alaska-source taxable income. This is one of the higher top rates in the country and is the reason most small Alaska operating businesses use pass-through treatment.

Who this state actually makes sense for

Three kinds of entities belong in Alaska, and the list is shorter than the Delaware equivalent because Alaska does not sell itself as a forum.

The first is a business whose owner lives in Alaska. The no-income-tax, no-sales-tax combination is real money on every K-1 dollar, and forming elsewhere only to foreign-qualify back into Alaska adds cost for no benefit.

The second is a vehicle that holds Alaska-situs assets: a lodge, a charter operation, a commercial fishing permit's business layer, a parcel of land, a small mineral or timber interest. The asset is in Alaska, the courts that will adjudicate disputes are in Alaska, and the LLC should be too.

The third is anything in the oil and gas value chain with operations on the North Slope or in Cook Inlet. Service companies, drilling contractors, logistics outfits, and consulting LLCs routinely form here because their work is here and because the state's regulatory regime for oil and gas — AOGCC permits, DNR leases, DEC spill-response plans — presumes an Alaska-registered counterparty. Forming in Delaware and foreign-qualifying works, but it earns you two sets of biennial reports and two sets of agent fees for no offsetting benefit.

Everything else — the remote-work consultancy, the e-commerce side project, the SaaS startup — can form elsewhere and be fine. Alaska's case law is thin compared to Delaware's, the Court of Chancery equivalent does not exist, and a $50 annual license on top of a $100 biennial report is a real if small friction for a business with no other connection to the state.

If you are forming this quarter because you live here, file the Articles, file the business license the same week, and put a calendar reminder two years out for the biennial report. Do not let the two-year cycle lull you.

Sources

Keep reading

More from the journal.