Choosing to form an LLC is a big move for any business owner. There’s a lot of work to be done, and it can all take a lot of time. And some of that time is, of course, filling out applications, gathering the necessary documents and getting everything ready to go on your end. But other parts have nothing to do with you, like processing and approval times. These can be most annoying, but if you know what to expect then you can at least anticipate how long you’ll be waiting. So, how long does it take to get an LLC in Alaska?
Discovering Alaska
Alaska is home to a lot of diverse wildlife and ecosystems. It differs from the rest of the United States in a lot of ways. While it's home to the majority of America's glaciers, with 3% of it being covered with them, it also has quite temperate summers. The hottest summer recorded was in Fort Yukon in 1915, while the lowest temperature in the entire country was recorded in 1971 in Prospect Creek Camp. So, lots of extremes in Alaska, which means there's something for everyone.
Economic Overview of Alaska
Many people think of Alaska as being frozen and covered in snow, and some of it is (at least during certain parts of the year). But the rest of it isn't and that's reflected in its economy.
In 2022, Alaska got up to $49.6 billion in Gross State Product (GSP), and it had a growth rate of 1.7% across 5 years (from 2017). Alaska's unemployment rate in 2022 was 5.1%.
Some of the biggest industries in Alaska are Tourism, Oil Drilling & Gas Extraction, Gasoline & Petroleum Bulk Stations, Real Estate Investment Trusts, Hospitals and Seafood Preparation. And some of the biggest companies in the state are Providence, The Kroger Co., The Home Depot, Inc., Arctic Slope Regional Corp and Alaska Airlines, Inc.
Business Environment in Alaska
Just as it's tough for anyone looking to start a homestead in Alaska, it can be tough to get a business started there, as well. And it can be hard to keep up the fight to keep it going, so it seems as though only the most tenacious business owners should brave it.
During the Southeast Alaska Business Climate Survey for 2022, it was revealed that 62% of Southeastern Alaskan business owners view the business climate positively. Half of the business owners who responded to the survey indicated they had positive outlooks and expected business to be better during they next year. 29% of businesses in the Southeastern Alaska are hiring.
When it comes to bumps and hiccups in the business environment in Alaska, housing is the biggest one. Business owners site a lack of housing as their biggest hurdle in growth and expansion. They also say that high freight and cost of living costs are pains.
It's also expensive to do business in Alaska. While there aren't personal income taxes and they have low property taxes, they charge a corporate tax rate of 9.4%, which is one of the highest in the United States. And utility costs are outrageous there. It costs around 20.20 cents per kilowatt hour for electricity there, which is close to twice the national average.
Plus, according to one of the internet service providers looking to capitalize on supplying the state with broadband internet, only 61% of Alaskans have broadband access, which isn't great for business.
State-Specific Regulations and Incentives for Forming an LLC in Alaska
There are several different incentives for forming a Limited Liability Company in Alaska.
- Small Business Grant Program: This is a program funded by the state government in Alaska and it provides monetary assistance to Alaskan small businesses. The goal of the program is to assist small businesses in getting started, expanding, and creating jobs in the state of Alaska. You could get a grant up to $50,000 if you own a small business in Alaska. To find out if you qualify for other small business grants and to apply for grants in Alaska, visit the Alaska Small Business Grants portal.
- Alaska SBIR/STTR Grant Program (Small Business Innovation Research/ Small Business Technology Transfer): This program works in conjunction with the Federal SBIR/STTR Phase 1 and Phase 2 grants. If you make it through the Federal Phase 1 grant approval, you can get up to $25,000 from the Alaskan SBIR/STTR program. For Phase 2 applicants who are approved on the Federal level, they’ll be awarded an initial $25,000, and then could possibly be awarded another $75,000 ($100,000 total) if funding remains to do so.
Pros And Cons Of Establishing An LLC In Alaska
When it comes to the benefits of forming an LLC in Alaska, it would be hard to overlook the lack of competition in the area. Because Alaska isn't densely populated, it's hard to imagine that there would be many other companies selling the exact same product as you, which can be an advantage.
Another benefit of forming an LLC is bypassing the double-taxation of corporations. LLCs are only taxed once through personal income tax returns of each of its LLC members, where as corporations are taxed both through state corporate taxes PLUS on the tax returns of shareholders.
Some of the drawbacks include the high costs of living, high corporate taxes, and high costs associated with starting and maintaining a business there. You may think that if you form an LLC you're immune to paying corporate taxes, but that's not always the case. If you choose to have your company classified as a corporation for tax reasons, then you'll still have to pay corporate taxes.
Procedure of Establishing An LLC In Alaska
Before you learn about the time frames of forming an LLC in Alaska, you need to learn how to form a Limited Liability Company. Here's a breakdown of the process:
- Get your Articles of Organization- This is the form that will establish your LLC, so it’s important that you obtain it and fill it out. It will ask for information such as your business name and address, your registered agent, and information about your LLC members.
- Pick a name for your LLC- Your LLC name is quite important, and you can’t always use your first choice. Most states stipulate that you aren’t allowed to use a name that’s already in use by another business in the state, and it can’t sound too similar, either. So, to avoid any hassle you’ll need to run a business name search and file a Business Name Reservation.
- Get a registered agent- A registered agent is an important position to fill for legal reasons. Every LLC is required to have a registered agent, which is someone who remains at the company’s business address during normal working hours to receive official mail from government agencies (like the Division of Corporations), and service of process. You can choose someone you trust, or a business for this.
- Choose a business address- This isn’t as simple as adding your business’s physical address to the form. Your business address is listed on the public record and is where all of your official mail and service of process is sent. So, it’s not ideal to list your home address. Some states allow you to use a virtual office address, but most won’t allow you to use a PO box address.
- Submit your Articles of Organization- Make sure that you’ve properly filled out the form with all of the correct information. Whoever signs and files the Articles is a matter of public record, so if you want to keep your information private, you could either have someone else do it for you or hire an LLC formation service. If you use an LLC service with a guarantee that your information is correct before filing, it can ensure some peace of mind. Once you’ve submitted your paperwork, the Division of Corporations, Business and Professional Licensing will contact you once it’s been processed. After submitting your Articles, there are a number of activities you’ll need to complete to set your business up for success. For more information about these and other activities, read How to Start an LLC in Alaska.
Necessary Documentation For Filing An LLC In Alaska
To save yourself some time in the formation process, you should have all of your forms on hand before filing. Here are some of the documents you'll need.
- Employer Identification Number (EIN): Many LLC formation services will apply for your EIN for you, but you can do so for free via the IRS’s website. An EIN is a business tax identification number.
- Business Name Reservation: Luckily, in Alaska there isn’t a charge for this.
- Articles of Organization: You need to make sure that this is filled out and 100% correct before you consider submitting it. There’s a fee of $250 to file it.
- Operating Agreement: This isn’t a legal requirement of most states, but most people who offer business and legal advice agree that it’s something you should have anyway. It’s not only an agreement between LLC members about how they’ll act and their shares, it’s a set of instructions for how the business will operate. Many good formation services will create an Operating Agreement for you, or at least provide you with a template.
- Initial Report: Your biennial report is filed every other year and costs $100 per year. But you file your first one along with your registration for establishing your LLC, and it's called the Initial Report. The Initial Report is free.
- Your Business License: You need this in Alaska when filing, and it’s $50 per year. You may also need to get local business licenses.
- Tax Registrations: You not only need to set up your business’s taxes with the Federal government, but also with the state and local governments, as well.
Legal Requirements For Starting An LLC In Alaska
In Alaska, you're required to assign a registered agent when you form your LLC. This can be anyone, including a close friend, employee, or family member. But they have to be available and present at your business address during normal business hours to receive mail and service of process on behalf of your business, and they have to have a physical address.
You'll be required to file a Biennial Report in Alaska. It's a way to ensure that your business's information is kept up-to-date with the Division of Corporations. It costs $100 and is filed every other year.
Time Frame For Establishing An LLC In Alaska
Now that you know the requirements and benefits of forming an LLC in Alaska, you want to know about the time frames for filing in the state. Here are the times you can expect in Alaska for forming a Limited Liability Company.
How Long Does The Initial Paperwork Take In Alaska?
The short answer to this is that mail filings take around 4-5 weeks in Alaska, while online filings have immediate processing times.
And according to the Division of Corporations, Business and Professional Licensing website, there are periods where it can take even longer. They say you can expect delays of possibly more than 3 weeks between October and February, and standard processing time from March to September.
Processing Times In The State Of Alaska
There’s a difference between processing time and approval time. Processing time is how long it takes the Division of Corporations to actually look over your filing and also get it into the system. Approval time is the total time it takes from the moment you submit your application to the time that it’s approved, including the processing time.
Processing time on mail filings in Alaska are usually 10-15 business days, with a 4-5 week approval time.
Common Delays In The LLC Formation Process In Alaska
The most common hold up when it comes to LLC formation in Alaska is mail filings. They can take 4-5 weeks, with 10-15 day processing times, whereas online filings are processed immediately.
Another common delay comes in the form of the Operating Agreement. If you have a complicated business structure, either with lots of rules or loads of members and managers, then that means additions to your Operating Agreement. You’ll either have to add them yourself, or your LLC formation company may take a bit longer to cater the document to your needs, which holds up the formation process.
Expedited Processing For LLC Formation In Alaska
Of course, anyone looking to form a Limited Liability Company fast is interested in expedited options. Here, we’ll tell you all about expedited processing in the state of Alaska.
What Are The Expedited Options Available?
There are no expedited processing options in Alaska. This is because they’ve got immediate processing on online filings, so it makes sense that there isn’t much of a need for expedited processing.
Additional Costs For Expedited Services In Alaska
Since there isn’t an expedited processing option in Alaska, there isn’t any additional cost. They aren’t charging you for something they don’t offer, after all!
Comparing LLC Formation Time Frame In Alaska With Other States
No matter your current living situation, it’s important to check out the formation process in other states. How does Alaska’s formation time frames compare to other states?
Brief Comparison With Key States
Alaska’s approval times for mail filings is between 4-5 weeks, with immediate processing of online filings and no expedited filing. Let’s see how that compares to some of the fastest states.
Delaware, Michigan, Montana, Nevada and West Virginia all have expedited processing in as little as an hour. Kentucky and Ohio have mail processing times of 1 day. So, they definitely beat Alaska by a mile in that regard.
There are a few states with online filing times that are slower than Alaska’s immediate processing. Maryland’s processing time is 2 weeks, Arizona’s is 14-16 days, Washington’s is 12-14 days, and Texas does online processing in 13-15 days. You won’t find many states with mail processing times longer than Alaska’s, but there are a few out there. Maryland can take between 5-8 weeks, Oregon can take 4-6 weeks, Texas can take 4-8 weeks, Washington can take 5-6 weeks, and Pennsylvania can take 6 weeks. But New York takes the cake with a whopping 8 months.
So, while approval times on mail-in filings in Alaska are pretty slow, they aren’t the slowest out there.
Why Is Alaska A Favorable Place For Forming An LLC?
Alaska can be a good place to form an LLC because there are certain tax breaks that you can cash in on. For instance, there aren't state income taxes imposed on individuals or on businesses, which can be a real boon for LLC members. It's an especially good place to set up shop if you're in the fishing, tourism, or oil and gas sectors because of all of the natural resources in the state.
Forming an LLC is typically regarded as a major undertaking for anyone, and all of the paperwork and hassle can be frustrating. LLC formation time frames and processing times can add additional frustration to an already annoying process. In Alaska, there's no expedited filing options, and mail filings can have approval times of 4-5 weeks, with immediate processing of online filings. But, knowing what to expect in terms of filing time frames can make the process less frustrating.
