Alaska Startup

An Alaska startup business can take many forms: a partnership, corporation, LLC, or even a sole proprietorship DBA.

Let's take a look at the various types of Alaska startups available so that you can make an informed decision and select the business structure that's right for you.

Alaska DBA

What is elsewhere known as an Assumed Name or Fictitious Name is known as a DBA in Alaska. It is registered with the Division of Corporations, Business, and Professional Licensing of the Secretary of State in Juneau.

Corporations and individuals alike can register for an assumed name in Alaska. In an assumed name business structure, there is no legal separation between business and owner; in the event that the assumed name is sued or defaults on a loan, it is the owning corporation or individual that is legally responsible.

Incorporate in Alaska

A business wishing to incorporate in Alaska will submit Articles of Incorporation to the Division of Corporations. When filed, the corporation becomes a legal entity—unlike a DBA structure, owners of a corporation cannot be held accountable for debts or obligations of the business (unless in certain cases, such as corporate fraud ).

A for-profit corporation is one that operates for the benefit of its owners; these owners are called shareholders, and capital is raised through shareholders purchasing shares of stock—units of ownership of the corporation. Profits are distributed to shareholders as profit in a ratio corresponding to the percentage of the company each owns.

There are two main types of for-profit corporations in Alaska: C corps and S corps.

C Corporation

The type of corporation formed by default, the C corporation, has a unique characteristic called "double-taxation"—before profit is distributed to the shareholders and taxed at the individual level, it is first taxed as corporate income.

Somewhat more positively, a C corporation provides great flexibility as far as ownership: the owners are not required to be US citizens, and there is no restriction on amount of shareholders.

Specifically, a C corporation is subject to what is commonly known as "double taxation"—corporate income is taxed both at the corporate level and the individual level. As far as ownership, a C corporation is allowed to have any number of shareholders. There is no citizenship requirement placed on these shareholders.

S Corporation

An S corporation in Alaska, on the other hand, does not experience double-taxation, instead acting as a "flow-through entity" and passing on corporate profits, untaxed, to its shareholders. The distributions are then taxed at the personal level.

An S corporation has limits that a C corporation does not: there can be no more than 100 shareholders, all of which must be either US citizens or legal aliens.

In order to apply for S corporation status, an Alaska corporation would send in Articles of Incorporation just as with a C corporation; however, there is then the second step of sending an S Corp Election Form to the IRS alerting them to your new qualification.

Alaska Foreign Corporation

If a corporation from outside the state wishes to do business in the state, it is generally required to register as an Alaska Foreign Corporation before doing so.

Alaska foreign corporation registration is a slightly more involved process than simply filing Articles of Incorporation. In order to register, you'll need to submit the following materials:

  • Application for Certificate of Authority
  • Disclosure of Corporate Purpose
  • NAICS code best reflecting your corporate purpose
  • Alaska Foreign Corporation filing fee

Keep in mind that, in addition to the materials listed above, just as with any other entity you'll also be responsible for obtaining any Alaska licenses or permits required for your industry, business structure, and location.

Alaska LLC

An Alaska LLC can be formed by submitting Articles of Organization (an LLC's version of the Articles of Incorporation) to the Division of Corporations, along with the filing fee.

An LLC, or limited liability company, resembles a corporation in some ways and a partnership in other ways. It provides limited liability protection to its owners, but as it is not recognized by the IRS as its own business classification, it can be taxed in one of a number of ways; when forming an LLC in Alaska, you will elect the tax classification that best fits your specific needs.

Alaska Nonprofit Corporation

A 501c3 nonprofit corporation is one that is formed for one of a few very specific purposes mentioned in the IRS Code section 501c3; these purposes include scientific, educational, religious, literary, amateur sports, testing for public safety, and animal or children cruelty prevention. This classification of nonprofits is tax-exempt and able to accept tax-deductible donations, as well as enjoy certain other incentives (such as reduced postage).

In order for your Alaska nonprofit corporation to be recognized as tax exempt under code 501c3 and take advantage of the benefits of a 501c3 corporation, you must first register the nonprofit corporation in the state; then, once registered, your nonprofit will submit IRS Form 1023 (along with several other supporting documents, such as a filed copy of your Articles of Incorporation, your mission statement, and financial documents) and apply for tax exemption. Only once the IRS has accepted this application can you begin acting as a tax-exempt organization.