How To Start a Business in Alaska: 8 Easy Steps

how to start a business in alaska

how to start a business in alaska

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For over a century, enterprising Americans have flocked to Alaska—nicknamed The Last Frontier—in search of opportunity and a fresh start. Although the Anchorage metro area is home to nearly 400,000 people, Alaska remains a rugged region with an independent streak. Today, it boasts one of the country’s highest rates of entrepreneurship and the highest per capita GDP. If you don’t mind the cold weather and want a favorable tax climate, Alaska is a great place to start a business. Here’s how to make it happen in eight steps.

1. Choose a business idea

Your business can thrive in Alaska, but you need a solid business idea. It might be a completely new product or service or improvements to existing offerings. Before establishing your Alaska small business, make sure you can answer the following questions:

2. Name your Alaska business

A great business name can offer hints about your company, industry, specialization, and prices. Take these two hypothetical seafood processors: one called King Crab Unlimited and the other called Johansson Salmon Specialists—you can tell what they specialize in just by glancing at their names. Consider the following guidelines when settling on a business name for your Alaska business:

  • Stand out. Lodge your name in potential customers’ minds by using tricks like rhymes, alliteration, or pop culture references. Consider also the tone of your name—a batting cage, for example, might benefit from a fun, playful name; a convalescent hospital wouldn’t. Shopify’s business name guidelines can be a brainstorming resource.
  • Confirm your name is unique. Every Alaska business entity needs an Alaska business license linked to its name, and no two can use the same title. Confirm that no other business in the state is using your preferred name by conducting a business license search with the Alaska Department of Commerce, Community, and Economic Development.
  • Follow Alaska naming guidelines. Alaska law lays out extensive requirements for the names of legal business entities in the state. For instance, LLCs must include the phrase “Limited Liability Company” or its abbreviations (“LLC” or “L.L.C.”) in their business names. Alaska corporation names must include “Corporation,” “Company,” “Incorporated,” or “Limited,” or abbreviations of these words.
  • Reserve your name. Once you find an unclaimed name, pay $25 to reserve your name online via the Alaska Department of Commerce, Community, and Economic Development for 120 days while you handle other aspects of your business formation. You’ll need an Alaska business license to formally get your business up and running. Once you have one, you can return to the Alaska Department of Commerce, Community, and Economic Development to formally register your business name for five years. The filing fee is $25.
  • Adopt a DBA. DBA stands for “doing business as.” Business owners use DBAs to conduct business under a different name than their company’s legal name. Alaska requires business owners to obtain a separate state business license for each DBA. Once you have these licenses, pay $25 per name to reserve a DBA for five years by submitting the filing form online through the Department of Commerce, Community, and Economic Development website. This is the same form and same process you use to file your primary business name.
  • Secure domain names and social media handles. Today’s customers assume they can easily track down businesses online. Meet their expectations by reserving a domain name (URL) for your business website. Shopify’s domain name generator can help you sort through options. Then lock down social media account names that align with your business’s legal name, DBA, or domain name.

3. Create a business plan

Small business owners draft and follow business plans to steer their companies toward solvency, growth, and sustained success. Yours might include:

For guidance, use a free template tailored to meet your needs or review existing business plan examples for inspiration.

4. Choose a business structure and get started

Most Alaska business owners choose from one of three business structures: a sole proprietorship, a limited liability company (LLC), or a C corporation. Each business entity has its benefits, and most also come with legal requirements and business costs. Here’s how they differ:

  • Sole proprietorship. Sole proprietorships work well for solo business ownership. They require no legal paperwork and little to no startup cost. Federal and state business law treats sole proprietorships as extensions of their individual owners. Because of this, sole proprietorships don’t come with the tax benefits and personal asset protections of LLCs or corporations. If a sole proprietorship is sued, the owner may be responsible for costs.
  • LLC. A limited liability company (LLC) is a formal business structure that often suits small businesses owned by multiple people. The legal structure of an LLC offers personal liability protection to its owners, also known as members. If someone sues the LLC, the suit is against the company, not its members, and if the LLC loses a lawsuit, members’ personal finances are not at risk. Alaska and the federal government treat LLCs as pass-through tax entities, meaning LLC profits and losses pass through to individual members, who report them to the IRS on their personal income tax returns. LLCs do not have boards of directors and instead govern operations via a member-drafted operating agreement.
  • Corporation. A corporation, or C corporation, is a legal business entity owned by a group of shareholders. Like LLCs, corporations separate company assets from their owners’ personal assets, meaning everything a corporation owns, from real estate to intellectual property, belongs to the corporation, not its shareholders. Business law forbids corporate owners from commingling personal and business expenses. Governments tax corporations at a corporate rate, which differs from the personal income tax rate. Alaska’s corporate tax rate ranges from 2% to 9.4%. Corporations come with more regulations and business expenses than LLCs or sole proprietorships. For example, owners must appoint boards of directors, hold regular meetings, and submit to more strenuous accounting and tax filing practices.

Obtaining a federal employer identification number (EIN) and related tax forms

Any legal business entity that incorporates or hires employees needs a federal employer identification number (EIN) from the Internal Revenue Service. (If you’re a sole proprietor with no employees, you don’t need an EIN.) An EIN functions as a business’s federal tax number, like a Social Security number for companies. It lets you open a business bank account, pay state and federal taxes, and set up payments for your employees. Apply for an EIN through the IRS, free of charge.

Beyond your federal EIN, you’ll also need an Alaska business license, which costs $50 per year for each business name under which you operate. If you have one legal name plus a DBA, you’ll need two business licenses for $100. You may also need to register for state business taxes specific to your industry. These range from corporate income tax, which applies to all for-profit corporations, to niche taxes like an electric cooperative tax. Consult the Alaska Department of Revenue Tax Division to see which taxes apply to your business.

Incorporating in Alaska

If you choose the corporate model, file Alaska Articles of Incorporation through the Alaska Department of Commerce website for $250. Your Articles must include the following:

  • Your corporation’s name
  • Disclosure of your corporate purposes
  • Information about your business’s corporate shares of stock
  • Contact information, including your mailing address, email address, and phone number
  • Your registered agent’s name and address (your registered agent, who accepts legal documents on behalf of the corporation, must be located in Alaska)
  • Information about alien affiliates, defined by Alaska state law as “a person that directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, a corporation subject to this chapter”
  • The name and signature of at least one incorporator

5. Obtain business licenses and permits

Your Alaska business may need specific permits to operate in certain industries. Architects, athletic trainers, marine pilots, and hearing aid dealers are among the many professionals who need special licenses. To learn more about Alaska’s requirements, visit the Department of Commerce’s professional licensing webpage.

6. Examine business insurance options in Alaska

While corporations and LLCs offer personal asset protection, you may still want to purchase insurance to cover your business and property from unforeseen mishaps. Alaska’s Insurance Division of the Department of Commerce requires specific policies, like workers’ compensation insurance and auto insurance. While other policies are technically optional, they may be required to rent a property or obtain business loans. Common types of business insurance policies include:

  • Workers’ compensation insurance. Workers’ compensation insurance covers a portion of lost wages, medical bills, disability, and death benefits in the case of a workplace accident and protects employers from any related lawsuits.
  • Professional liability insurance. Professional liability insurance ​provides coverage for any damages due to claims of negligence or misconduct.
  • Commercial general liability insurance. Commercial general liability insurance—sometimes called business liability insurance—covers broad third-party claims against your business, including bodily injury and property damage.
  • Commercial auto insurance. Commercial auto insurance covers the cost of damages to a specialized work vehicle, related legal bills, and medical expenses.
  • Unemployment insurance. Unemployment insurance (purchased on behalf of your employees) goes to the state’s unemployment insurance fund for laid-off workers.

7. Understand financial considerations

With an EIN from the IRS, you can start business banking at a commercial bank or credit union. Set up business accounts for your company and its subsidiaries, and obtain lines of credit or business credit cards to handle costs and cash flow.

Consider hiring lawyers, accountants, or other professionals to support your endeavors. (Corporate bookkeeping, for example, can be more labor intensive than personal bookkeeping.) You’ll likely have to make other financial investments, including renting retail or warehouse space, getting a professionally designed website, and purchasing ads, equipment, and software.

Find funding, grants, and special tax benefits through resources like Launch Alaska and the Alaska Commerce Department’s Small Business Center. Explore federal economic development resources via the US Small Business Administration, which has a district office in Anchorage that serves the entire state. The Chamber of Commerce keeps a catalog of angel investors specializing in Alaska businesses. You can also find lenders and investors through merchant support services like Shopify Capital, which offers fast funding and flexible payments.

8. Market your business

Once you’ve legally established your business in Alaska, pivot to building your brand and create a marketing plan. This starts with market research to understand your potential customers, assess current market offerings, and identify ways to penetrate your target market. With this knowledge, you can develop marketing campaigns that include the following:

  • Organic search marketing. Organic search marketing, also known as awareness content, includes blog posts, newsletters, search engine optimized (SEO) articles, podcasts, and informational videos, all of which helps a brand’s organic search results.
  • Pay-per-click web ads. Pay-per-click campaigns appear in web videos, sponsored search results, websites, and social media feeds. They can target specific groups of customers.
  • TV and radio ads. TV and radio ads tend to cost more than web ads, but these traditional marketing channels can help you reach a broad, diverse audience.
  • Social media influencer campaigns. Social media influencers help businesses reach younger audiences who spend more time online. You pay social media influencers to showcase your products and services in their feeds.

Starting a business in Alaska FAQ

How much does it cost to start a business in Alaska?

Startup costs for establishing a business in Alaska include $25 to reserve a name, $250 to file Articles of Incorporation (for C corporations) or Articles of Organization (for LLCs), $50 for a state business license, and additional fees for other industry-specific licenses and permits.

Is Alaska a good place to start a business?

Alaska is a great business location. It’s ranked among the most tax-friendly states in the nation by The Tax Foundation, owing to a lack of state income tax on personal income as well as no state-wide sales tax. Alaska also stands out for its boundless natural beauty and rugged, pioneering spirit that lends itself to entrepreneurship. However, Alaska offsets low personal taxes by financing its spending via taxing oil revenues, making its economy highly dependent on resource extraction, a revenue model it may be forced to reevaluate in the coming years.

Does Alaska have a statewide business license?

All companies must obtain and renew Alaska’s statewide business license, the Alaska Business License, on an annual basis. For most Alaska businesses, the license and each renewal cost $50. Apply online at the Alaska Department of Commerce, Community, and Economic Development website.

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