How to Start a Professional LLC in Alaska

If you’re a highly-skilled specialist, rendering professional services in the law, medicine, building field, etc., you can look into structuring your business as a PLLC and benefit from lower taxes and personal asset protection.

Wonder how to form a PLLC in Alaska and don't know where to start? The good news is you’ve come here, as our comprehensive guide will walk you through the most important steps on how to start a PLLC in Alaska and help you get off on the right foot.

What Is a PLLC in Alaska?

A professional limited liability company in Alaska is a limited liability company founded by a group of licensed professionals rendering professional services in industries, such as law, medicine, architecture, and so on. So, essentially, LLCs and PLLCs don’t differ much.

However, as just mentioned, unlike LLCs, which can be formed for any type of commercial activity, PLLCs are only suitable for professionals, and they need to have a business license authorized by the state.

How to Start a PLLC in Alaska: Step by Step

If you, like the majority of people, think that forming a PLLC in Alaska is a complicated thing, you’ll be relieved to know that it’s much easier than it may seem.

In general, the process is not much different from opening an LLC, except for the requirement to obtain a business license as well, which you can do by applying online or by mail with the Alaska Department. 

Once you have the official permit from the state to conduct your business, you can look into other steps of Alaska PLLC registration. 

Step 1: Name Your PLLC

The first step to setting up a PLLC in Alaska is to choose your company’s name. Think of a name that best reflects what your business is about and is easy to remember so that it’s always on top of people’s minds. 

It should also be something that you like, because, at the end of the day, it is your business.

Other than that, there are a few state requirements for the PLLC names to consider, including:

• Legalities. Whichever name you choose, it must include the term PLLC, either abbreviated or in a long form, to describe the type of entity you are registering;
• Name restrictions. Words that are not related to your business or may mislead people, such as “state department,” “corporation,” “federal” and so on, cannot be used;
• Explanatory names. The name should clearly say what type of professional services you provide, without any allusions;
• Name availability. Don’t get attached to a name until you’ve verified it’s available. If it’s available, but you’re not ready to open a PLLC just yet, you can reserve it;
• Choose a domain name. To check off all steps from the list, you may just as well select a domain name, with a distinct URL.

To elaborate on the Business Name Reservation, it’s a great opportunity for companies that are still in the process of forming a PLLC to get exclusive rights to the use of the desired business name.

By submitting a name reservation request to the Alaska Secretary of State, the chosen name will be put on hold for up to 120 days, giving you enough time to sort through all the necessary paperwork.

Step 2: Designate a Registered Agent to Get a PLLC in Alaska

Whether you’re setting up a PLLC or LLC in Alaska, one of the primary requirements of the state is that the business has a designated registered agent (RA) that will accept and process documents on its behalf.

You yourself can be your own registered agent. However, in most cases, it’s more convenient and reliable to use the services of a professional registered agent that will only work with paperwork without being distracted by other things that most businesses have to deal with.

What’s more, with a professional RA, you’ll avoid many uncomfortable situations, like answering emails in front of your customers, and also keep your personal data off the public records, which can be especially useful for those working from home.

So, who can be a registered agent? Alabama’s law allows any individual over the age of 18, or a company, with a physical address within the state to act as an RA, which opens up quite a wide range of options. Here they are:

• You, your partner, or even your neighbor, if he or she is ready to handle your paperwork;
• Attorneys and incorporated law firms;
• Professional registered agent companies.

Whichever option you choose, it’s necessary to make sure that your RA can be easily accessed during business hours. Otherwise, you may run the risk of failing to respond in a timely manner, face penalties, and even worse, find yourself held in contempt of court.

Step 3: File Your PLLC Articles of Organization

Once you’ve chosen your business name and hired an RA to represent your business, it’s time to file your Articles of Organization. This document officially proves the fact of your business establishment and includes the following details:

• Your business state;
• The purpose of your business, as well as what products or services you will provide;
• Your NAICS code, used to show the category to which your company’s service belongs;
• The name and address of your registered agent;
• The company’s creation date;
• The structure of your business, including details on how the company will be managed;
• Signatures of organizers.

The Articles of Organization form can be filed online or by mail however it’s more convenient for you, and then it must be submitted to the Alaska State of Secretary (SoS). The standard filing fee is $250, and the processing time is from 10 to 15 business days.

Step 4: Draft an Operating Agreement

Although not a mandatory step, drafting an operating agreement after you set up a PLLC is highly advisable, and here are a few reasons why.

First of all, this document, which basically outlines the structure of business along with the responsibilities of each PLLC member, is legally binding, meaning it can be used for opening bank accounts, and so on.

And secondly, it saves you from operational and legal difficulties if any of the PLLC members fail to fulfill the obligations set out in the agreement.

Besides, operating agreements also offer added value. For example, if you decide to bring new partners into your business, an operating agreement will help showcase your PLLC purpose and benefits and make it easier for them to decide whether to join or not.

Generally, an operating agreement includes the following information:

• The names of all PLLC members;
• Responsibilities and obligations of each member, as well as their voting rights;
• How the capital was divided;
• How the business will be managed - you can either specify each member’s role or include your manager’s details;
• How you will resolve any issues if those arise;
• How you will accept and let go of PLLC members;
• And other details that can help describe the purpose of your business.

Step 5: Get an EIN for Your Alaska PLLC Registration

Finally, all newly created PLLCs in Alaska must obtain an EIN (also known as a social security number). An EIN is needed by any business that hires employees and is necessary to file tax returns, open bank accounts, pay taxes, and so on.

To acquire this number, you can go to the official website of the Internal Revenue Service (IRS) and submit a request form online. There’s no fee to pay.

Cost to Start an LLC in Alaska: How Much Is PLLC in AK

PLLC Alaska cost will vary depending on how much work you decide to do yourself and how much you delegate to professional formation services, as well as who you appoint as a registered agent. By and large, there are two types of fees:

• Mandatory. These are the filing costs that every PLLC must pay to establish a business;
• Additional. You may pay additional fees if you make amendments to your Articles of Organization, introduce a new service, accept new PLLC members, and so on.

Following below is a chart with the costs that the PLLC registration in Alaska entails.

When planning expenses, you should also factor in the costs that will go on into renewing your business license and registered company name.

The business license in Alaska must be renewed once every 1 or 2 years depending on the application, and the fee is $50 or $100 accordingly. You will also need to renew the registered company name every 5 years, which will cost you $25.

First Tasks After Creating a PLLC in Alaska

When all paperwork is done and fees are paid, there are a few other things you may want to take care of in order to strengthen your business.

Open a Bank Account

One of the reasons why people choose to open a PLLC over other legal entities is because this type ensures your personal asset protection. However, did you know this benefit is only applicable to you when the separation between your personal and business assets is evident?

So, the first thing to do is open a bank account that you will only use for business-related transactions, which can be done by filling out an application form at a bank of your choice and providing your EIN.

Find an Account/Tax Expert

While it might seem that managing finances isn’t a big deal, quite often, it’s the hardest part of running a business. And if you don’t have a financial background, it’s certainly worth looking into hiring an accountant.

Having an account working on your behalf offers you a number of advantages:

• You’ll never fall behind on your tax payment schedule and avoid paying penalties;
• You’ll know what to pay and how much to pay exactly;
• Your books of accounts will be in order, and you’ll be able to access them whenever necessary;
• You’ll pay employees on time;
• You’ll be able to attract more investors, as they will more likely want to work with a company that has well-kept books.

In addition, you will get help with tax returns, income tax payments, allowances, filling in forms, and anything necessary to help keep your business in good standing.

Insure Your Business

No business is guaranteed from money losses, not to mention common risks, such as property damage, workplace accidents, bodily injuries, etc., which is why any PLLC will benefit from taking up insurance.

Keep note that if your company has at least 5 employees, Alaska’s law requires you to acquire workers’ compensation. Also worth noting is that the members of your PLLC are counted as employees, too, so make sure to take it into account.

Understanding Reports

Keeping compliant with state laws is a must in order to successfully operate your business, so it’s crucial to track your records and file them on due time.

In Alaska, you don’t need to file reports every year. After filing the first report, which should be done by January 2 of the year when a PLLC has been created, PLLCs in AK are only required to send biennial reports. The form can be filed online, and the fee is $100.

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