How to start a business in Alaska
If you’re looking to start a business in Alaska, you’ll need to be well-acquainted with all the rules and regulations needed to do so, as well as all the options you have at your disposal.
The following guide is a deep dive into the 16 steps you need to take to start a business in Alaska:
- Develop your idea,
- Research the business value of your idea,
- Choose your legal entity,
- Name your business,
- Reserve and register your business name,
- Acquire licenses and permits,
- Register your business,
- Get federal and state tax IDs,
- Choose a location for your business,
- Make a business plan,
- Acquire funding,
- Open bank and credit accounts for your business,
- Get business insurance,
- Hire employees,
- Start using reliable business software, and
- Build an internet presence
At the bottom of the guide, you’ll also find answers to some of the most frequently asked questions about starting a business in Alaska and resources for further research.
Is Alaska a good state for starting a business? Key takeaways
Despite its vast potential for growth, Alaska lags behind the majority of US states when it comes to economic development — a situation made worse by the COVID-19 pandemic.
However, according to Alaska’s annual small business survey, the economy is starting to rebound, and business opportunities are increasing — which entrepreneurs might use to their advantage.
Alaska is particularly favorable for entrepreneurs when it comes to taxation. In fact, according to the 2023 State Business Tax Climate Index, Alaska is the 3rd most favorable US state regarding taxation — with an overall score of 7.23.
Alaska owes this score to the fact that it does not levy individual taxes or sales taxes on a state level.
The following table shows Alaska’s tax scores and rank compared to other US states, measured against a maximum score of 10.0 — where a higher score indicates lower taxes.
|Alaska’s tax score and USA ranking|
|Unemployment insurance taxes||4.33||44th|
Alaska is also especially supportive of entrepreneurs and small business owners.
To help entrepreneurs get started and find their footing, the Alaska Small Business Development Center (SBDC) offers free help for new business owners in the form of:
- One-on-one business advising and mentoring services,
- Business workshops, and
- Business tools.
The state also provides various grants to help with the development of small businesses. In particular, business owners can apply for:
- Alaska rural business development grant,
- Various aquaculture grant opportunities,
- Grants for nonprofit organizations, and
- Loans for Alaska farmers and ranchers.
All budding entrepreneurs are encouraged to join the 1 Million Cups meet in Anchorage where new and seasoned business owners from across the country meet every Wednesday to network, learn, and share ideas.
The American Bar Association also offers a free service where volunteer attorneys provide free legal answers regarding any civil legal issues.
That said, Alaska has one of the highest cost of living scores in the US, which makes it one of the most expensive US states to live in.
The table below shows Alaska’s cost of living scores measured against the average of 100.0, along with the corresponding rank in each category compared to other US states (data taken from the Cost of Living Index by State 2023).
|Alaska’s Cost of living score and USA ranking*|
|Cost of living index||127.1*||45th|
|*Scores above 100.0 indicate cost above the average|
How to start a business in Alaska in 16 steps
Before you get carried away with dreams of a wildly successful future as an entrepreneur, it’s important to carefully consider:
- The value of your business idea,
- Its feasibility, and
- All the legal requirements necessary to start and operate a business.
Luckily, the State of Alaska is supportive of startups and small businesses. So, as long as you’ve developed your idea and are confident in its viability, your road to entrepreneurship shouldn’t be too bumpy.
Without further ado, here are the exact steps you need to take to open a business in Alaska.
Step #1: Develop your business idea in detail
If you know you want to start a business, but still can’t decide on what you want to do, HBS gives advice on thinking up innovative business ideas and Forbes provides insight into testing the potential of your business idea.
Here are some things worth considering, according to the 2 sources:
- Why do you want to start a business in the first place?
- What are some of the things you’re good at (and enjoy doing)?
- Is there a problem in your life/environment you’ve identified and know how to solve?
- Is there an existing business/product you admire, but think you can improve?
While it’s not a requirement, it would be helpful to actually like the job you plan on dedicating your upcoming months and years to. Try creating a Venn diagram of your strengths and likes, and seeing where they overlap — that’s where you can find your niche.
Once you’ve made your choice, try to evaluate the potential of your business idea with a few simple questions:
- How easy/difficult will it be to market your idea?
- Are people willing to pay for it?
- Who is your target market?
- Who are your competitors?
- Do you own all the skills necessary to run your business or will you need a partner/hires?
All of this said, don’t feel pressured to reinvent the wheel. If you’re a mechanic and want to open a car repair shop, you probably don’t have to think too hard about standing out. Just make sure the market in your area is not overly saturated.
Alaska business idea suggestions
If you’re looking for a more Alaska-specific business idea, here are a few suggestions based on Alaska’s highest GDP by industry sector:
- Fishery business,
- Warehouse renting,
- Real estate,
- Vehicle and housing renting,
- Construction business,
- Retail, and
- Healthcare and social assistance.
Step #2: Research the business value potential of your idea
Once you’ve decided on one or more business ideas, it’s time to explore their business potential and settle on the one that promises the greatest chance of success. Some of the things to ask yourself are:
- Do you have enough money to start your business or assets you can use as collateral to borrow it?
- Are your management and leadership skills enough, or do you need to hire employees?
- Is there a demand for your product/service in Alaska?
If you’re satisfied with the answers, it’s time to perform market research — determine your target audience and your competition, and thoroughly analyze them.
Identify your major competitors and define what makes them successful. If possible, try out their product/service and see if you can improve upon it.
Take a look at the size of your market. Is there enough room for multiple businesses of the same kind to grow, or is the market already too saturated?
Find out where your audience is. For example, if they mostly hang out online, you might not even need a brick-and-mortar store.
Once you’re certain you know who your target audience is, you may also choose to run a focus group and see what your target audience thinks about the product or service you’re offering.
Once you’re done, if you are satisfied with the results and have deemed your business idea viable, you can start focusing on the legal aspects of starting your business.
Step #3: Choose your legal business entity
Once you’ve settled on the type of business you want to start in Alaska, the first thing you should do is choose your business entity.
The full list of business entities you can choose from — as described on the Alaska Department of Commerce’s official website — will be covered in the next section and it includes:
- Sole proprietorship,
- (General) partnership,
- Limited partnership,
- Limited liability partnership (LLP),
- Corporation, and
- Limited liability company (LLC).
That said, we advise that you consult an Attorney or Certified Public Accountant (CPA) before making your final decision. This will ensure you choose the structure that best suits your business activities.
Entity type #1: Sole proprietorship
A sole proprietorship is a business structure where the business and the business owner are considered one and the same from a legal standpoint.
Since a sole proprietorship is not a separate legal entity, it doesn’t require you to submit a business income tax return. The owner simply uses a portion of their personal funds to conduct business.
This means that, in a sole proprietorship, you (the owner) get all the profits, but you also shoulder all the responsibility, risks, and losses the business incurs, such as:
- Hiring employees, etc.
A sole proprietorship is the preferred model for those who run a low-risk business and wish to maintain full ownership of it. It’s a common business model for freelancers and people who sell arts and crafts.
While the US federal government allows a married couple to form a sole proprietorship, in Alaska, a sole proprietor can only be 1 person.
The Alaska Department of Commerce Business Structure FAQ page explains that, as a sole proprietor, you may register your business under any name you want, provided it is not in use by any other business in the State of Alaska.
You may also hire employees — but remember that neither you nor your assets are protected in case of any potential litigations between the business and the employee.
Entity type #2: General partnership
A general partnership is a business owned by 2 or more people or entities (individuals, corporations, other partnerships, etc.).
It is similar to a sole proprietorship in that it is not a separate legal entity. As such, each partner is equally and personally liable for all debts and legal action against the business.
Likewise, all partners share business profits and pay taxes for their portion of the profit separately.
When creating a partnership, you may draft a partnership agreement to determine the roles and responsibilities of each partner. When there is no partnership agreement, all partners share equal control of the business.
If one or more partners within the partnership change, the State of Alaska requires the owners to get a new business license.
As per the Alaska State Legislature, even though a partnership is not a legal entity, in Alaska, all property owned by the partnership belongs to the partnership, and not the individual owners.
There are 2 other types of partnerships besides general partnership:
- Limited partnership — a partnership between at least one general partner and at least one limited partner. The general partner has full control of the business and holds all the responsibility. The limited partner has minimal control and no responsibility. A limited partner’s only stake in the business is a financial investment.
- Limited liability partnership (LLP) — a type of partnership where the partners’ assets are partially protected. An LLP functions just like a general partnership, except that one partner cannot be held liable for the mistakes or wrongdoings of another. An LLP is a separate legal business entity from its members and is often used by doctors, lawyers, accountants, etc.
In Alaska, a general partnership can become a limited liability partnership by filing a statement of qualifications with the Alaska Department of Commerce.
Entity type #3: Corporation
A corporation is considered a legal entity separate from its owners (the total number of which is unlimited). As such, it protects the personal assets of the owners in case of any legal disputes.
In Alaska, a corporation is normally led by a board of directors whose liability is determined by the number of shares they hold in the company.
The basic type of corporation is called a C-corporation. All corporations are automatically considered C-corporations if they don’t explicitly choose a different type.
The second major corporation type is the S-corporation. They are smaller corporations with no more than 100 shareholders.
The main difference between the two is in the manner in which they pay federal taxes — the C-corporation files taxes as an entity, while the S-corporation files taxes through the shareholders.
The Alaska Department of Commerce official website describes 5 other types of corporations:
- Professional corporations — a legal entity that provides only 1 type of service and requires a professional license. Each and every member of a professional corporation, including its stakeholders are also required to have a professional license.
- Cooperative corporations — also known as just cooperative, this type of corporation is owned and operated by its members and for the sake of its members.
- Public corporations — owned and operated by the government for the sake of the public, but not relying on the state budget. Some examples of public corporations in Alaska include the Alaska Railroad, Alaska Student Loan Corporation, and Alaska Mental Health Trust Authority.
- Religious corporations — a corporation formed for the benefit of a religion, public worship, education and charity, or religious property management and led by 1 elected/appointed person. The State of Alaska doesn’t allow for the creation of foreign religious corporations.
- Nonprofit corporations — an entity formed for the benefit of the public, not geared toward making a profit.
Entity subtype: Nonprofit corporation
Nonprofit corporations operate for the benefit of the public. Neither the corporation nor any of its members receive any profit from the activities of the corporation.
Nonprofits may be formed for various purposes, such as:
- Athletic, etc.
As stated by the Alaska Department of Commerce, In Alaska, a nonprofit corporation is led by a Board of at least 7 official positions:
- Treasurer, and
- 3 directors.
While people may hold more than one official position, the president and secretary cannot be the same person. Therefore, in Alaska, a nonprofit organization must be led by a minimum of 3 people.
Nonprofit organizations have the right to apply for the 501(c)(3) tax exempt status with the IRS, but this is not required for registering the corporation.
Entity type #4: Limited Liability Company (LLC)
An LLC is a business entity with at least one member. It is a separate legal entity, which means its members’ personal assets are protected in case of any debt or legal action against the business.
An LLC is managed by its members or designated managers who may or may not be members. Its internal affairs are managed by operating agreements.
The level of liability the LLC members have depends on the level of their involvement and contribution to the business.
LLCs are fairly common in Alaska due to their:
- Benefit of limited liability,
- Lower tax rates compared to corporations,
- Informal business structure, and
- Simple forming process.
Step #4: Name your business
Once you’ve consulted with a professional and decided on your business structure, the next step is to think of a name for your business. It might be a good idea to have a few backup names in case the one you’ve set your sights on is already taken.
Once you’ve narrowed down your selection of business names, you can check their availability by searching the Alaska license database.
Keep in mind that some names are still off-limits even if they do not appear in the license database. This includes:
- Names of foreign businesses that operate in Alaska but are not registered in Alaska,
- Names that are not registered but are currently in use.
- Trademarked names or phrases.
For this reason, the Alaska Department of Commerce advises that you also check other, informal sources, such as trade magazines or the Internet, before you submit your chosen name for consideration.
To check if a name or phrase you wish to use is trademarked, check the United States Patent and Trademark Office (USPTO) website.
If you plan to create a business website, this would also be a good time to check if the name you want to use is available as a web domain name.
To learn more about creating your business website and why it is important to do so, take a look at Step 16: Build an internet presence section further down in this guide.
Step #5: Reserve or register your business name
Once you’ve found a name that meets all legal requirements of the State of Alaska, you have 2 options:
- Reserve your business name — you may want to reserve your business name if you are still in the process of starting a business, but want to make sure no one snatches your ideal business name by the time you’re ready to register it. The reservation is valid for 120 days and costs $25. You can reserve your business name online or submit a hardcopy business name reservation to the Alaska Department of Commerce.
- Register your business name — registering a business name requires a valid Business License. You may register your business name online or submit a hardcopy business name registration to the Alaska Department of Commerce. Both options cost $25 and are valid for 5 years.
Note that all organized or incorporated entities have their names automatically registered upon incorporation and don’t have to go through the steps described above. This includes:
- Limited liability companies (LLCs),
- Limited Partnerships, and
- Limited liability partnerships (LLPs).
It is also important to note that owning a Business License under a certain name does not mean you own that name or that the name is registered. The Alaska Department of Commerce points out that there may be multiple business licenses issued under the same name in Alaska at the same time.
Step #6: Get the necessary licenses and permits
To obtain a business license in Alaska, there are 3 other things you must obtain depending on your business structure:
- The NAICS Code,
- Professional licenses, and
Substep #1: Determine your NAICS Code
The North American Industry Classification System (NAICS) is a way to classify businesses according to their type and Line of Business (LOB).
To get a business license, you will need a NAICS Code — a 6-digit code where the first 2 numbers determine the LOB and the following 4 the type of business activity.
The NAICS Code is not something you get. It is a self-allocated code. To find out what the numbers mean, you can consult the NAICS Manual.
However, keep in mind that the State of Alaska doesn’t use all the codes described in the NAICS manual — only the 2022 NAICS Codes. To be sure you’ve chosen the correct code, you can cross-reference the 2022 NAICS Codes with the Alaska NAICS Codes provided by the Alaska Department of Commerce.
Even if your business activities may fall under several different categories (codes), you’re only required to provide one code on the business license application. So, choose one that best describes your business.
If your business activities fall under several categories and one of those categories requires a professional license, you must use that NAICS code as your primary and/or secondary code when applying for a business license.
Substep #2: Obtain professional licenses (if applicable)
Not all businesses require a professional license. The lines of business that may require a professional license are highlighted in pink in the Alaska NAICS Codes document linked above.
If your line of business requires a professional license, you will need to obtain one before you can get your business license. All professional licenses are issued by the State of Alaska.
The Alaska Department of Commerce has provided a list of professional licenses you can apply for directly on their website.
As of November 22, 2022, you can also get your primary source license verified online, directly through the Alaska Department of Commerce, and for no additional charge.
Substep #3: Acquire a business license
Now that you have determined your NAICS Code and acquired your professional license (if needed), you can finally apply for a Business License.
An Alaska Business License is necessary for all businesses that conduct business activities in Alaska in any way, regardless of whether their business is located in Alaska or not.
You can get a business license online directly on the Alaska Department of Commerce website and immediately print your Business License certificate.
Another option is to submit a hardcopy business license application in person, in which case the processing will take 10–15 business days under normal circumstances.
For further information and business license exemptions, check the Alaska Business Licensing Statutes and Regulations.
Anyone purchasing a business license may get either a 1-year or a 2-year license. As of February 1, 2023, a new business license costs $50 per year.
Upon purchasing a business license, you will have to provide a name under which you wish to run your business. The only name you can use to operate and advertise your business is the exact name that’s on your business license, including the entity indicators (INC, LP, LLP, LLC, etc.).
As of October 29, 2014, businesses can perform multiple lines of business under the same business license. The only condition is that they must all have the same owner and name.
If you decide that your business’s legal name is too vague or difficult to market, you may choose to get a DBA (doing business as) — an alias your business can operate under.
To get a DBA in Alaska, first check if the name is available and, if it is, fill out the new business name registration form. The process is the same as the normal name registration process and it costs $25.
Substep #4: Acquire the necessary permits for your line of work (if applicable)
Alaska requires certain industries to acquire a Municipal business license and/or industry-relevant business permits.
As an example, here’s a list of businesses that require a Municipal business license in Anchorage:
- Adult-Oriented Establishment,
- Bar Safety Hour,
- Circus, Carnival,
- Private Detective Agency,
- Roving Vendor/Ice Cream Truck,
- Shooting Gallery,
- Teen Nightclub/Cultural Performance Venue,
- Tow Operator, and
- Used-Automobile Display Lot.
Similarly, your business may need one or more special permits, such as:
- Permits for different food and beverage businesses,
- Environmental services,
- Transportation services, etc.
For example, say you want to open a grocery store in Anchorage that sells cigarettes among other things. You will have to acquire a grocery store permit and a Tobacco Endorsement.
If you plan on selling marijuana, tobacco, or any other product containing nicotine (including electronic smoking products), you will need a Tobacco Endorsement for each separate location you plan to sell at.
To receive an Endorsement, you will need to fill out the Business License: NEW Endorsement form and file it with the Division of Corporations, Business and Professional Licensing in person.
The Endorsement costs $100 per location. Each endorsed location must have the endorsement warning sign printed and placed in a conspicuous place where customers can see it.
For other industry-specific permits you might need if you want to open a business in Anchorage, consult the Municipality of Anchorage Licenses and Permits webpage.
To check if your particular business requires a Municipal business license or a permit and apply for it, check your municipality’s official website.
Step #7: Register your business (and appoint a registered agent)
Now that you’ve chosen your business structure and registered your business name, it’s time to register your business.
To do this, you will first need to designate a registered agent — an individual or corporation authorized to receive legal documentation on behalf of your business.
In Alaska, all types of corporations, limited partnerships (LPs), limited liability partnerships (LLPs), and limited liability companies (LLCs) are required to have a designated registered agent.
A registered agent (individual) for an Alaskan business must:
- Be over the age of 18,
- Have permanent residency in Alaska (and only Alaska), and
- Have and maintain a valid mailing address within the State of Alaska.
If you’re choosing an entity to be your authorized agent, the entity must be either a domestic (Alaskan) corporation or a foreign corporation with the authority to conduct business in Alaska.
Make sure the individual or corporation you choose is trustworthy and reliable. If the registered agent fails to receive or forward the documentation to your company, your business may get a non-compliance status and your business license could be revoked.
Now, let’s see what you need to register different types of business entities in Alaska and how you can do it.
Registering a sole proprietorship in Alaska
To register a sole proprietorship in Alaska, all you need is a business license.
Sole proprietorships don’t need to register with the Corporations Section and don’t need an Alaska Entity Number.
A business license costs $50 per year and can be purchased for 1 or 2 consecutive years.
The State of Alaska offers Senior Discounts and Disabled Veteran Discounts for purchasing a business license.
The Senior Discount is valid for a sole proprietor aged 65 or older. Those who will turn 65 by the time their license expires are also eligible. The discount reduces the cost of the business license to $25 per year. To get the discount, you must provide your birth date before you buy or renew your business license.
The Disabled Veteran Discount is valid for service-connected disabled veterans. When applying for the first time, applicants must provide their documentation in person or via mail. The documentation should include a copy of the applicant’s service-connected disability determination letter from Veterans Affairs.
Discounts are only available to sole proprietors.
If qualified for both discounts, owners must choose one or the other.
Because a sole proprietorship is a structure where the owner is the same as the business, your personal name is the same as your business name, and you can use your Social Security number to file taxes.
However, it is highly recommended that you file for a DBA (doing business as) name and an EIN for an added layer of security.
Registering a partnership in Alaska
By this point, you should have everything you need to register your partnership business:
- Business name,
- NAICS code,
- Alaska registered agent, and
- Registered agent’s Entity Number (if the registered agent is an entity).
There is a slight difference between registering a limited partnership and a limited liability partnership.
To register a limited partnership, you will need to submit a hardcopy of the Certificate of Limited Partnership along with a $150 fee. A limited partnership lasts a maximum of 5 years.
To register a limited liability partnership, you will need to submit a hardcopy of the Statement of Qualification and pay a $150 fee.
Registering an LLC in Alaska
To form a limited liability company, you will need:
- Business name,
- NAICS code,
- Alaska registered agent, and
- Registered agent’s Entity Number (if the registered agent is an entity).
Additionally, you will need to submit the Articles of Organization online or a hardcopy of the Articles of Organization. In both cases, the filing fee is $250.
While the owners may create an Operating Agreement, this is not necessary for registering an LLC and will be returned if provided along with the other documents.
Registering a corporation in Alaska
To register a corporation, you will need:
- Business name,
- NAICS code,
- Alaska registered agent,
- Registered agent’s Entity Number (if the registered agent is an entity).
Additionally, depending on the type of corporation you wish to register, you will also need the following information/documentation:
To register a business corporation, you will need:
- Articles of Incorporation for a business corporation,
- $250 fee,
- Alien affiliate, and
- The number of authorized shares.
To register a cooperative corporation, you will need:
- Articles of Incorporation for a cooperative corporation,
- $250 fee,
- Listed membership fee,
- Described membership stock,
- Described capital stock, and
- Name and email/address of board of directors and incorporators.
To register a professional corporation, you will need:
- Articles of Incorporation for a professional corporation,
- $250 fee,
- List of alien affiliates and their addresses,
- List of all shareholders, directors, and officers, and their addresses,
- Professional license, and
- Number of authorized shares.
To register a religious corporation, you will need:
- Articles of Incorporation for a religious corporation,
- $50 fee,
- Property value, and
- Sole official.
Registering a nonprofit organization in Alaska
To register a nonprofit corporation, you will need:
- Business name,
- NAICS code,
- Alaska registered agent,
- Registered agent’s Entity Number (if the registered agent is an entity),
- Names, emails, and the number of the members of the board of directors,
- A $50 filing fee, and
- Articles of Incorporation for a nonprofit corporation that you may mail to the Alaska Department of Commerce, or file the Articles online.
Substep to take after registration: File initial and biennial reports
In Alaska, all businesses have to file an initial report within the first 6 months of their registration, with the exception of sole proprietorships and cooperative electric and telephone organizations.
After that, they must file a biennial report every other year.
For-profit corporations, professional corporations, LLCs, and LLPs must file a biennial report between October 2 and January 2 every other year after registration.
Nonprofits, cooperatives, and religious corporations must file a biennial report between April 2 and July 2 every other year after registration.
All entities required to file a biennial report have a 1-month grace period before they incur penalty fees.
Step #8: Obtain federal and state tax IDs
Applying for federal and state tax IDs is necessary in order to legally run your business, pay your employees, open bank accounts, and file taxes.
Procure your Employer Identification Number (EIN)
An EIN is issued by the IRS and serves as a 9-digit employer identification on a federal level. EIN is also sometimes known as:
- Federal Employer Identification Number (FEIN) — when used for reporting employment taxes.
- Federal Tax Identification Number (TIN) — when used for all other purposes.
All types of businesses (incorporated and unincorporated) are required to have an EIN. Having an EIN is necessary for filing business tax returns and paying employees.
Applying for an EIN is free. Entities cannot apply for an EIN. All applicants must be natural persons.
The easiest way to get your identification number is to apply for an EIN online.
You may also apply via fax, mail, or telephone. For instructions on how to do so, consult the instructions provided by the IRS.
Alaska state taxes
The Alaska state tax ID number is normally used to organize state-level sales taxes (not applicable in Alaska) or if you want to hire employees in Alaska or owe excise taxes.
The State of Alaska does not have a state sales tax. Note that some local governments may levy a sales tax. To find out about your municipality’s sales tax regulations, you must contact the municipality(s) itself, or check its website. Alternatively, you may take a look at the Alaska Taxable, which lists all Alaska municipalities along with the taxes they levy.
For more information on Alaska sales tax, read the Alaska sales tax information.
The State of Alaska does not levy individual state income tax either. This is good news for sole proprietors in Alaska. Sole proprietors and their businesses are considered one and the same in the eyes of the law, which means that sole proprietors don’t pay taxes on their sole proprietorship income to the state (federal taxes are still valid).
Instead, the owner of a sole proprietorship lists the business income on their personal return.
The Alaska corporate tax is based on the federal corporate tax, with minor discrepancies related to multistate and oil and gas corporations.
Sole proprietorships and partnerships don’t pay corporate taxes. According to the IRC, S-corporations are treated as partnerships on a federal level and are therefore also exempt from paying corporate taxes.
Additionally, in Alaska, LLCs are also treated as partnerships if they file as partnerships on a federal level. Electronic and telephone cooperatives are also free from corporate tax.
For a detailed explanation of Alaska corporate tax, visit the Alaska Department of Revenue.
For a more comprehensive list of Alaska state taxes, visit the Alaska Department of Revenue, Tax Division.
Alaska remote seller sales tax
Remote sales in Alaska are regulated by the Alaska Remote Sellers Sales Tax Commission (ARSSTC).
According to the Uniform Tax Code, all remote sellers who send their products/services to Alaskan jurisdictions that have adopted the Uniform Code must register and file taxes with the ARSSTC if:
- They have made over $100,000 in annual gross remote sales, or
- Have had more than 200 individual remote transactions either last year or this year.
If a seller conducts business exclusively via a Marketplace Facilitator (e.g. Amazon, eBay, Etsy, etc.), the seller does not have to register with the ARSSTC. Instead, they must fill out the Marketplace Seller Affidavit.
If a seller has a store on their personal business website AND on a Marketplace, they should only file taxes for the sales made in Alaska via their website. The sales made through the Marketplace are filed by the Marketplace itself (e.g. Amazon, eBay, Etsy, etc.)
The exact ARSSTC tax rates are available on the ARSSTC website.
The Uniform Code tax rules do not apply to remote sales made from Alaska to other states.
Step #9: Choose an appropriate location for your business
Choosing the right location is vital for the success of your business. So, you should take your time to carefully pick out your base of operations and avoid opting for the first attractive offer you encounter.
This goes without saying for businesses such as clothing stores, hair salons, cafes, restaurants, etc., where securing a location with a lot of foot traffic can make a world of difference. However, location is important for many other reasons.
Here are a few things to consider when choosing a location for your Alaska business:
- City/municipality — as the largest city in Alaska with almost 300,000 residents, Anchorage is the city with the greatest number of opportunities for budding entrepreneurs. On top of that, Anchorage is one of the cities in Alaska that don’t collect sales taxes, which makes it the perfect place to start your business.
- Zoning — regardless of where in Alaska you plan to open your business, the next thing to consider are zoning laws. Zoning is a method governments use to divide the municipality into districts (e.g. residential, industrial, commercial, etc.). Zoning laws may restrict you from opening your business in certain areas of the city if your business doesn’t “fit” the zone’s regulations (e.g. you can’t open a waterpark in a residential district). To learn more about zoning, take a look at the Alaska Planning Commission Handbook. To look up zoning codes in Anchorage or any other municipality, look it up on that particular municipality’s official website.
- CC&Rs in HOAs — homeowners living in planned communities with a homeowners association (HOA) are restricted by the Declaration of Covenants, Conditions, and Restrictions (CC&R) in many ways. If you live in a community with an HOA and want to open a business based in your house, you’ll first have to check the community’s rules described in the CC&R you’ve likely signed upon purchasing your home to see if the community will allow you to do so.
Step #10: Make a clear business plan
A business plan is an important written document that shows where your business is, where it’s going, and how you plan to get it there.
Say you want to open a store that sells interior decor items. You believe your pieces are unique because they combine wood and resin and feature traditional Alaskan tribal designs. The main purpose of a business plan for this type of business would be to:
- Serve as a detailed plan and roadmap for starting and running your interior decor shop,
- Serve as a baseline for benchmarking your progress, and
- Convince banks and potential investors that your shop is worth their while.
A business plan is not an official document, meaning there are no real rules on how to write it. Still, according to the SCORE Foundation, certain elements of a business plan your bank and/or investors will expect to see (listed in no particular order) include:
- Executive summary,
- About the business,
- Finances, and
- Supporting data.
Don’t forget to also include a table of contents and an appendix that will contain supporting documents such as:
- Legal documents,
- Product images (if applicable), and/or
- Any other accompanying documents that might have been requested from you.
Section #1: Executive summary
An executive summary is a brief review of the business plan. It is usually placed at the beginning of the business plan as it contains information lenders and investors are the most interested in. The executive summary of a business plan for our interior decor shop would contain:
- Business description,
- Your shop’s location, its owners, and employees,
- A description of your product,
- Growth plan for the next 5 years,
- The amount of money you’ll need to start and run your interior decor shop,
- How the money will be used and repaid,
- Revenue model and forecasted ROI, and
- Mission statement — why you’ve decided to open a store selling handcrafted interior decor items, what your product will be contributing to the market, who your target customers are, etc.
Section #2: About the business
In this section, you are encouraged to go into more detail about your store and its management and operations strategy. The business section can contain:
- Business description — explain in more detail what your store is all about, what problems it solves and how, who it is for, and how it stands out from the competition. This is also where you may describe why you’ve chosen a particular business location and highlight any standout members or qualities of your team.
- Product and service description — provide more detail about the product or service you’re selling and how it works. This would be a good place to further explain just how unique your handcrafted interior decor items are, and how exactly they’re made. You may also provide more information about your intellectual property and how it’s protected.
- Market analysis — provide evidence that you’ve performed a market analysis and that you understand your industry, your competitors, and your target customers. Analyze who your audience is, where they are and how to reach them, what it is they like about your competition, and what your store offers on top of that.
- Organization and management plan — explain the legal structure of your company and why you chose it. Describe your management structure and present the people who will manage the business.
- Marketing and sales plan — finally, explain how you will market your handcrafted items and how you plan to retain customers. This is also where you should describe your sales process and revenue model.
Section #3: Finances
The finances section should contain a detailed rundown of all your financial needs and plans for the future. It should include:
- Funding goals and requirements — this is where you provide more detail about why you need funding, how you’ll use it, and how much money you need (e.g. you need new carpentry tools and equipment, resin molds, and a larger workshop). Also, make sure to include your detailed financial plan for the next several years. This is the information that banks and investors are particularly interested in, and it should be as detailed as possible.
- Financial forecast — describe what you expect the shop will earn over the next several years. Explain how the funding you’re asking for will play a part in that. Since you’re just opening your shop, explain what you will need to earn to break even.
- Assets, liabilities, and equity — list all the money, physical assets, and assets you are owed, your debts, and the value of your shop.
Section #4: Supporting data
The supporting data section is where you provide backup for some of the information provided throughout the rest of the document, e.g. research and statistics supporting your conclusions on market research and competitor analysis. The numbers and research will help you determine:
- How well the most successful handicraft store in town is performing,
- Which items are selling the best,
- Who are their most frequent customers,
- What makes their handicrafts store unique and appealing to the customers, and
- What makes your handcrafted items different from theirs.
Make sure to explain how and where you got your data.
Step #11: Secure the necessary funding
Once you have your business plan ready, you may proceed to look for ways to fund your business. Depending on your business structure and the type of business you’re running, there are a number of ways you can get the necessary funding.
Option #1: Self-funding
Also known as bootstrapping, self-funding refers to procuring the money to fund your business by using your:
- Credit card,
- 401(k), or
- Asking your friends and family for help.
Depending on how you go about it, self-funding can be a great way to get your business off the ground, especially if you are a small company or sole proprietor as it allows you to retain full control and ownership of your business.
However, remember that using your credit card and 401(k) is incredibly risky and may be more trouble than it’s worth.
Option #2: Partnership
If you don’t have the means to self-fund your venture, forming a partnership with someone who does is a good way to get your business up and running.
The downside is that you’ll be forced to share ownership and control of the business.
Option #3: Small business loan
A small business loan may be the way to go if you want to retain full control of your business, but self-funding and partnerships aren’t an option.
To get a small business loan, you’ll need:
- A detailed business plan that will convince the bank to lend you the money,
- A good credit score,
- Your legal business documents,
- Bank statements and revenue (if you own an established business), and
- Other documents depending on your individual situation.
Some of the best Alaska small business loan options include:
- SBA 7(a),
- SBA 504, and
- SBA Express programs.
SBA loans are particularly favorable for small businesses because the Small Business Administration guarantees a part of the loan, which makes banks more willing to give them out.
Option #4: Investors
An investor is an individual or entity willing to invest money in your business with the hopes of profiting. The most common types of investors are angel investors and venture capitalists.
Angel investors are usually wealthy individuals who are willing to invest their own funds in a business idea and help build a startup from scratch.
They normally ask for company shares as compensation but prefer to take a backseat when it comes to operating the business.
Venture capital investors
Venture capitalists are normally entity investors (investment firms) that invest in businesses in exchange for equity stakes. Venture capitalists usually:
- Look for businesses with high growth potential,
- Help businesses on their journey,
- Demand a high rate of return, and
- Demand a seat on the business’s board of directors.
In other words, they invest large sums of money and are willing to provide for the business because it’s in their interest that the company grows and prospers. But, they also demand a high price for their help.
Option #5: Crowdfunding
While taking out a bank loan or finding investors allows you to get a large sum from one or relatively few sources, with crowdfunding, you can get funding from thousands, or even millions of people via the Internet.
Some of the most popular websites for pitching your idea to the public and getting crowdfunded are Kickstarter, IndieGoGo, GoFundMe, Patreon, and SeedInvest Technology.
The main advantages of crowdfunding are that:
- You get insight into the potential of your business idea based on the number of backers you get, and
- Your investors expect other forms of repayment instead of money, such as a discount, a gift, early access, public acknowledgment, exclusive content, etc.
While you can crowdfund virtually any business idea so long as the public is interested in it, the majority of those that end up succeeding are creative and technology-based ideas where the investors are also the end-users.
Step #12: Open business banking and credit accounts
Opening a business bank account is a wise decision as it allows you to draw a clear line between your personal and business assets and accurately do your taxes.
You may also get a credit card for your business and start racking up good credit. This might later help you get better loans and investments.
To open a business bank account, you will generally need:
- Your business’s address and phone number,
- Personal ID, and
- Documentation that proves your business exists (may differ depending on the business structure).
Applying for a business bank account is fairly quick and easy, and applications are usually available online.
Some of the options for opening a business bank account in Alaska include:
- First National Bank,
- Mt. McKinley Bank, and
- Denali State Bank.
Another option is to open an account with a credit union. A credit union is a nonprofit organization that allows you to borrow money with low-interest rates from a pooled fund.
The Alaska USA Federal Credit Union is among the largest credit unions in the US.
Step #13: Get the insurance you need
You’ve probably given some thought to insuring your business to protect it from a potential disaster, natural or otherwise. However, as a business owner, you’ll likely have to obtain other types of insurance as well — those that protect your employees.
Here are the types of insurance you’re required to have as a business owner in Alaska:
- Workers’ compensation insurance — as per the Alaska Workers’ Compensation Act, every employer with one or more employees is required to have workers’ compensation insurance. The insurance covers lost wages, medical expenses for illness and injuries obtained as a result of their job, and death benefits for families of those killed on the job.
- Unemployment insurance — all employers in Alaska are required to pay unemployment insurance taxes. Unemployment insurance provides financial help to people who have lost their jobs suddenly, inexplicably, or otherwise through no fault of their own. Employers are required to fill out the IRS Form 940 and file the Annual Federal Unemployment (FUTA) tax return. For a more complete explanation and exceptions to the rule, consult the unemployment insurance handbook.
When it comes to insurance aimed at protecting your business, you might want to consider the following:
- General liability insurance — having general liability insurance is a good idea for most businesses. It protects businesses from claims against them for property damage, injury, and illness by covering the costs of damages and potential legal proceedings. General liability insurance is good for most businesses, but especially for sole proprietorships and partnerships, since they lack personal and business liability protection.
- Business owner’s insurance policy (BOP) — this is all-in-one insurance that combines property insurance, liability insurance, and business interruption coverage, and covers your entire business. It is best suited for small and medium businesses with up to 100 employees and under $5,000,000 in revenue.
Step #14: Hire employees
You’ve finally completed all the necessary steps to open your business and obtained worker’s compensation insurance. Now all that’s left is to hire employees.
Once you’ve selected a competent candidate, the Alaska new hire law states that you must report the new hire to the State of Alaska magnetically, electronically, or via the W-4 form. Depending on your reporting process of choice, the reporting must be completed no more than 16 or no more than 20 days after the employee is hired.
For more information on proper reporting of new hires in Alaska, consult the State of Alaska Child Support Services Division.
Once you’ve hired your first employee, you must file for the Alaska Employment Security Tax and register yourself as an employer.
From the moment of hiring the first employee, all Alaska business owners must have accurate employee records going back at least 3 years, including:
- Employee personal information (age, address, occupation, etc.),
- Time worked,
- Overtime earnings,
- Payment dates,
- Raises, bonuses, and wage reductions,
- Total gross and net wages for each pay period, etc.
To avoid problems down the road, thoroughly inform yourself of the relevant Alaska labor laws.
For more detailed information on Recordkeeping requirements for Alaska employers, consult the Alaska Department of Labor and Workforce Development.
Finally, you must make sure you are compliant with the AKOSH Health and Safety standards.
Step #15: Start using reliable business software
Once you get your business underway, it’s going to take a lot of consistent work and discipline to keep it running.
A great way to get yourself to do the work you need to do and stay consistent is to find suitable task management software where you can keep tabs on all your responsibilities in one place.
These days there is a plethora of amazing task management software for small businesses that are free to use and can be used as tools to boost your productivity.
Using software to organize your work is especially useful if you have a team of employees or freelancers you need to synchronize and constantly keep updated. For this, you will need business software that can serve as a reliable team collaboration tool and make it easy to get your team on board, without wasting anyone’s time.
To illustrate a few more ways project management tools (such as Plaky, for example) can be useful, consider this: you’re running a catering business, and it’s going well. You have a team of 7 people and a packed schedule.
You have 5 events to cater in the next week, so your team has split into 3 groups, each focusing on their own tasks.
However, you find that your supplies are running out faster than you anticipated and your teams are losing time waiting on the other teams to finish using the tools and machines they need to continue working.
Situations like these can be easily avoided by:
- Maintaining proper communication,
- Crafting suitable workflow systems,
- Keeping track of everyone’s duties, tasks, and deadlines, and
- Managing inventory with the help of inventory management software.
Any business software worth its salt will also have a library of templates you can use to get started and avoid wasting hours learning how to use the software and create boards first.
💡 Plaky Pro Tip
While there are plenty of amazing business tools out there, many tend to hide their most useful functionalities behind a paywall. If you’re looking for a free alternative, check out Plaky — especially if you’re looking for a:
Step #16: Build an internet presence
One of the main conditions for successful marketing is knowing how to find your audience — not only who they are but where they spend their time. This is how you know where and how to advertise your product or service.
These days, everyone is online. If you don’t pop up in Google search results, you don’t exist.
This makes it difficult to get traction for your business if you don’t have an internet presence. So, let’s build one in 3 steps!
Step #1: Create a Google Business Profile
Opening a Google Business Profile is free, and it allows you to add images, posts, and business descriptions, as well as basic information such as:
- Phone number,
- Open hours,
- Business highlights, etc.
A Google profile also allows your customers to find your location on Google Maps, leave reviews, and send you direct messages.
Having a fleshed-out Google profile makes your business feel more polished and reliable.
Step #2: Create a business website or blog
Having a business website will go a long way in making your business appear more trustworthy and appealing to potential customers.
Creating a business website is easy. First, find a hosting company — Hostinger and Bluehost are excellent choices that won’t break the bank. This makes them perfect for small businesses that are just starting out.
Alternatively, you can pick a hosting company/website builder such as Wix, Squarespace, or WordPress that allow you to create your website directly on the platform.
Second, choose and purchase your domain name through a domain registrar you’ve previously chosen (Bluehost, Hostinger, Wix, etc.). Ideally, your domain name should be the same as your business name, or at least contain your business name within it. And that’s pretty much it.
A great addition to your business website that will boost your sales is an online shop, so consider adding one.
Now, if you don’t want to pay for a website hosting service, you can also create a business blog. However, keep in mind that a blog requires a lot more work to grow and maintain.
Additionally, your website will appeal much more trustworthy to both your customers and the Google Search Engine if you have your own domain name.
Step #3: Create social media profiles for your business
Having at least one active social media profile for your business is essential for your marketing efforts.
If you have a website or blog, Pinterest is one of the best ways to drive traffic to them. Otherwise, consider creating Instagram and/or TikTok accounts for promotion purposes.
All of these social media platforms also have a Business Account. A business account comes with a number of perks, such as statistics on the number of impressions and clicks to your posts, outbound clicks, analytics for your posts and stories on Instagram, and much more.
But remember — having social media is important, but if you want your audience to grow, consistent posting is key. If you’re afraid you’ll run out of ideas, we’ve compiled a list of 60 social media content calendar ideas that will help you get inspired.
FAQ about starting a business in Alaska
In this section, we’ll answer some of the most frequently asked questions about starting a business in Alaska.
How much does it cost to start a business in Alaska?
You can start a business in Alaska for as little as $75.
Sole proprietorships are the simplest and cheapest type of business to open in Alaska. To start a sole proprietorship you only need a business license ($50 without discounts) and name registration ($25).
However, if you want to start something other than a sole proprietorship, the answer can vary drastically. The price of starting a business in Alaska goes up depending on:
- What type of entity you choose to form,
- The industry you’re in,
- Whether your business requires a special permit (noise permit, tobacco permit, etc.),
- Whether your business requires a professional license,
- Whether you wish to reserve your business name before registering it,
- Whether you’re required to designate a registered agent,
- Whether you need a physical location or an expensive domain name,
- Whether you plan to hire employees,
- How much upfront investment you need in tools, supplies, vehicles, etc.
To learn more about what it takes to start a business in Alaska and how much it costs, check out the rest of our guide.
Is it hard to start a business in Alaska?
Despite how daunting it may seem, it’s surprisingly easy to start a business in Alaska.
First of all, the Alaska Small Business Development Center offers a variety of free courses, webinars, workshops, and tools you can use to learn more about starting and running your business.
Once you have all the necessary information and you’re ready to start your business, the Alaska Department of Commerce’s official website and the IRS website contain links to all the documentation you need. You can file most of the paperwork online. In most cases, online requests are processed immediately.
If you don’t have the means to self-fund your business, Alaska also offers plenty of grants and favorable small business loans you can take advantage of.
To find out more about all the benefits the State of Alaska offers to entrepreneurs and small business owners, take a look at the rest of the guide.
Does Alaska require a business license?
Yes, you need to have a business license to operate a business in Alaska unless your business falls under the Alaska business license exemptions. The basic business license fee in Alaska is $50 per year.
Certain types of businesses — adult establishments, circuses, detective agencies, etc. — may require a municipal business license in addition to the regular business license.
To check whether your business requires a municipal business license and how much it costs, check your local municipality’s official website.
How much is an LLC license in Alaska?
Registering an LLC in Alaska costs $250 and requires you to submit the Articles of Organization to the Alaska Division of Corporations, Business, and Professional Licensing. Additionally, you will need to acquire a business license for your LLC, which costs $50.
Is Alaska a good place to start a business?
Alaska is the least densely populated state in the US, and one of the US states with the fewest residents. Additionally, it’s one of the most expensive US states to live in, which doesn’t make it a particularly desirable place to work and live in.
However, Alaska also doesn’t levy personal income tax, or state sales tax, which is a huge plus for small businesses.
Alaska is also the source of some of the best quality seafood in the world. This makes it the best place in the US to start a fisheries business.
What does it take to start a business in Alaska?
To start a business in Alaska, you will need to:
- Choose and register a business name,
- Determine your NAICS code,
- Get your EIN,
- Get a business license,
- Register your business, and
- Open a business bank account.
Depending on the type of business you’re planning to start, whether you have the means to do so, and whether or not you plan to have employees, you might also need one or more of the following:
- Additional municipal business licenses,
- Professional licenses,
- Business permits,
- Different types of employee insurance,
- Business plan,
- Registered agent, and
- Website/physical location.
For more detailed information on how to start a business in Alaska, read the rest of this guide and follow the links provided.
Alaska business resources for further reading
Although we’ve provided you with a detailed guide on starting a business, we are not authorized to give legal advice. Therefore, we strongly advise you to consult with an attorney or a CPA before making any decisions and do your own independent research using the State of Alaska’s official websites.
Here are some websites we recommend you visit for further reading:
- Alaska Small Business Development Center (SBDC) — Alaska SBDC offers a host of free workshops and business tools, business advisory services and mentorships, funding options, and other resources for small business owners.
- Official Alaska State Website — get all the necessary information about different business entities, business and professional licenses, financial assistance, etc., including all the legal documents and printable/online forms you need to file to get licenses and register your business in Alaska.
- Alaska Department of Labor and Workforce Development — everything you need to know about being an employer in Alaska (labor standards and safety, workforce compensation, unemployment insurance, labor laws, etc.)
- Alaska Department of Revenue — inform yourself about taxable services in Alaska and download forms for filing different state-specific taxes, file federal taxes online, and more.
- Alaska Child Support Services Division — learn about Alaska New Hire Laws, Wage Withholding, new hire reporting, and child support.
- Alaska State Legislature — a detailed guide to Alaska laws and regulations.
- Alaska Remote Seller Sales Tax Commission — all you need to know about online/remote selling in Alaska and to Alaska.
- Alaska USA Federal Credit Union — learn more about and apply for business loans in Alaska.
- US Small Business Administration (SBA) — a website offering business learning and resource pages, SBA loans, business assistance programs and counseling, and more.
- US Department of Labor — a comprehensive source of information on federal and state labor laws, links to relevant websites, and downloadable forms.
- Internal Revenue Service (IRS) — learn more about federal taxes, and tax exemptions, file for an EIN, and more.
Starting a business in Alaska — Conclusion/Disclaimer
Hopefully, you’ve learned something new and found this Alaska business guide useful. Please note that this guide does not presume to give legal advice. The content we provide is for informative purposes only.
This guide was written in Q1 of 2023, so any changes of requirements that occur after this period, may not be included in this starting a business in Alaska guide.
Before making any final decisions about opening a business in Alaska, or acting on any legal matters, please consult an attorney or another qualified individual.
Please remember that this guide refers to the State of Alaska only. Legal requirements for starting a business in other states may differ.
Plaky is not responsible for any losses or risks incurred, should this guide be used without further guidance from legal, tax, or other advisors.