How to Form an LLC in Alaska!

“Limited liability company” must be in the name of every Alaska LLC, although it can be abbreviated using single letters, “ltd.,” or “co.” The name can contain the name of a city, borough, or village, as long as it does not use “city, “borough,” or “village” to imply that the company is a municipality or affiliated with one. Finally, the chosen name must be distinguishable from every other business name on record with the corporations section of the Department of Commerce, Community, and Economic Development, whether the name be for a company formed in Alaska or qualified to do business.

Alaska LLCs are formed by filing Articles of Organization with the corporations section, along with a $250 fee. The Articles of Organization for your LLC must include the name and purpose of the LLC, the name and address of the Registered Agent, and whether the company will be managed by managers. Additionally, Alaska requires that you submit a “Disclosure of Company Activities” form, which describes what the company will do.

Alaska LLCs are governed internally by their Operating Agreement. This sets out the provisions for management and membership. Alaska has a very vague definition of Operating Agreement, although we recommend that you have a written LLC agreement that is signed personally by all members.

EIN: Any tax returns filed by employees or one of multiple members will need an EIN, which the LLC can obtain from the IRS.

Biennial Report: Each Alaska LLC must file a report every two years that states the name of the company, the name and address of its Registered Agent, and the names and addresses of either managers and >5% owners, or all members if there are no managers. This is submitted with a $100 fee ($200 for foreign LLCs) to the Department of Commerce, Community, and Economic Development.

Dealing with Business Partners

The Act gives members contractual freedom to customize the duties each party to the LLC agreement owes to the other parties by giving members and managers contractual freedom to “opt out” of duties by including provisions in an LLC agreement that modify them. The Act provides that to the extent a member or manager has fiduciary duties to the LLC, other members, or other managers, “[t]he member’s or manager’s or other person’s duties and liabilities may be expanded or restricted by provisions in an operating agreement.”

Preventing Unwanted Business Partners

The Alaska LLC Act allows members to protect their control of an LLC. An LLC agreement may prohibit members from assigning their membership interests. But if an LLC agreement does not prohibit it, an assignment does not dissolve the LLC or entitle the assignee to participate in management or to become a member. Instead, the assignee may receive only the distributions and allocations of profit and loss to which the assignor would have been entitled, and all the non-assigning members must consent to the assignee becoming a member.

Creditors Only Get Passive Rights, Not Control Rights

Section 10.50.380 provides that if a judgment creditor of a member obtains a charging order against the member’s interest, “the judgment creditor has only the rights of an assignee.” That is, a charging order requires the LLC to pay the judgment creditor any distribution that would otherwise be paid to the judgment debtor. But the judgment creditor does not have a right to participate in management.  In addition, a charging order is a judgment creditor’s “exclusive remedy.”

In addition, the Act states that unless an LLC agreement provides otherwise or all members give written consent, a person ceases to be a member of an LLC when the person makes an assignment for the benefit of creditors, files a voluntary petition in bankruptcy, is adjudicated insolvent or bankrupt, or fails to contest a petition seeking his or her reorganization, liquidation, dissolution, or similar relief. These events are considered “events of bankruptcy.”

An Alaska LLC must continuously maintain an agent for Service of Process in the state.  A Commercial Registered Agent service may act as an Alaska Registered Agent.

Because of the advantages of forming an LLC in Alaska, over 3,000 new LLCs are formed in the state each year.

Should you wish to have more flexibility and protection, you may instead form a Delaware LLC even if you operate in Alaska. What are the advantages of a Delaware LLC?(Delaware LLC) We can then help you file an application for registration to do business in Alaska with your Delaware LLC.