Starting a Business in Alaska: The Ultimate Guide

starting a business in alaska snowflakes

Alaska, aka the Last Frontier, is by far the nation’s biggest, coldest, and most remote state. But, believe it or not, it’s also one of the best states to start and run a business. If you’re wondering how to start a business and are up for an adventure—you may want to consider starting a business in Alaska.

There are a few reasons why starting a business in Alaska has such a good reputation. For one, the Tax Foundation ranks Alaska as the second most tax-friendly business state out of all 50 in its State Business Tax Climate Index (due to no individual income tax or state sales tax).

Plus, Alaska had the country’s second-highest rate of new entrepreneurs and the second-highest percentage of available employees as of 2016.[1] Clearly, the spirit of commerce is alive and well way up north.

So, if you’re interested in starting a business in Alaska—maybe you’re drawn to the 49th state by virtue of its low taxes, not to mention its stunning natural beauty—then you need to know a few things about getting started.

Starting a Business in Alaska: A Step-by-Step Guide

One of the hardest parts about starting a new business is deciding to actually do it. Once you’ve done that, the work begins. (You might find it helpful to use this starting a business checklist.) There are a lot more decisions to make and tasks to complete after that first big one, so to help you manage them all, we’ve laid them out here.

Step 1: Choose Your Business Name and Entity 

One of the only things this article can’t tell you is what kind of business to start. That depends on what you’re passionate about, what you’re good at, and what suits the community you’re looking to serve in Alaska and beyond.

If you want some ideas on starting a business in Alaska, this analysis by the State of Alaska lists every occupation in the state, how much they make on average, and the outlook on future opportunities. (For example, the medical and dental fields are seeing strong growth and lots of openings in Alaska. Actors, as you might expect, aren’t likely to catch their break here.)

Once you know what type of business you want to open, choose which business entity you’ll structure your business as. Maybe you want your business to be a partnership, or maybe you want to be a sole proprietor.

There are a few different legal structures to choose from, and all of them have different benefits when it comes to taxes, liability, and operations. The four most common are:

  • A limited liability company (or LLC) is the most popular structure, as it provides corporation-like protection without double taxation. LLCs can function as a partnership or corporation, and single-member LLCs allow business owners to choose to be taxed as a sole proprietorship or corporation.
  • S-corporations typically have up to 100 shareholders, a board of directors, and corporate officers; S-corporations don’t get corporate taxation, as all income and loss go through the shareholders’ themselves.
  • C-corporations, on the other hand, can have as many shareholders as they’d like. With C-corporations, though, both the business and the shareholders must pay taxes.
  • You can also choose to be a sole proprietorship, which doesn’t require having a formal business structure or articles of incorporation. The downside: the sole proprietorship structure doesn’t come with any legal protection. You can choose to file a DBA (“doing business as”), however.

You’ll also want to choose a name for your business at this stage, as well. Having both of these things established will be necessary for the other steps moving forward.

Step 2: Write a Business Plan

Once you decide what kind of business to open, the entity you want, and what you want to call it, you’ll need to create a business plan. You can write it yourself or use digital tools, like a business plan template or business plan software, to help you out. Your business plan should cover your pitch, who your potential customers are, your marketing strategy, and some financial details like where you’ll secure financing and projections for the first few years, among other important details like the type of entity and the name of the business.

For outside help with crafting your business plan, Alaska’s Small Business Development Centers offer no-cost business counseling. There are a few types of businesses they don’t provide assistance for, like nonprofits and cannabis-based organizations, but otherwise, they can be a valuable resource for both launching and maintaining a business.

Step 3: Register Your Business and Apply for an EIN

This isn’t the most fun part of starting a business in Alaska, or anywhere for that matter, but it is no doubt the most necessary. You need to register your business with the state of Alaska in order to operate legally.

If you chose to incorporate, you can get the necessary paperwork from the Department of Commerce, Community, and Economic Development—Division of Corporations, Business, and Professional Licensing. Here are some Business Structure FAQs put out by the state of Alaska if you have more questions.

If your business name is available and what the state deems “distinguishable” you can reserve it for 120 days, and if you register with the name you have access to it for five years. It will cost you a $25 filing fee to register your business name, and before you do, Alaska’s government recommends that you do significant research and consult legal aid to ensure that your business name is unique. Alaska’s Department of Commerce provides an online search tool where you can check if your desired business name is already in use before you register.

You also want to apply for an employer identification number (EIN). You can apply for an EIN with the IRS, and this number is what you’ll use for business taxes and other financials, like opening a business bank account or credit card, or applying for a business loan.

Step 4: Get Permits at Every Level

Once you’re registered, the next step for starting a business in Alaska is to make sure you have the proper federal and state permits in order to conduct business.

If your business is regulated by a federal agency, you’ll need a federal permit. Industries under federal oversight include alcohol and fish and wildlife (two very important aspects of Alaskan culture).

For the state of Alaska, you’ll need either a general business or professional license. New general business licenses cost $50 a year and can be purchased for one or two years (note that seniors and disabled veterans can get a discount on these licenses and that the license expires at the end of the calendar year, regardless of when you first applied). Additionally, professional licenses might be required for certain professions, including athletic trainers and nutritionists.

You might also need a permit depending on your industry and your municipality. Check with your local municipality to see what permits are required for certain businesses, such as food and beverage or building and construction.

Starting a business in Alaska may also require one or more business licenses. Alaska’s Division of Corporations, Business, and Professional Licensing can provide other business licenses like your Alaska Professional License Number and Alaska Business License Numbers. What licenses or permits you need will vary depending on your business entity and type.

Step 5: Prepare to Start Hiring

Maybe starting a small business in Alaska means an extra-small, one-person operation—but if you’ve set your sights on a larger business or your services are in greater demand than you can handle by yourself, you might want to expand your offerings and your reach, and start hiring employees.

To do that, you’ll need to add a few steps to your “starting a business in Alaska” checklist, including:

  • Obtain an Unemployment Insurance Identification Number from the Alaska Department of Labor and Workforce Development, Unemployment Security Division.
  • Understand your role in complying with the Workers Compensation Act by contacting the Alaska DoL, Division of Workers’ Compensation. This goes hand-in-hand with obtaining insurance, so contact your insurance company as well.
  • Get in touch with the Alaska DoL, Division of Labor Standards and Safety to determine compliance with the Occupational Safety and Health Act.

If this sounds overwhelming, the Alaska SBDC has a “Hiring Your First Employee Tool” to walk you through the process. This is also a good time to consider any other small business insurance you may need to operate your business in Alaska.

You’ll also need to budget responsibly and accurately to make sure you can pay your new employees. And speaking of a budget…

Step 6: Consider Your Business Financing Options

This should be covered in your business plan for starting a business in Alaska, but once your company actually starts to take shape and can start conducting business, it’s more than likely that you’ll need sources of startup funding.

Your first stop should be one of Alaska’s Small Business Development Centers, which are located across the state in places like Anchorage, Fairbanks, Juneau, Homer, Ketchikan, Soldotna, and Wasilla. The SBDCs can help you find financing options for starting a business in Alaska.

You can also visit the Small Business Administration’s website directly to see if you qualify for SBA loans or if there are other grants and resources you can take advantage of. The same thing goes for the Alaska Department of Commerce.

Traditional banks and financial institutions are always a possible source of funding, but online lending has taken off in recent years, and you can use sites like JustBusiness to access business loans or other financing options, as well.

As mentioned throughout the article, there are steps to starting a business in Alaska that can be done easily and on your own, especially if your business isn’t under federal oversight. But perhaps you want some help in keeping things straight.

While the Alaska SBDCs have free or low-cost counseling available, they can also put you in touch with local business attorneys, accountants, insurance agents, financial institutions, bookkeepers, and others who have proven to be assets to other small business owners in Alaska if you’re looking for additional guidance along this journey.

Starting a Business in Alaska: The Rest Is up to You

Just as this article can’t decide what kind of business you should open, it also can’t run your business for you. You’ll have to decide how to best reach customers, how much to spend on your website, how to interact with people on social media and review sites, whether this location or that is best for seeing high foot-traffic, and all the other variables that go into whether a business is a success or failure.

Luckily, if you’ve made it this far, now comes the fun part: actually running your business in the state of Alaska. That’s why you’re here, isn’t it?

Starting a business in Alaska is in many ways similar to starting a business in the Lower 48. You’ll have to flesh out your business plan, jump through regulatory hoops, find a reliable source of funding, and everything else we covered up top.

But once you get started, you’ll see that Alaska’s not only a beautiful place to live and work—it’s a state that sets its business owners up for success. Read up on what determines success for starting a business in Alaska, and get started on joining the list of prosperous Last Frontier companies today.

Article Sources:

  1. “The best and worst states to start a business

Eric Goldschein

Eric Goldschein is the partnerships editor at JustBusiness and Fundera.

Eric Goldschein has a decade of experience in digital media, writing and reporting on entrepreneurship, finance, business lending, marketing, and small business data and trends. He has written for a number of outlets including Business Insider, HuffPost, Men’s Journal, BigCommerce, Volusion, Square, RetailNext, Zenefits, and Keap.

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