Starting a Business in Alaska
A new business in Alaska is in your reach. You may be wondering: exactly how do I start a business in Alaska? And more importantly, can I do so no matter what the economic conditions are? Can I start a new business in Alaska during a recession?
A New Business in Alaska: Pluses and Minuses
Business Insider named Alaska the second best state to start a new business in, in the entire country, in 2016.
But just why is that? For one thing, Alaska has 10 tax brackets for corporate income tax. Yet the business tax climate in Alaska is still the third best in the United States. This is especially since there is no individual income tax or state sales tax.
In addition, the state of Alaska has the second highest rate of new entrepreneurs. It has the highest per capita GDP. It also has the second highest percentage of available employees.
But do not be so quick to hire the locals. Because starting business in Alaska does have some downsides. Alaska has the worst level of education for potential employees in the country. It may also turn out to be difficult to hire workers remotely and have them relocate.
Alaska’s remoteness and unique time zone do not seem to hurt it when it comes to starting a new company, but do note the warning about getting non-Alaskan workers to potentially relocate.
Recent Slight Slippage
In 2019, Dollar Sprout ranked Alaska at number five. Still an impressive showing. And keep in mind, the methodologies for Dollar Sprout and Business Insider differ.
Three big positives were a large pool of available workers and a good ten-year business survival rate. Plus Alaska has one of the highest average annual income levels for sole proprietors in the nation. But the issues with the climate and remoteness have not changed. And it is probably still difficult to get out of state employees to relocate.
Starting a New Business in Alaska – DBAs in Alaska
Filing for a fictitious name allows the creation of a business name which is then separate from an entrepreneur’s legal name. This is called “Doing Business As”, or a DBA.
In Alaska, the business name must be both reserved and registered. Each of these steps is going to be a separate process. The names of some entity types will be automatically registered.
Starting a New Business in Alaska – Alaska Corporations
All businesses operating in Alaska as corporations, professional corporations, nonprofit corporations, limited partnerships, registered limited liability partnerships, limited liability companies, and professional associations will need to reserve and register their business name.
Starting a New Business in Alaska – Alaska Top Industries
According to the official state government of Alaska website, the top industries in the state are oil, tourism, and fishing. Plus other important industries are timber, mining, and agriculture.
Enterprising business owners should be able to find opportunities in working directly with Alaska’s bigger industries. This can come in the shape of, for example, trucking in supplies or manufacturing fishing gear. Maybe a new business owner can invent and provide safety devices for mining and agriculture. Or maybe they can feed and house the state’s oil workers and its many tourists.
Here’s how to start business in Alaska.
Starting a New Business in Alaska – Alaska New Business Secretary of State Requirements
Register a Business Name
Go to the Alaska Department of Commerce, Community, and Economic Development, and surf to the Division of Corporations, Business and Professional Licensing. The information is there. Check on available names at Selecting a Name for your Business, and Alaska Corporation Registration.
Business Permits and Licenses
Local Permits and Licenses
Check with your local municipality, city or county office or website. Find out if there may be any local licensing or permit requirements. E. g., in Anchorage, you will need to go to the Municipal Business Licenses page. It’s on the Municipality of Anchorage website.
All needed forms are on the Corporations page of the Department of Commerce, Community, and Economic Development.
It may end up being more difficult to find virtual offices within the other parts of the state of Alaska than in other parts of the country. This may be due to the remoteness of most areas. That is because many of them are only accessible via airplane.
However, it may also be possible to work with Regus.
Maybe a business owner can work directly with some virtual office providers or even computer user groups and see if they have any suggestions.
Starting a New Business in Alaska and Building Business Credit
Company credit is credit in a company’s name. It doesn’t link to an owner’s consumer credit, not even if the owner is a sole proprietor and the solitary employee of the business.
As such, a business owner’s business and consumer credit scores can be very different.
Because company credit is separate from personal, it helps to safeguard an entrepreneur’s personal assets, in case of a lawsuit or business insolvency.
Also, with two separate credit scores, an entrepreneur can get two separate cards from the same merchant. This effectively doubles buying power.
Another benefit is that even start-ups can do this. Visiting a bank for a business loan can be a formula for disappointment. But building small business credit, when done correctly, is a plan for success.
Consumer credit scores depend on payments but also additional factors like credit use percentages.
But for company credit, the scores actually only depend on whether a company pays its debts in a timely manner.
Start a New Business in Alaska – Small Business Fundability™
A business needs to be Fundable to credit issuers and vendors.
For this reason, a business will need a professional-looking website and e-mail address. And it needs to have site hosting from a hosting vendor.
In addition, company telephone numbers need to have a listing on ListYourself.net.
At the same time, the business phone number should be toll-free (800 exchange or comparable).
A small business will also need a bank account devoted strictly to it, and it needs to have all of the licenses necessary for operation.
Dealing with the IRS
Visit the Internal Revenue Service web site and get an EIN for the small business. They’re free. Select a business entity like corporation, LLC, etc.
A business can begin as a sole proprietor. But they should change to a sort of corporation or an LLC.
This is in order to decrease risk. And it will optimize tax benefits.
A business entity will matter when it comes to tax obligations and liability in the event of a lawsuit. A sole proprietorship means the business owner is it when it comes to liability and tax obligations. No one else is responsible.
Start a New Business in Alaska – Instigating the Business Credit Reporting Process
Start at the D&B web site and get a totally free D-U-N-S number. A D-U-N-S number is how D&B gets a business into their system, to generate a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.
Once in D&B’s system, search Equifax and Experian’s sites for the company. You can do this at www.creditsuite.com/reports. If there is a record with them, check it for accuracy and completeness. If there are no records with them, go to the next step in the process.
In this manner, Experian and Equifax will have something to report on.
First you must build trade lines that report. This is also called vendor credit. Then you’ll have an established credit profile, and you’ll get a business credit score.
And with an established business credit profile and score you can start to get more credit.
These sorts of accounts often tend to be for the things bought all the time, like marketing materials, outdoor work wear, and office furniture.
But to start with, what is trade credit? These trade lines are credit issuers who will give you preliminary credit when you have none now. Terms are ordinarily Net 30, versus revolving.
Therefore, if you get approval for $1,000 in vendor credit and use all of it, you need to pay that money back in a set term. So this is like within 30 days on a Net 30 account.
Start a New Business in Alaska – Monitor Your Business Credit
Know what is happening with your credit. Make certain it is being reported and take care of any errors as soon as possible. Get in the habit of checking credit reports. Dig into the particulars, not just the scores.
We can help you monitor business credit at Experian, Equifax, and D&B for 90% less.
Update Your Records
Update the data if there are inaccuracies or the data is incomplete.
Start a New Business in Alaska – Fix Your Business Credit
So, what’s all this monitoring for? It’s to contest any mistakes in your records. Mistakes in your credit report(s) can be fixed. But the CRAs generally want you to dispute in a particular way.
Disputing credit report inaccuracies normally means you specifically itemize any charges you dispute.
A Word about Building Business Credit
Always use credit sensibly! Never borrow more than what you can pay back. Keep track of balances and deadlines for repayments. Paying promptly and completely will do more to boost business credit scores than virtually anything else.
Establishing company credit pays. Excellent business credit scores help a small business get loans. Your lending institution knows the company can pay its financial obligations. They know the company is for real.
The small business’s EIN links to high scores and lending institutions won’t feel the need to request a personal guarantee.
Business credit is an asset which can help your company in years to come. Learn more here and get started toward establishing company credit.
Want to start a new business someplace else in America? Then check out our handy guide to starting a business in any state in the country.
Alaska’s Response to COVID-19
Here’s how Alaska is handling the COVID-19 situation. On March 17, Governor Mike Dunleavy announced the creation of an Alaska Economic Stabilization Team. A bipartisan group of leaders will work with the Dunleavy administration. The goal is a plan to protect the state’s economy from the impact of COVID-19.
Leading the group will be former Governor Sean Parnell. Former US Senator Mark Begich will join. The remaining seats will be filled by a cross section of Alaska’s economic leaders and former elected officials.
By April 16, the governor and legislators disagreed whether funding under the CARES Act could be used to fill in for programs the governor has already vetoed. Due to this question, legislators wrote to Treasury Secretary Steve Mnuchin for clarification.
As of the end of September of 2020, it did not appear that CARES Act funding for Alaska had made up for shortfalls due to gubernatorial vetoes.