Articles of Organization

Before your Alaska LLC can actually start conducting business, you must submit articles of organization to the Division of Banking, Securities, and Corporations in the Alaska Department of Commerce, Community, and Economic Development (DCCED). The filing fee is $250, which includes a $100 biennial license fee that will be an ongoing requirement.

Your new LLC's articles of organization must be signed by at least one person, called an organizer. The organizer (there must be at least one) must be a natural person (as opposed to a business entity such as a corporation), and the organizer(s) must sign the articles and deliver them to the DCCED. The organizer is not required to be a member of the LLC, either at the time of or after its organization. The articles must include:

• The LLC's name
• The mailing address of its registered office
• The name of the LLC's registered agent there
• The LLC's purpose, which may be specific or the statement, "for any and all lawful conduct for which a limited liability company may be organized."
• Whether the LLC will be member-managed or manager-managed

The certificate can also contain other items that the members desire to include (presuming they don't conflict with state law), even if they are also included in the operating agreement.

Registered Agent and Office

Alaska LLCs are required to have an in-state registered agent-someone designated to receive official administrative and legal correspondence from the state. The registered agent can be an individual Alaska resident whose business office is the same as the registered office, or it can be a business entity authorized to do business in Alaska whose business office is the same as the registered office.

The registered office may be the same as the LLC's business office.

Operating Agreement

Almost as critical for the organization as the articles of organization is the operating agreement. This can be amended in a way that's specified by the agreement itself, or in a manner permitted by state law. The state doesn't officially require your LC to have this-but it's a critical internal document that officially documents how your LLC will operate. The operating agreement should name the LLC's members, state how much each one has invested in the LLC, specify how profits will be divided, and set forth how much proportional weight (based on investment, usually) each member has when issues are put to a vote. The articles of organization may include constraints on the members' power to adopt, amend, or repeal an operating agreement.

The operating agreement may also set forth meeting requirements such as the amount of required notice, what constitutes a quorum, voting rules, and so on, but it doesn't have to. The operating agreement may (and often does) include requirements that are already laid out in state law. It can also include such items as restrictions or constraints on the power of the members to adopt, amend, or repeal the operating agreement. If there is more than one member, the operating agreement must initially be approved unanimously in writing by the members.

Membership in the LLC

An LLC must at least one member, and that member must be a person, not just a business entity. Persons may become members of the LLC by acquiring an interest either directly from the company (such as when the LLC is first formed), or, if the operating agreement doesn't provide for that, with the written consent of all the members.

To join the LLC, the prospective member usually needs to acquire an interest in the LLC by making a contribution of some kind-for instance, paying cash or transferring property to the LLC-or making a binding obligation to do so.

Individuals can become LLC members in exchange for a promissory note or promise to contribute property or services in the future only if the person has already paid in some property or services to the LLC.

An LLC member can only resign in accordance with applicable provisions in the articles of organization or the operating agreement. An LLC may even pursue remedies against a resigning member if the resignation violates the operating agreement. In fact, unless the operating agreement states otherwise, LLC members are not allowed to resign from the LLC before the LLC is dissolved and its affairs wound up. And, unless otherwise laid out in the operating agreement (and not including termination), after an LLC member resigns, the former member's rights become those of an assignee.

Ongoing Requirements

All Alaska LLCs must file a biennial (every two years) report with the state before January 2 of each filing year, along with a $100 biennial license fee. The first report must be within six months of organization, but does not require the $100 fee because it is included in the filing fee during the year of organization. The report must include:

• The LLC's name and the state or country where it was organized
• The address of the LLC's registered office
• The name of the LLC's registered agent there
• The names and addresses of the LLC's members if member-managed
• The names and addresses of the LLC's managers if manager-managed
• The name, address, and percentage interest owned of each person owning at least a five percent interest in the LLC

Also, it's a good idea to keep on file and available the minutes of board meetings, as well as any member or manager committees.

Dissolution

An LLC will be dissolved and its affairs wound up when any one of the following events occurs:

• Event(s) that are specified in the articles of organization or operating agreement
• All members agree in writing to dissolve the LLC
• Event that makes it illegal for the LLC to continue
• A court order ordering dissolution

Taxes

An LLC by its nature offers some tax advantages over a corporation's structure, including the availability of more deductions. The biggest advantage is that an LLC is not required to be a separate tax entity like a corporation. Instead, it can be a "pass-through entity" for tax purposes, so that the LLC owners report business losses or profits on their personal tax returns, in the same way that a partnership does.

Articles of Incorporation

So that your Alaska corporation can actually start doing business in the state, you must file articles of incorporation with the Division of Banking, Securities, and Corporations in the Alaska Department of Commerce, Community, and Economic Development (DCCED). The filing fee is $250, which includes a $100 biennial license fee that will be an ongoing requirement.

Your new LLC's articles of incorporation must be signed by at least one person, called an incorporator, who must be at least 18 years old and a natural person (not a business entity). They must sign the articles and deliver them to the DCCED. The articles must include:

• The corporation's name
• Its business purpose, which can be the general statement: "the transaction of any lawful business allowed by the Alaska Corporation Code"
• The name of the corporation's initial registered agent
• The address of the corporation's initial registered office
• The address of the corporation's principal office
• Number of shares authorized for the corporation to issue (par value is not required to be designated)
• Whether the corporation has any alien (non-US citizen or a person without permanent US resident status, or non-US legal entities) affiliates (corporate directors, officers, shareholders, and other persons or entities that control or are controlled by a corporate entity)
• If the corporation has alien affiliates, their names and addresses
• The primary and secondary North American Industry Classification System (NAICS) Code Standard Industrial Codes (SICs) that most clearly describe the initial activities of your corporation

Some other provisions that aren't required-but which may be included in the articles of incorporation-are:

• The names and addresses of all directors
• Eligibility requirements to be a director
• Circumstances where shareholders can be liable for corporate debts
• Increased rights for or restrictions on shareholders, stock, or the board of directors
• Provisions for managing the business and regulating the affairs of the corporation

If the initial articles do not name directors for the corporation, the incorporators may elect directors or amend the bylaws.

Registered Agent and Office

Alaska corporations must have a registered agent in the state-a person or office designated to receive official state administrative and legal correspondence. The agent must be either an adult who is a resident of Alaska whose business office is the same as the registered office, or it may be a corporation whose business office is the same as the registered office.

Bylaws

Bylaws lay out the corporation's basic operating principles from both the managerial and legal perspectives. A corporation must keep its bylaws available at its principal executive office, but is not required to file them with the state. The incorporators or board of directors should adopt the corporation's bylaws at their first meeting-insuring there is no conflict with the corporation's articles of incorporation-and keep them updated as time goes on. Bylaws should include, at minimum:

• What authority directors have, how many there are, and how long they serve
• Duties and responsibilities of officers and how long they serve
• How consensus on major decisions is reached, both with and without meetings
• How, when, and where shareholders' and directors' meetings are held
• How the corporation's stock is issued
• Requirements for publishing annual financial information to shareholders

Even though the corporation is not required to file its bylaws with the state, if the articles of incorporation don't specify the number of directors, the bylaws must either state the exact number of directors or specify a minimum or maximum number of directors, along with the way that shareholder or board approval will determine the exact number at a specified later date.

Directors and Officers

The board of directors has the responsibility of making the corporation's major decisions. There must be at least one director; the number should be specified in the bylaws unless it is already set forth in the articles of incorporation. If no number is specified in either document, the "default" number will be three. A change in the number of directors must be approved by a majority of the board, but such a change cannot shorten the term of any currently-serving director.

Titles and duties of the corporation's officers must be either listed in the bylaws or determined by the board of directors. Any two or more offices may be held by the same person, except the offices of president and secretary. When all of the issued and outstanding stock of the corporation is owned by one person, the person may hold all or any combination of offices.

Required Reports

Each Alaska corporation must file a biennial (every two years) report with the state before January 2 of each filing year, along with a $100 biennial license fee. The first report must be within six months of organization, but does not require the $100 fee because it is included in the $250 fee at the time of incorporation. The report must include:

• The corporation's name and state or country of original incorporation
• The name and address of its registered agent and registered office
• The principal corporate address for foreign corporations
• The nature of the corporation's business
• The names and addresses of the corporation's directors and officers
• An itemization of shares authorized to be issued by the corporation
• An itemization of shares that have been issued to date
• Information on all alien affiliates
• The name, address, and ownership percentage of each shareholder who owns more than five percent of the corporation's stock

Taxes

Alaska imposes a corporate income tax similar to the federal corporate income tax, based on graduated tax rates. Alaska does recognize "S corporation" status.