Taxes for LLCs in Alaska
(Full Guide)
2025 LLC Guide
Taxes for LLCs in Alaska
Learn about the taxes for LLCs in Alaska. your LLC will need to pay in Alaska. This guide covers everything from federal taxes to state taxes and more.
Once you establish an Alaska LLC, you’ll encounter two primary categories of ongoing filings. The first is the Biennial Report submitted to the state, and the second involves taxes.
Handling taxes is a crucial aspect of managing a business, but determining which taxes are applicable can be challenging.
This guide will equip you with essential resources and fundamental information regarding Alaska LLC tax filing obligations.
What kind of taxes are applicable to a LLC in Alaska?
Each LLC has a unique tax scenario, which means the taxes owed by an Alaska LLC can differ.
The specific amounts and categories of taxes your LLC is responsible for are influenced by factors such as:
- how your LLC is taxed
- state and local tax laws
- any sales and use tax requirements, or
- whether you have employees
Moreover, certain types of businesses must enroll for taxes that are specific to their industry.
Pro Tip: It’s advisable to engage an accountant to guarantee that your LLC fulfills all its tax responsibilities.
Additionally, obtaining an EIN Number for your LLC is highly recommended. An EIN is also known as a Federal Tax Identification Number, and both terms refer to the same thing.
An EIN will not only be essential for establishing an LLC bank account, but it will also play a crucial role in filing taxes with local, state, and federal authorities.
Pass-through taxation for LLCs (Who is responsible for the taxes?)
By default, LLCs are not subject to taxation.
Instead, it is the LLC Members who must report their income (or losses) on their personal 1040 tax return. Members are liable for taxes on any profits generated by the LLC. This is due to the concept of LLC pass-through taxation.
In straightforward terms, pass-through taxation indicates that the obligation to report tax information from an LLC is transferred to the LLC Members.
How is taxation applied to LLCs in Alaska?
By default, an LLC in Alaska is taxed by the Internal Revenue Service (IRS) according to the number of Members it has. Subsequently, the Alaska Department of Revenue recognizes this and applies the same taxation method at the state level.
An LLC that has a single owner (Single-Member LLC) is taxed in the same manner as a Sole Proprietorship.
An LLC that has two or more owners (Multi-Member LLC) is treated for tax purposes like a Partnership.
The aforementioned are known as the “default status.” This indicates that they are automatically assigned according to the number of LLC Members.
Another option available to you is to apply for “elective status” for your LLC. This process involves submitting an additional form to the IRS. Once approved, this elective status allows the IRS to classify your LLC as a Corporation (either as an S-Corporation or C-Corporation) for taxation purposes.
Federal Income Taxes
The IRS has multiple ways to classify your LLC regarding taxation.
Taxation of Single-Member LLCs (Default Classification)
The IRS classifies all Single-Member LLCs as Disregarded Entities when it comes to taxation. Essentially, this indicates that the IRS does not require the LLC to submit a separate federal income tax return.
Instead, the owner of the Single-Member LLC submits the tax return (and pays the federal income taxes).
The way federal income tax is paid by an LLC depends on its ownership structure:
- If an individual owns the LLC, it is taxed similarly to a Sole Proprietorship. Conversely
- if the LLC is owned by another corporation, it will be taxed as a branch or division of the parent entity.
Taxes for Multi-Member LLCs (Default Classification)
If an LLC has multiple owners, it is taxed as a Partnership.
The LLC must submit a 1065 Partnership Return and provide a Schedule K-1 to its owners.
The K-1 forms detail the distributive share of profits for each owner. This K-1 income is then passed through to the owners. Subsequently, each owner is responsible for paying income taxes on their individual income tax return (Form 1040).
Husband and Wife LLC taxes
It’s possible you’ve come across information suggesting that in certain states, a husband and wife LLC can choose to file taxes as a Single-Member LLC (also known as a Qualified Joint Venture) rather than as a Multi-Member LLC.
This applies to states with community property laws (such as Texas). However, Alaska does not fall under this category, meaning Qualified Joint Ventures are not an option in this state.
Choosing to have your LLC treated as a Corporation for tax purposes
Rather than adhering to the standard statuses mentioned earlier, a Limited Liability Company (LLC) has the option to be taxed as a Corporation.
Note: It is advisable to consult with an accountant prior to making a corporate election.
There are two categories of corporate elections:
- S-Corporation
- C-Corporation
LLC classified as an S-Corporation (optional designation)
By submitting Form 2553 to the IRS, your LLC can elect to be taxed as an S-Corporation.
Being classified as an S-Corp can enable businesses with consistent profits to reduce their self-employment tax liabilities.
Tip: Additional costs are associated with having your LLC taxed as an S-Corporation. Most new entrepreneurs should refrain from making this tax election until their business is well-established and generating consistent revenue. Once your LLC Members achieve at least $70,000 in annual net income, it’s advisable to consult with your accountant regarding this choice.
LLC classified as a C-Corporation (optional designation)
By submitting Form 8832 to the IRS, your LLC can opt to be taxed as a C-Corporation.
Being classified as a C-Corp can enable sizable employers to reduce expenses related to healthcare fringe benefits.
Note: This election is unusual. The majority of people opt against having their LLC taxed as a C-Corporation.
Alaska State Income Tax for Alaska LLCs
Local Income Tax for LLCs in Alaska
Alaska Sales Tax
Alaska LLC Payroll Taxes
Organizing your books and maintaining order
Collaborating with an accountant
Alaska Department of Revenue Contact Details
Alaska LLC Taxes FAQs
Is there an annual fee required for my LLC in Alaska?
Sort of. Every Alaska LLC must submit an Alaska LLC Initial Report within six months after receiving approval. Following this, you will need to file a document known as the Alaska LLC Biennial Report every two years.
Your first Biennial Report is due by January 2nd, two years after your Initial Report was submitted.
For instance, if Shah submits his Initial Report for Shah Products LLC on May 3rd, 2025, his first Biennial Report will be required by January 2nd, {year +2}.
These filings are designed to ensure that your contact information remains current with the state. It’s important to note that these fees are distinct from the federal, state, and local taxes you are responsible for paying. The LLC Biennial Report is submitted to the Alaska Division of Corporations, and it is not a tax payment made to the Alaska Department of Revenue.
The Initial Report submission is free of charge, while the Biennial Report for Alaska LLCs incurs a fee of $100, which is payable every two years for the duration of your LLC’s existence.
What is the cost of forming an LLC in Alaska?
Alaska LLC expenses consist of:
$250 for establishing your Alaska LLC (to submit your LLC Articles of Organization).
$100 in biennial fees (for filing your LLC Biennial Report every two years) for an Alaska LLC.
Is it necessary to submit a state tax return for my Alaska LLC?
It may vary based on the type of LLC you possess.
For a Single-Member LLC taxed as a Sole Proprietorship: No, you simply need to submit your personal tax return (Federal Form 1040) and report your LLC’s earnings on that return.
For a Multi-Member LLC taxed as a Partnership: It depends. If all members of your LLC are “natural persons” (real individuals), then a state income tax return is not necessary. However, if any member of your Multi-member LLC is a company, you will need to file an IRS Form 1065 and an Alaska Partnership Information Return (Form 6900).
Please verify this information with your accountant prior to submitting any paperwork, as tax matters can often be quite complex.
LLC taxed as a Corporation: Yes. While Alaska does not impose state income taxes on LLCs or individuals, it does mandate state-level income taxes for business entities classified as Corporations. This indicates that your LLC is obligated to file tax returns with both the IRS and the Alaska Department of Revenue to remit your Alaska corporate income tax. Consult your accountant to ensure that you complete all necessary documentation correctly.
Learn More: Alaska Department of Revenue: Corporate Income Tax
How can I determine the tax classification of my LLC?
You can determine the tax classification of your LLC by examining the number of Members it has. This classification is assigned by the IRS based on how many Members (owners) are part of your LLC. If there is a single Member, your LLC will be taxed as a Sole Proprietorship. Conversely, if your LLC has multiple Members, it will be taxed as a Partnership. This is referred to as being taxed in the default status, which means you are not required to submit any forms to inform the IRS of this classification, as it is automatically applied to LLCs.
However, if you wish for your LLC to be taxed as a Corporation, you or your accountant must submit the necessary paperwork to the IRS indicating your choice for Corporate taxation. After this, the IRS will send you an Approval Letter to confirm that your LLC has opted for the Corporate tax election.
It’s important to note that being taxed as a Corporation is uncommon for LLCs, so most individuals do not need to concern themselves with this option.
If you’re uncertain about your LLC’s tax status, we suggest reaching out to your accountant or contacting the IRS at 1-800-829-4933. To get in touch with a live representative, press option 1, then option 1 again, followed by option 3.
What are the steps to establish an LLC in Alaska?
Here are the procedures for establishing an LLC in Alaska:
- Select a name for your LLC and confirm its availability.
- Designate your Alaska Registered Agent.
- Submit the Articles of Organization for your Alaska LLC.
- Draft and sign an Operating Agreement for the LLC.
- Obtain a Tax ID Number (EIN) from the IRS.
- Open a bank account for your LLC.
- Verify if you require a business or sales tax license in Alaska.
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