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What are the advantages of Limited liability company (LLC) in Alaska?

Updated time: 06 Aug, 2021, 18:44 (UTC+08:00)

Alaska is one of the most ideal states when it comes to setting up an offshore company in the USA. It is a state located in the northwest extremity of the United States West Coast, completely separated from the rest of the country.

In 2020, the Gross State Product (GSP) of Alaska was about 50.65 billion USD. The oil and gas industry dominates the Alaskan economy, with more than 80% of the state's revenues derived from petroleum extraction. Some other big industries in Alaska are retail trade, tourism, seafood processing, etc., making it an attractive destination for investors seeking for a fresh and potential market.

Alaska is a famous state for its oil & gas industry

Alaska is a famous state for its oil & gas industry

It is highly recommended for people who intend to start a new business in Alaska to register under the structure of Limited liability company (LLC).

Alaska LLC Advantages

1. Tax incentives

Alaska is currently one of the five US states that does not collect sales tax. Consequently, if the investor sets up an LLC in Alaska, the business does not need to worry about paying sales tax to the state. However, if the company sells to customers in other states, sales tax may be applied in compliance with local state regulations.

In Alaska, corporate income tax rates range from 0% to 9.4%. The higher the taxable income, the higher the rate applied. For example, the corporate income tax rate applied for companies with taxable income of US$ 25,000 and below is 0%, while for companies with taxable income of US$ 222,000 and above is 9.4%.

Alaska LLC is the common type of company when international investors decide to set up an offshore business in Alaska. Investors opening Alaska LLCs can enjoy 0% of sales tax, no individual income tax and low corporate income tax. An Alaska LLC can also be a great choice for SMEs as it requires minimum expense for operation. Thanks to the favorable tax policies, Alaska attracts new businesses everyday despite being distant from other states in the US.

2. No Double Taxation

An Alaska corporation has a drawback that it is subject to “double taxation”. On one hand, the corporation must pay corporate net income tax. On the other hand, shareholders of a corporation must pay taxes for profits distributed to them when shareholders report on their tax returns. An Alaska LLC, however, is subject to a “pass-through taxation”. This means that an Alaska LLC is free from corporate income taxes, shareholders will only be taxed once after the profits are distributed to them based on their personal tax returns.

Setting up an Alaska LLC - Alaska LLC, alaska llc advantages, alaska limited liability company

Setting up an Alaska LLC is a top choice for global investors

3. Asset Protection

As you open an Alaska LLC, it means that the debts of your business aren’t your personal debts. You are only liable for personal financial responsibility that is limited to your investment. Therefore, forming an Alaska LLC can help businesses protect their personal assets.

If there is any lawsuit against your Alaska LLC, it will be considered to be a separate entity from its members. This provides the “Single member protections” for owners and shareholders of the company.

4. Flexibility

Unlike a typical corporation, an Alaska LLC consists of shareholders and a board of directors. Board members are made up of the owners. This provides flexibility in the operating structure of setting up an Alaska LLC. The members in the board of directors can be easily changed without going through a formalized meeting.

5. Biennial Report

The State of Alaska requires you to file an initial report within the first 6 months of forming your Alaska LLC. The due date for the business report is every 2 years, starting from the date you filed your initial report.

There is no fee for the initial report. One IBC is a professional international corporate service provider with over 10 years of experience, we can support you to file the statutory report fast and with a reasonable fee.

One IBC is a professional business consultant in setting up offshore companies

One IBC is a professional business consultant in setting up offshore companies

In conclusion, an Alaska LLC satisfies a necessary condition of your business planning development to gain the preferential benefits and legal protection in the State of Alaska. With Alaska LLC advantages, the investor has only limited liability for the capital contribution in the company, businesses will enjoy a favorable tax rate, flexible company structure when doing business here.

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