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 Alaska Corporation, and Alaska Corporation Registration.

Business Permits and Licenses

Check the Alaska Department of Revenue’s Permits and License website. Get information about professional and business licensing.

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.

Business Registration

All needed forms are on the Corporations page of the Department of Commerce, Community, and Economic Development.

Tax Registration

Find information you need to register at the Department of Revenue Tax Division.

Virtual Office

Alliance does not have virtual offices in Alaska. However, DaVinci does, in Anchorage.

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 is maybe due to the remoteness of most areas. 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.

The Advantages

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.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

The Process

Growing business credit is a process, and it does not happen automatically. A business has to actively work to establish company credit.

Nonetheless, it can be done easily and quickly, and it is much more efficient than establishing consumer credit scores.

Merchants are a big part of this process.

Undertaking the steps out of sequence will result in repetitive denials. No one can start at the top with company credit. For instance, you can’t start with retail or cash credit from your bank. If you do, you’ll get a rejection 100% of the time.

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 vendor such as GoDaddy.

In addition, company telephone and fax 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.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

Dealing with the IRS

Visit the Internal Revenue Service web site and obtain an EIN for the small business. They’re totally free. Select a business entity like corporation, LLC, etc.

A business can begin as a sole proprietor. But they will most likely wish to 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.

Sole Proprietors Take Note

If you run a business as a sole proprietor, then at the very least be sure to file for a DBA. This is ‘doing business as’ status.

If you do not, then your personal name is the same as the company name. As a result, you can find yourself being directly accountable for all business financial obligations.

And also, according to the Internal Revenue Service, by having this arrangement there is a 1 in 7 possibility of an IRS audit. There is a 1 in 50 chance for corporations! Avoid confusion and dramatically reduce the chances of an IRS audit at the same time.

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 fastcs.wpengine.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.

Vendor Credit Tier

First you must build trade lines that report. This is also called the vendor credit tier. 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 credit in the retail and cash credit tiers.

These sorts of accounts often tend to be for the things bought all the time, like marketing materials, shipping boxes, outdoor work wear, ink and toner, 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, like within 30 days on a Net 30 account.

Details

Net 30 accounts have to be paid in full within 30 days. 60 accounts must be paid in full within 60 days. In comparison with revolving accounts, you have a set time when you must pay back what you borrowed or the credit you used.

To begin your business credit profile the proper way, you ought to get approval for vendor accounts that report to the business credit reporting bureaus. Once that’s done, you can then use the credit.

Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Vendor Credit Tier – It Makes Sense

Not every vendor can help like true starter credit can. These are vendors that will grant an approval with negligible effort. You also want them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

You want 5 to 8 of these to move onto the next step, which is the retail credit tier. But you may have to apply more than once to these vendors. So, this is to prove you are trustworthy and will pay punctually.

Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then progress to the retail credit tier. These are businesses like Office Depot and Staples.

Only use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use the business’s EIN on these credit applications.

One such example is Lowe’s. They report to D&B, Equifax and Business Experian. They want to see a D-U-N-S and a PAYDEX score of 78 or higher.

Fleet Credit Tier

Are there 8 to 10 accounts reporting? Then progress to the fleet credit tier. These are service providers like BP and Conoco. Use this credit to purchase fuel, and to repair, and maintain vehicles. Just use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, make certain to apply using the company’s EIN.

One such example is Shell. They report to D&B and Business Experian. They want to see a PAYDEX Score of 78 or more and a 411 business phone listing.

Shell might say they want a certain amount of time in business or profits. But if you already have sufficient vendor accounts, that won’t be necessary. And you can still get an approval.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

Cash Credit Tier

Have you been responsibly handling the credit you’ve up to this point? Then progress to the cash credit tier. These are service providers such as Visa and MasterCard. Only use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, use your EIN instead.

One example is the Fuelman MasterCard. They report to D&B and Equifax Business. They need to see a PAYDEX Score of 78 or more. And they also want you to have 10 trade lines reporting on your D&B report.

Plus, they want to see a $10,000 high credit limit reporting on your D&B report (other account reporting).

In addition, they want you to have an established company.

These are businesses such as Walmart and Dell, and also Home Depot, BP, and Racetrac. These are usually MasterCard credit cards. If you have 14 trade accounts reporting, then these are doable.

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 and digging into the particulars, and not just the scores.

We can help you monitor business credit at Experian and D&B for only $24/month. See: fastcs.wpengine.com/monitoring.

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.

Disputes

Disputing credit report inaccuracies normally means you send a paper letter with duplicates of any proof of payment with it. These are documents like receipts and cancelled checks. Never mail the originals. Always mail copies and retain the original copies.

Fixing credit report mistakes also means you specifically itemize any charges you dispute. Make your dispute letter as clear as possible. Be specific about the concerns with your report. Use certified mail so that you will have proof that you sent in your 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.

Learn more here and get started toward opening a new business in Alaska.

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 on a plan to protect the state’s economy from the impact of the Coronavirus Disease (COVID-19) in Alaska. The group will be led by former Governor Sean Parnell and former US Senator Mark Begich. The remaining seats will be filled by a cross section of Alaska’s economic leaders and former elected officials. 

See: gov.alaska.gov/newsroom/2020/03/17/governor-dunleavy-announces-alaska-economic-stabilization-team