Do you own a limited liability company (LLC) created in a state other than Alaska, but you want to expand your business to the The Last Frontier? If so, you’ll need to qualify your foreign LLC in order to transact business in Alaska.
What is a foreign qualification and how do foreign LLCs function within the state of Alaska? In this guide, we’ll answer these questions and more.
Rocket Tip: If you’d rather hire an online service to handle this process for you, many of the best LLC services can handle it for you.
What Is a Foreign Qualification?
A foreign qualification enables your limited liability company to do business in the state of Alaska. It doesn’t matter which state you originally formed your business in ― or in other words, the state your domestic LLC is located in ― as the qualification process to register a foreign LLC in Alaska is the same regardless of where your domestic LLC is based.
The confusion surrounding foreign qualification usually centers on what it means to “do business” in a state outside of your primary state. This gets especially problematic considering some states don’t strictly define what it means to transact business in that state. Alaska state law does not provide a clear definition of “doing business,” though it does outline certain practices that do not qualify.
What Qualifies as ‘Doing Business’ in Alaska
Any business formed outside of Alaska that wishes to do business in the state is considered a foreign entity, and therefore needs to register with the state. According to Alaska tax law, a business entity is considered to be doing business or “conducting affairs” if it maintains a physical presence in Alaska.
What Does NOT Qualify as ‘Doing Business’ in Alaska
Meanwhile, the following activities are not considered to be “doing business” in Alaska, and you do not need to qualify a foreign LLC to pursue them:
How to Get Foreign Qualification in Alaska
If you want to foreign qualify your LLC in Alaska, you’ll need to file a Certificate of Registration with the Alaska Division of Corporations. However, if you are registering as a foreign corporation, you will need to use this form. The information required in either application includes:
Filing Fee: $350, with the check written to the “State of Alaska.”
What Is the Penalty for Not Getting Foreign Qualification in Alaska?
There are a few major penalties for failing to qualify a foreign LLC in Alaska. Without this qualification, no foreign business can bring a lawsuit in a state court. However, all contracts and agreements with an unregistered LLC are considered valid, and you can still defend against lawsuits. Additionally, you could be subject to fines up to $10,000 per year.
Should I Hire a Business Service Provider to File My Alaska Foreign Qualification?
If you don’t want to handle your foreign qualification on your own, you have options. Some entrepreneurs choose to hire a lawyer to prepare and file their Certificate of Authority, which can be a good option if you’re concerned about getting the job done right. However, attorney’s fees can be quite expensive.
The other option is to hire a business service provider like Incfile or ZenBusiness to register your foreign LLC with the state of Alaska.
These companies can typically get your foreign qualification done for a fraction of the price of an attorney. This is our preferred route if you don’t want to go with the DIY option.
Conclusion
The process for getting a foreign qualification in the state of Alaska isn’t particularly complicated compared to some other states. In addition, Alaska’s rules and regulations regarding which LLCs need to foreign qualify are considerably looser than many states. Still, this isn’t a process that should be overlooked or taken lightly, because the penalties for not qualifying a foreign LLC in Alaska can be severe in some cases ― especially if your LLC continues to conduct business without proper registration.
We hope this article managed to answer your questions about obtaining an Alaska foreign qualification, and we wish you a prosperous business future!