Alaska is by far the nation’s biggest, coldest, and most remote state. But, despite that fact, it’s also one of the best states to start and run a business for yourself or your kid.
There are a few reasons why starting a business in Alaska has gained such a reputation. One of them being that, the Tax Foundation lists the Last Frontier as third on their list of most tax-friendly business states (due to no individual income tax or state sales tax).
In addition, Alaska has the country’s second-highest rate of new entrepreneurs. Yes, that is clearly the spirit of commerce it shows that it is alive and well way up north.
So, if you’re interested in starting a business for your kid in Alaska—maybe you’re a native son or daughter, or you’re drawn to the 49th state by virtue of its low taxes, not to mention its stunning natural beauty—then you need to know a few things about getting started.
Here is how to get started in Alaska:
1. Choose Business and create a Plan
The only question this article cannot answer is the type of business that your kid should get involved in. This depends on what your kid is passionate about or what they are good at, and what suits the community you’re looking to serve in Alaska and beyond.
If you want some ideas on starting a business in Alaska, you need to do a market survey around the area or vicinity you live in. you and your kid can try to find out how much is made on an average on the type of business he or she chose.
Once you decide what kind of business to open, you’ll need to create a business plan. You can write it yourself or use digital tools to help you out. Your business plan should cover your pitch, your potential customers, your marketing strategy, and where you’ll secure financing and any other important detail.
For outside help with crafting your business plan, Alaska’s Small Business Development Centers offer no-cost business advising, which you can benefit from.
2. Register the business
This isn’t a walk in the park but it is quite literally the most necessary. You need to register your kid’s business with the state in order to do business. The process isn’t easy for your kid to follow or to be able to fulfill alone so for this part you need to be in support at all times.
There are a few different legal structures to choose from when registering, and all of them have different benefits when it comes to taxes, liability, and operations. The four most common are below:
A limited liability company (or LLC) is the most popular structure, as it provides protection without double taxation. LLCs can function as a partnership or corporation, and Single Member LLCs allow business owners to choose to be taxed as a sole proprietorship or corporation. You are also protected from personal liability in the case of damage.
You can also choose to be a sole proprietorship, which doesn’t require having a formal business structure or articles of incorporation. The downside: This structure doesn’t come with any legal protection. You can choose to file a DBA (Doing Business As), however, if you choose to incorporate, you can get the necessary paperwork from the Department of Commerce, Community, and Economic Development—Division of Corporations, Business, and Professional Licensing.
Once you decide on a structure, you’ll have a better idea of what your tax requirements will be, so go ahead and get your federal employee identification number from the IRS, and contact the Taxpayer Education Service to best understand your obligations.
3. Get Permits at Every Level
Once you’re registered, you need to make sure you have the proper federal and state permits in order to conduct business.
If your business is regulated by a federal agency, you’ll need a federal permit. Industries under federal oversight include alcohol and fish and wildlife (two very important aspects of Alaska culture). Hence, make sure that all of the necessary documents that are needed for your kids business are provided.
For the state of Alaska, you’ll need either a general business or professional license. New general business licenses cost $50 a year and can be purchased for one or two years (note that seniors and disabled veterans can get a discount on these licenses and that the license expires at the end of the calendar year, regardless of when you first applied). Professional licenses might be required for certain professions, including athletic trainers and nutritionists.
You might also need a permit depending on your industry and your municipality. Check with your local municipality to see what permits are required for certain businesses, such as food and beverage or building and construction.
4. Get Your Hands on Some Financing
This should be covered in your business plan for starting a business in Alaska, but once your company actually starts to take shape and can start conducting business, it’s more than likely that you’ll need sources of startup funding for your kids business.
If you’re independently wealthy and money is no concern of yours, good for you because you could fund it on your own if you so desire. And even at that, you will still collect your money back when the business begins to make profits. You could take on loans from, one of Alaska’s Small Business Development Centers, which are located across the state in places like Anchorage, Fairbanks, Juneau, Homer, Ketchikan, Soldotna, and Wasilla. The SBDCs can help you find financing options for starting a business in Alaska. However, if your kids been saving he or she could use their own funds and if not enough, this could be supported by you or family members if possible.
Now that you have started the business, you need to let people be aware of it. This can be done through any means. Depending on the type of business, your kid may use the social media which is a general platform. Business cards, newspapers, and flyers are all other means of promoting your business.
6. Prepare to Start Hiring
Maybe you plan on running an extra-small, one-person business. But if you find success, you might want to expand your offerings and your reach, and start hiring.
To do that, you’ll need to add a few steps to your checklist, including:
- Obtain an Unemployment Insurance Identification Number from the Alaska Department of Labor and Workforce Development, Unemployment Security Division.
- Understand your role in complying with the Workers Compensation Act by contacting the Alaska DoL, Division of Workers’ Compensation. This goes hand-in-hand with obtaining insurance, so contact your insurance company as well.
- Get in touch with the Alaska DoL, Division of Labor Standards and Safety to determine compliance with the Occupational Safety and Health Act.
- If this sounds overwhelming, the Alaska SBDC has a “Hiring Your First Employee Tool” to walk you through the process.
- You’ll also need to budget responsibly and accurately to make sure you can pay your new employees.
While the Alaska SBDCs have free or low-cost counseling available, they can also put you in touch with local lawyers, accountants, insurance agents, financial institutions, bookkeepers, and others who have proven to be assets to other small business owners in Alaska.
In conclusion, this article can’t decide what kind of business you should open, it also can’t run your business for you. You’ll have to decide how to best reach customers, how much to spend on your website, how to interact with people on social media and review sites, whether this location or that is best for seeing high foot-traffic, and all the other variables that go into whether a business is a success or failure.
Starting a Business in Alaska is in many ways similar to getting it started in the Lower 48. You’ll have to flesh out your business plan, jump through regulatory hoops, find a reliable source of funding, and everything else we covered up top.
But once you get started, you’ll see that Alaska’s not only a beautiful place to live and work—it’s a state that sets its business owners up for success.