What is Alaska LLC Domestication?

Alaska domestication is a legal process that allows a business formed in another state to become an Alaska LLC.¹ An out-of-state LLC that domesticates to Alaska remains the same company during and after the domestication process. It keeps the same assets and liabilities, business history, and taxpayer identity.² The difference is that—after completing the domestication—the LLC’s state of organization is Alaska, and the Alaska Revised Limited Liability Company Act primarily governs the company.³

Alaska’s LLC domestication law also lets Alaska LLCs domesticate to another state.⁴ Some states call the process of moving an LLC to another state a conversion. A conversion in Alaska is a process for changing a business’s form—for example, from a corporation to an LLC.⁵

Why Transfer an LLC to Alaska?

An Alaska LLC domestication is usually the simplest and most cost-efficient means of transferring an out-of-state LLC to Alaska. There are several reasons why a business owner might want a business currently organized in another state to be governed by Alaska law.

• Owner convenience. An LLC owner who moves to Alaska may find it more convenient to have the company governed by Alaska law. For example, communications with state government agencies may be simpler to coordinate.
• Professional networking. Local professionals based in Alaska are more likely to be familiar with Alaska law. So, finding reliable lawyers, accountants, and other business professionals will be easier for an Alaska LLC.
• Reduced filing requirements and fees. Domestication to Alaska may reduce an LLC’s annual reporting and fee requirements. A business that is physically located in one state but organized in another state typically has to file annual reports in both states. Alaska only requires LLC reports once every two years. Domestication to Alaska may reduce an out-of-state LLC’s reporting burden if the company no longer needs to file in the original state.
• Tax advantages. Domestication to Alaska can save a company on taxes if it will no longer owe taxes in the original state. A state’s power to tax a company requires a sufficient connection—called a nexus—between the state and the company. An Alaska LLC domestication may result in lower overall business taxes if the move breaks the taxable nexus with the original state. Alaska also has no individual income tax and no state sales tax—only local sales tax in some areas. So, owners may reduce their personal taxes by moving a business to Alaska.
• Legal advantages. Alaska’s legal and regulatory atmosphere is generally considered “pro-business.” A domestication to Alaska may be a good business decision if Alaska’s Revised Limited Liability Company Act and other business laws work well with the LLC’s business plan.

What are the Benefits of Alaska LLC Domestication?

The Alaska LLC domestication process is designed to be an uncomplicated, inexpensive process for formally moving a business to Alaska. While there are other methods of achieving the same goal, domestication offers several advantages that make it the best approach in most cases.

• The LLC’s identity and EIN are unchanged. An LLC that goes through a domestication remains the same entity during and after the transfer.⁶ It keeps the same tax identity and Employer Identification Number (EIN). The consistency avoids administrative confusion and bureaucratic hurdles.
• The LLC retains its bank accounts or other assets. An out-of-state LLC that domesticates to Alaska continues to own all the same assets.⁷ It can keep its same bank accounts, and there is no need to sign deeds or transfer instruments. The LLC also owes all of the same debts after domestication.
• Existing contracts are unaffected. A domestication does not alter the LLC’s contractual rights or obligations.⁸ Existing contracts stay in place, and the company can continue its business relationships. Employment relationship are also unchanged, so there is no need to fire and re-hire employees.
• The company continues day-to-day operations. The domestication process does not interfere with a LLC’s ordinary operations. The company can remain open-for-business throughout the domestication.
• Dissolution is unnecessary. An out-of-state business that domesticates to Alaska does not need to wind up affairs or dissolve the LLC in its current state. ⁹ The company simply files the necessary paperwork with the current state to reflect the domestication. The LLC may register as a foreign entity in the original state, but that is only needed if it will continue to do business there.

What LLCs can Convert to Alaska LLCs?

Not every out-of-state LLC can domesticate to Alaska. The process is only available if the LLC’s current state authorizes domestications (and not all do).¹⁰ The other state may call it conversion instead of domestication. What matters is that the state has a statutory process that lets an LLC change its state of organization.

An out-of-state LLC should also verify that its type of business is lawful for Alaska LLCs before domesticating. Alaska law gives LLCs broad authority to engage in “any lawful purpose.”¹¹ Some states do not allow LLCs to offer professional services that require a license, but that is not the case in Alaska.

If an out-of-state LLC’s business is unlawful in Alaska—though legal in the current state—the company should not domesticate to Alaska unless it plans to change the nature of its business. It’s a good idea to verify that the LLC’s business is allowed in Alaska and determine what (if any) licenses are needed before starting the domestication process.

How Much Does Alaska LLC Domestication Cost?

An out-of-state LLC that domesticates to Alaska will incur labor costs, filing fees, and (in some cases) registered agent fees. The precise cost for an LLC domestication vary by company and domestication but are generally as follows:

• Labor costs. The LLC’s labor costs are the amounts charged by the service provider it hires to manage the domestication. Providers may charge a flat fee or bill hourly. The work involved includes information gathering, document preparation, communications with owners and state agencies, and document filing. Total labor costs may vary significantly between providers.
• Filing fees. The LLC’s filing fees are the state-agency charges for filing the documents needed for the domestication. Alaska charges $25.00 for the Statement of Domestication. The filing fee for the Articles of Organization is either $150.00 (if the LLC already has an Alaska entity number) or $250.00 (if the LLC will receive a new Alaska entity number). Thus, the amount paid to the Alaska Division of Corporations, Business, and Professional Licensing for an LLC domestication is either $275.00 or $175.00. The current state’s equivalent agency will also charge a filing fee for the document it requires for LLCs domesticating out of the state.
• Registered agent fees. Every Alaska LLC must have a registered agent who is authorized to accept service of process for the company. A registered agent must either an Alaska resident or a corporation registered to do business in Alaska.¹² Some companies choose to hire a commercial registered agent—which charges a fee in exchange for serving as the LLC’s registered agent. Commercial registered agents promote consistency and help keep owner information private. The cost is typically from $50.00 to $200.00 per year.

How Long Does Alaska LLC Domestication Take?

Alaska LLC domestications typically take less time than alternate methods for officially moving an existing out-of-state business to Alaska. The total time involved will include:

• The service provider’s turnaround time for gathering information and preparing documents;
• The business owners’ turnaround time for reviewing documents, responding with questions, and signing documents; and
• The turnaround time required for the Alaska Division of Corporations, Business, and Professional Licensing to accept and process the domestication documents.

See How Long Does the LLC Domestication Process Take? for a more detailed explanation of the LLC domestication timeframe.

What Laws Govern Alaska LLC Domestication?

An out-of-state LLC domesticating to Alaska must follow Alaska law and the law of the LLC’s current state of organization. The company must also ensure that the domestication is carried out in compliance with its current articles of organization and operating agreement (or equivalent documents).

Alaska law governs the domestication procedure for out-of-state LLCs domesticating to Alaska, the domestication effective date, and the requirements for documents filed in Alaska—as more fully described in this article.¹³

The company’s current state’s law governs the following issues:

• Whether domestication is permitted;¹⁴
• The topics that must be addressed within the written plan of domestication (if the current state requires a written plan);
• The standard of approval for the plan of domestication;¹⁵
• The documents that LLCs must file in that state when domesticating out of the state; and
• Any other requirements the current state’s domestication law places on LLCs.

What is the Alaska LLC Domestication Process?

The Alaska LLC domestication process consists of two components: document preparation and administrative tasks.

Document Preparation

LLC domestication requires careful planning to ensure that the process is carried out in compliance with both states’ legal requirements. A domesticating company must prepare a series of documents that describe and implement the domestication. The below domestication documents affect the company going forward, so attention to detail is important.

• Plan of Domestication. A Plan of Domestication that is designed to comply with the requirements of both Alaska law and the law of the state that the LLC is moving from.
• Alaska Statement of Domestication. The Alaska Statement of Domestication with all information and any related documents needed for filing with the Division of Corporations, Business, & Professional Licensing of the State of Alaska.
• Domestication Document for Filing in Prior State. Depending on state law, this document may be called articles of domestication, statement of domestication, articles of conversion, certificate of conversion, statement of conversion, certificate of conversion, or a similar term.¹⁶
• Alaska Articles of Organization. The Alaska Articles of Organization for filing with the Alaska Division of Corporations, Business, & Professional Licensing.
• Alaska Operating Agreement. A state-specific Operating Agreement to properly structure the LLC as an Alaska limited liability company, provide rules for profit distributions and decision-making, clarify the federal income tax classification, and help provide maximum liability protection.
• Resolution Authorizing Domestication. A resolution approving the transaction and adopting the Alaska organizational documents as the LLC’s governing documents.

Administrative Tasks

An LLC that has prepared and approved its domestication documents must next complete the administrative tasks listed below to formally adopt the documents and implement the domestication. After all tasks are successfully completed and the state agencies accept the filed documents, the LLC is officially an Alaska LLC governed by Alaska law.

• Conduct preliminary name search. Check the official records of the Alaska Division of Corporations, Business, & Professional Licensing to determine whether the LLC’s name is available in Alaska. (If the name is unavailable, a slight name change may be required to complete the domestication.)
• Obtain signatures on the Statement of Domestication. The Statement of Domestication must be signed by the required parties. The Alaska Division of Corporations, Business, & Professional Licensing requires a manual (wet) signature on the Statement of Domestication (no e-signing).
• Obtain signatures on the Articles of Organization. The Articles of Organization must be signed by the required parties. The Alaska Division of Corporations, Business, & Professional Licensing allows the Articles of Organization to be e-signed.
• File the Statement of Domestication. File the Statement of Domestication with the Division of Corporations, Business, & Professional Licensing of the State of Alaska. The Alaska Division of Corporations, Business, & Professional Licensing requires the Statement of Domestication to be filed by mail or in person (no e-filing).
• File the Articles of Organization. File the Articles of Organization with the Alaska Division of Corporations, Business, & Professional Licensing. The Articles of Organization should be included as an attachment with the Statement of Domestication.
• File domestication documents with prior state. File the domestication documents with the Secretary of State or equivalent agency for the state that the LLC is moving from.

What is the Legal Effect of Alaska LLC Conversion?

Alaska LLC domestications change an LLC’s state of organization to Alaska with minimal legal effects other than changing which state’s law governs the company. The legal effects of a domestication to Alaska include:

• Governing law. The LLC is now an Alaska LLC primarily governed by the Alaska Revised Limited Liability Company Act.¹⁷
• Company identity. The Alaska LLC before the domestication is the same fundamental entity as the out-of-state LLC before the domestication.¹⁸ Its taxpayer history and EIN do not change.
• Assets and liabilities. The LLC owns all the same real estate, intellectual property, and other assets—and still has all the same debts and obligations—that it had before domestication. There is no need to record deeds or create assignments or other transfer instruments to give assets to the Alaska LLC.¹⁹
• Legal actions. Any legal or administrative proceedings in which the company is involved continue uninterrupted. If the LLC’s name changed during the domestication, the company’s new name is substituted for the prior name.²⁰
• Contracts. Any contracts involving the company are still in place, and it has the same contractual rights and obligations as it had before domestication.²¹
• Company ownership. The LLC’s members have the same ownership interest in the Alaska LLC as they had in the company before domestication—except to the extent the members agreed otherwise in the plan of domestication.²²