The Economics of Starting a Business in Alaska

Eric Goldschein

Eric Goldschein

Eric Goldschein is a writer and editor at Fundera. He covers entrepreneurship, small business trends, finance, and marketing. He was previously the managing editor of, and has written for Business Insider, the Huffington Post, and more.
Eric Goldschein

Alaska is by far the nation’s biggest, coldest, and most remote state. But, believe it or not, it’s also one of the best states to start and run a business.

There are a few reasons why starting a business in Alaska has gained such a reputation. For one, 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).

Plus, Alaska has the country’s second-highest rate of new entrepreneurs. Clearly, the spirit of commerce is alive and well way up north.

So, if you’re interested in starting a business 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.


The Basics of Starting a Business in Alaska: Choosing Your Business and Having a Plan

One of the only things this article can’t tell you is what kind of business to start. That depends on what you’re passionate about, what you’re 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, this analysis by the State of Alaska lists every occupation in the state, how much they make on average, and the outlook on future opportunities. (For example, the field of physical therapy is seeing strong growth and lots of openings in Alaska. Actors, on the other hand, aren’t seeing much work.)

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, among other important details.

For outside help with crafting your business plan, Alaska’s Small Business Development Centers offer no-cost business advising, which you can learn more about here.

Register your Business Properly

This isn’t the most fun part of starting a business in Alaska, but it is quite literally the most necessary. You need to register your business with the state in order to do business.

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 corporation-like 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.
  • S corporations typically have up to 100 shareholders, a board of directors, and corporate officers. S corporations don’t get corporate taxation, as all income and loss go through the shareholders’ themselves.
  • On the other hand, C corporations can have as many shareholders as they’d like, but both the business and the shareholders must pay taxes.
  • 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.

Here’s the Business Structure FAQ put out by the state of Alaska if you have more questions.

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.

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).


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.

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. And speaking of a budget….

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.

If you’re independently wealthy and money is no concern of yours, good for you. For everyone else, your first stop should be 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.


You can also visit the Small Business Administration’s website directly to see if you qualify for an SBA-backed loan or if there are other grants and resources you can take advantage of. Ditto the Alaska Department of Commerce page.

Traditional banks and financial institutions are always a possible source of funding, but online lending has taken off in recent years, and you can use sites like Fundera to compare the increasingly vast number of options as well.

Should I invest in people to help me make this happen?

As mentioned throughout the article, there are steps to this process that can be done easily and on your own, especially if your business isn’t under federal oversight. But perhaps you want some help in keeping things straight.

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.

Starting a Business in Alaska: The Rest Is Up to You

Just as 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.

Luckily, if you’ve made it this far, now comes the fun part: actually running your business in the state of Alaska. That’s why you’re here, isn’t it?


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. Read up on what determines success for starting a business in Alaska, and get started on joining the list of prosperous Last Frontier companies today.  

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
Eric Goldschein

Eric Goldschein

Eric Goldschein is a writer and editor at Fundera. He covers entrepreneurship, small business trends, finance, and marketing. He was previously the managing editor of, and has written for Business Insider, the Huffington Post, and more.
Eric Goldschein

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