Form a General Partnership in Alaska

Starting a business with others can be a great way to share start-up costs, innovative ideas, strategy, and responsibilities, ultimately resulting in shared profits.

Forming an Alaska general partnership is the easiest way to get started without a lot of administrative effort. There is no formal filing requirement, but there are a series of steps to ensure that your Alaska general partnership is compliant and set up for success. Here is a guideline to help you through how to form a general partnership in Alaska. 

Step 1: Determine if you should start a general partnership

There are pros and cons to forming a partnership in Alaska. It’s important to evaluate what you’re truly looking for in your business and potentially seek guidance from legal or financial professionals. If you choose to go with a formal business structure for your company, we can help you start your Alaska LLC or Alaska corporation. 

Pros

The biggest benefit of a general partnership is the lack of formalities and ongoing maintenance fees like annual reports. Essentially, a partnership can be formed with a handshake, although that isn’t recommended. They’re easy to start and convenient, especially for short-term business endeavors. Partnerships are subject to pass-through taxation. This means they’re only taxed on the owners’ personal tax returns. 

Cons

While the lack of requirements simplifies the process, there are some downsides. Your Alaska general partnership doesn’t provide any personal liability protection. You and your partners are personally liable for all financial concerns, such as debts, or legal issues. Because they’re not formally structured, general partnerships have a difficult time raising capital when compared to formal business entities. 

Step 2: Choose a Business Name

It’s important to choose a name that conveys what your company does and that isn’t confusing to potential customers. Your Alaska general partnership will automatically be the last name of you and each of your partners. This is usually not ideal for marketing purposes but may make sense if you’re not doing any marketing. 

Step 3: File a DBA Name (if needed) 

If you don’t want to use your last names as the name of your business, you will need to apply for an Alaska DBA (Doing Business As). Alaska does require you to obtain a business license prior to registering your DBA. So this is where some of the administrative work comes in. Here are the steps for an Alaska DBA:

1. Obtain a business license through the Department of Commerce, Community, and Economic Development’s Division of Corporations, Business, and Professional Licensing. 

2. Determine if your name is distinguishable from any corporate name in use in Alaska.

3. Submit a Business Name Registration form and pay the required fees. 

4. Check to see if there are any DBA registration requirements at the local level where you do business. 

Depending on the natural and projected longevity of your business, it’s probably worth it to go through the process. 

Step 4: Draft and sign partnership agreement

An Alaska general partnership agreement isn’t required to form a partnership, but it’s highly recommended. In a perfect world, you and your partners agree on all aspects of the business and there are never any disagreements. Here on Earth, things are usually not so simple. 

A partnership agreement needs to clearly outline the business’s day-to-day operations and the rights and responsibilities of each partner. Asset and liability distribution is also important. The agreement doesn’t have to be a formally filed document, but it’s best if it’s written and easily accessible, much like corporate bylaws or an LLC operating agreement.

If no formal written agreement exists, the partnership will follow state laws outlined in Chapter 6 of the Alaska Uniform Partnership Act.

Step 5: Obtain licenses, permits, and clearances 

Your Alaska general partnership must adhere to the same local guidelines as other businesses. The licenses you need depend on the nature of your business. Licenses and permits can be issued at the local, state, or federal level.

Failing to obtain proper federal licenses or permits for your business could result in penalties, fines, and other legal actions including the inability to operate in the state. Determining which licenses you need can be time-consuming. We can take that off your plate with our business license report service. 

Step 6: Get an Employer Identification Number (EIN)

An EIN is a nine-digit number issued by the Internal Revenue Service (IRS). You will need this number to file taxes or open business accounts. Acquiring your EIN is another task we can check off your list of things to do when forming your Alaska general partnership. 

Step 7: Get Alaska State Tax Identification Numbers 

There is no state-level state tax in Alaska, so a general partnership in Alaska doesn’t pay a state tax. You may need an Alaska state tax ID number if you’re hiring employees in the state or if you’re going to owe excise taxes on certain goods.

Alaska employers will need to fill out the Alaska Employer Registration form provided by the Alaska Department of Labor and Workforce Development. There may be additional tax requirements at the local level.

Forming a Business Partnership in Alaska: Next Steps

Once you have the appropriate name, agreement, licenses, permits, and tax numbers, you’re ready to go about starting your business operations. It’s a good idea to open a banking account under the business name to ensure that personal assets and business finances are kept separate. Depending on your industry, you may also need business insurance. You will also want to keep up with your taxes.

How We Can Help

An Alaska general partnership is one of the easiest businesses to start. It’s important that you stay on top of any state and local requirements to keep your business operating smoothly. Our extensive suite of business development and maintenance services, including our Worry-Free Compliance Service, can help you easily fulfill many of your business obligations. As your business continues to grow, we’re here to make sure you have the tools to expand and stay organized, whether that means, forming a different business entity with more liability protection, obtaining additional funding, opening new locations, or whatever else the future brings.