Establishing A Business In Alaska

INTRODUCTION

Starting your own business is a basic part of the American dream and it can be personally and financially rewarding if you plan ahead and arm yourself against the inevitable pitfalls and problems that can occur. A majority of the 1.4 million businesses formed each year in the UnitedStatesfailwithinfouryears.Thereasonsforthesefailuresvary,butthemostcommon are:

x Insufficientstartupcapital; x Poorbusinessplanning; x Poorbusinessperformance; x Lackofmanagementskills; x Cashflowproblems,and x Inadequatecostcontrols. Theinformationinthispublicationisdesignedtohelpyou,theentrepreneur,startthinkingand actinginamannerthatimprovesyourchancesofsuccess.Itisintendedasaguidetothemany sourcesofdetailedinformationandassistancethatanentrepreneurwillneed.Thispublication willnotanswerallofyourquestions;however,itshouldgiveyouagoodplacetostart.Please be sure to take advantage of the agencies, programs, and people available to assist you. They can provide the information and explanations, which this publication must omit due to space limitations. Please note that regulations, statutes, and contact information change so often that this publicationmaybeoutofdate,inpart,soonafteritispublished.Tomaintainamoreuptodate source of continuing information, Alaska Division of Investments (ADI) has provided this publicationontheInternetaspartoftheStateofAlaska'sHomePageontheWorldWideWeb at . Besides the availability of this publication on the Internet, the publication is also available in a hard copy version or compact disk(CD)bycontactingADI. AlaskaDivisionofInvestments 3032VintageBlvd.,Suite100 P.O.Box34159 Juneau,AK99803 Phone:(907)4652510or(800)4785626 Fax:(907)4652103 TTYorTTD:(907)4655437 Each chapter has been broken down into sections that pertain specifically to that chapter. Withineachsection,youwillfindresourceinformation.Theseare: x Emailaddresses,and x Websitespertainingspecificallytothesubjectmatterwithinthatsection,and x Hyperlinks.(Seeexplanationofhyperlinksbelow.)

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Words,phrases,publications,forms,etc.,thatareblue,underlinedanditalicizedarehyperlinks (direct links to the applicable Internet website) for that subject and may be used if you have obtainedtheCDversionofthispublication.Wehaveattemptedtoprovidehyperlinksthatwill remainconstant,yettakeyouasclosetotheinformation,orformaswecan.Asanexample,if youneedtofind"Form0405573FisheriesBusinessLicenseApplication",thehyperlinkwilltake you the Internet web page entitled "Fisheries License Applications". This site lists all Alaska DepartmentofRevenue/TaxDivision/Fisheriesrelatedforms. While ADI plans to periodically update the publication on the Internet, we do not control the content or maintenance of the information/forms provided. Accordingly, it is strongly advised thatyoucontacttherelevantagenciesbeforeactingonanyoftheinformationlisted. TheStateofAlaska'shomepageislocatedatstate.ak.us.

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TABLEOFCONTENTS

EstablishingaBusinessinAlaska 14thEdition RevisedandUpdated,November2009 CHAPTERONE:THEENTREPRENEUR'STOOLBOX StartingaBusiness....................................................................................................................... .....7 ChecklistforStartingaBusiness .....................................................................................................10 BusinessPlanChecklist...................................................................................................................11 MarketingWorksheet.....................................................................................................................1 1 ValuableResourcesofInformation ................................................................................................13 CHAPTERTWO:SELECTINGTHEFORMOFORGANIZATION SelectingtheFormofOrganization ................................................................................................15 TypesofCorporations ................................................................................................................... .19 FilingYourDocuments....................................................................................................................21 BiennialReportRequirements .......................................................................................................25 Trademarks&Servicemarks ...........................................................................................................26 FederalProtectionforPatents,Copyrights,&Trademarks ...........................................................27 CHAPTERTHREE:LICENSE®ULATIONREQUIREMENTS AlaskaDepartmentofAdministration............................................................................................29 AlaskaDepartmentofCommerce,Community,andEconomicDevelopment, BusinessLicensing...................................................................................................................... 29 InsuranceProducersLicensingRequirements ...........................................................................31 AlaskaDepartmentofFishandGame, CommercialFisheriesEntryCommission ...................................................................................32 AdministrativeServicesDivision ................................................................................................33 AlaskaDepartmentofLaborandWorkforceDevelopment...........................................................34 AlaskaDepartmentofPublicSafety ...............................................................................................35 AlaskaDepartmentofRevenue ......................................................................................................35 NationalOceanicandAtmosphericAdministration,NationalMarineFisheriesServices..............38 Administration ...........................................................................................................................38 AlaskaFederalFisheriesManagement,SustainableFisheriesDivision .....................................38 HabitatConservationDivision....................................................................................................38 ProtectedResourcesDivision ....................................................................................................39 RestrictedAccessManagement .................................................................................................39 CHAPTERFOUR:LABORLAWS WhoareEmployees?..................................................................................................................... .41 WhoisanEmployer?...................................................................................................................... 42 UnemploymentInsuranceProgram ...............................................................................................43 WhoFundstheUnemploymentProgram?.....................................................................................45 EmployerResponsibilities............................................................................................................... 46 PaymentofWages.......................................................................................................................... 50

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LaborLaws........................................................................................................................... ...........53 DivisionofWorkers'Compensation ...............................................................................................56 AlaskaOccupationalSafetyandHealth ..........................................................................................57 CHAPTERFIVE:TAXES FederalTaxation ....................................................................................................................... ......59 FederalCorporationTaxRateSchedule...................................................................................60 FederalTaxesTaxTable .........................................................................................................63 AlaskaStateTaxation .....................................................................................................................64 AlaskaCorporationNetIncomeTaxComputation ..................................................................65 AlaskaTaxesTaxTable...........................................................................................................75 MunicipalTaxation ....................................................................................................................... ..77 Borough&CityTaxRequirements...........................................................................................77 CommunitiesOutsideofBoroughswithPropertyorRetailSalesTaxes .................................79 CHAPTERSIX:GOVERNMENT FederalGovernment ..................................................................................................................... .81 StateGovernment ..................................................................................................................... .....81 MunicipalGovernment...................................................................................................................82 CHAPTERSEVEN:BUSINESSASSISTANCE AlaskaDepartmentofCommerce,Community,andEconomicDevelopment ..............................85 AlaskaBusinessDevelopmentCenter,Inc. ....................................................................................88 AlaskaSmallBusinessDevelopmentCenter ..................................................................................90 AlaskaTravelIndustryAssociation .................................................................................................91 BUYALASKA ......................................................................................................................... ...........91 TheTechnologyResearchandDevelopmentCenterofAlaska......................................................92 VirtualEnterpriseManufacturingofAlaska ...................................................................................92 WorldTradeCenter........................................................................................................................9 3 CHAPTEREIGHT:FINANCIALASSISTANCE FederalPrograms ....................................................................................................................... ....95 StatePrograms ....................................................................................................................... ........98 PrivatePrograms ....................................................................................................................... ...100 CHAPTERNINE:ENVIRONMENTALPROTECTION,HEALTH&SANITATIONCONTROLS AlaskaDepartmentofEnvironmentalConservation....................................................................109 AlaskaDepartmentofHealthandSocialServices ........................................................................115 CHAPTERTEN:RESOURCEGUIDE Agriculture ....................................................................................................................................117 AlaskaRegionalDevelopmentOrganizations...............................................................................118 AlaskaStateGovernment.............................................................................................................120 Arts&Crafts ......................................................................................................................... ........122 BusinessInformation.................................................................................................................... 123 CommunityDevelopmentQuota

State .......................................................................................................................... .............128

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Groups......................................................................................................................... ...........128 EconomicInformation ..................................................................................................................12 9 EnvironmentalSafeguardsandServices ......................................................................................130 FinancialInformation ...................................................................................................................1 31 Fish,Fur,andWildlife ...................................................................................................................133 Insurance ...................................................................................................................... ................135 InternationalTrade.......................................................................................................................135 Labor.......................................................................................................................... ...................136 LandsandForests ........................................................................................................................ .137 Licensing,Corporations,andPermits ...........................................................................................138 MineralsandOil ...........................................................................................................................1 39 MunicipalInformationServices ....................................................................................................142 Music .......................................................................................................................... ..................142 NativeAffairs ........................................................................................................................ ........143 NativeRegionalCorporations.......................................................................................................143 OrganizedBoroughs .....................................................................................................................14 6 Taxes.......................................................................................................................... ...................148 Tourism........................................................................................................................ .................149 Transportation................................................................................................................. .............150 WaterandPower .........................................................................................................................1 51 REFERENCESECTION SectionA.Acronyms ....................................................................................................................153 SectionB.FinancialInstitutions ...................................................................................................157 SectionC.Glossary ......................................................................................................................1 63 SectionD.WebPageReference ..................................................................................................167 SAMPLEDOCUMENTS IncomeStatement ...................................................................................................................... ..179 BalanceSheet .......................................................................................................................... .....180 ACKNOWLEDGEMENTS: DCCED,AlaskaDivisionofInvestments ........................................................................................181

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CHAPTER1

THEENTREPRENEUR'STOOLBOX

Today'sbusinessworldisverycompetitive.Tobesuccessful,youmustplancarefullyandwork

hard. One of the keys to a successful business is having knowledge of the market for your

productsorservices.Youshouldprepareamarketingworksheetandabusinessplanafteryou

review the topics listed below. These plans will give you (and anyone you ask for financing) a

road map to where your business is headed in the future as well as an indication of the

probabilityofsuccess.

STARTINGABUSINESS

StepOne:ExamineYourMotivation forBusinessOwnership

YourPersonalityTraits: x Are you an authoritarian or a team

player? How will this affect your relationship with employees, customers,andsuppliers?

x Can you handle the stress of time

Answering questions such as these is the

deadlinesfromcustomers?

firstandoneofthemostimportantstepsin

x Canyoulivewithyourselfifyouhaveto

your decisionmaking process to enter the

fireanemployee?

world of business ownership. Ask yourself hard questions. Be brutally honest with yourselfasmostsmallbusinessesfaildueto problems and issues that should have been anticipatedanddealtwithinitially. YourPersonalObjective: x Haveyoudefinedyourpersonalneeds?

x Are you willing to risk everything you own? Will you be able to live with yourself and with the fear of loss? Will yourfamily?

x Can you handle the stresses of being responsible for reoccurring obligations suchastaxes,payroll,accountspayable ordebtpayments?

x Whatareyourfinancialobjectives?

x Whydoyouthinkyouwillbehappyasa businessowner?

x Are you mainly interested in money, power,orflexibility?

x Haveyouexaminedyourfamilyneeds?

YourTalents: x Doyouliketosell?Canyousell? x You will be required to sell yourself,

yourcompany,andyourproducts.

StepTwo:SelectaBusinessSuitable forYou

A question often asked is "What kind of business should I start?" No one can answerthisquestionforyou.Yourchoiceis a highly personal matter. Businesses of all types are both successful and unsuccessful. A particular business generally succeeds or fails based on the customer market, the

x Do you have special skills or education inaparticularindustry?

quality of the owner(s) and workers, and the quality of the products, not because of

x How will these talents help you in the

thetypeofbusiness.

development and operation of your

ownbusiness?

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PersonalAreastoConsiderWhenSelecting YourBusiness:

x Yourexperience x Yourtalents x Yourinterests Your experience is most important when youareconsideringstartinganewbusiness or buying an existing business. It is less importantwhenbuyingafranchise. If you start a new business or buy an existing business, past experience in that particular industry may help you better understand your customer market and avoidcostlyoperatingmistakes. If you buy a proven franchise, your purchase will include a developed technical support system that makes your previous experienceinthatbusinesslessimportant.

StepThree:EvaluatetheFeasibility ofYourChosenBusiness

A common mistake made by many individuals is to blindly pursue business ownership without adequately evaluating whether their idea is actually feasible. Before you go any further, you need to examineyourideaforfeasibility. What is a feasibility evaluation, and why wouldyouwanttotakethetimetodoone? Afeasibilityevaluationisaprocessthatwill allowyoutomakeamoreinformed,"go"or "no go" decision. A good feasibility evaluation involves a detailed examination of financial, personal, and market realities. Asamplingoftopicsthatshouldbehonestly appraisedincludesbutisnotlimitedto: x Doyouhaveenoughmoneytogetyour

idea off the ground without going into debt? x If not, do you have enough cash and own other tangible assets that financial

institutions will consider worthy of accepting as collateral if you need to borrowmoney? x Ifnot,whereareyougoingtogetyour money? x Canthebusinessgenerateenoughcash to pay its expenses as well as your desiredlevelofownerprofit? x Are the rewards from the business, bothmonetaryandpersonal,worththe effort and investment you are going to havetomake? x Are your management skills adequate to oversee and develop the business operations? x Is there really a demand for your product? x Have you done research on market demand or have you just assumed that people need or want your product or service?

StepFour:ConsiderYourStartup Requirements

There are references, checklists, and additional information available to help you. This material by no means covers all startup requirements that you must be prepared to handle or all the common errors we see potential business owners make.Becautious,prepared,andflexible. StartupRequirements: x Selecting a form of organization, see

Chapter2. x Be aware of licenses, permit rules, and

regulations that pertain to your businessandindustry,seeChapter3. x Determine the types of taxes that are relevant to your business and the paperworkrequiredofyoutokeep,see Chapter5. x Determine the steps you must take to establish a business entity, see Chapter 2.

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