Alaska LLC Operating Agreement
Every Alaska LLC should have an Operating Agreement; obtaining one doesn't have to be costly. You can use our free template to download and customize your Operating Agreement.
Alaska LLC Operating Agreement (Member-managed)
Here is a template for a Member-managed Operating Agreement that is available. This can be used for either a Single-Member LLC or a Multi-Member LLC:
In a Member-managed LLC, all the Members (owners) have the authority to bind the LLC in contracts and agreements legally, and they handle the daily operations and management of the business.
Alaska LLC Operating Agreement (Manager-managed)
Here is a template for a Manager-managed Operating Agreement that is available. This can be used for either a Single-Member LLC or a Multi-Member LLC:
In a Manager-managed LLC, one or more designated Managers have the authority to legally bind the LLC in contracts and agreements, as well as handle the day-to-day operations. The Members have an investor-like position and are not able to bind the LLC or oversee its operations. On the other hand, Members have a say in some important choices, such as whether or not to remove Managers.
Which Agreement Should You Choose?
Your choice depends on how you want your LLC to be managed. For more details, see Member-managed vs Manager-managed LLC. If you’re unsure, the Member-managed Operating Agreement is a common choice and might be the right fit for most situations.
What is an Alaska LLC Operating Agreement?
An Alaska LLC Operating Agreement is a formal document that describes how the LLC is owned and managed. It explains who owns the business and who is in charge.
Every LLC, whether it has one member or more, should have this agreement. It should be kept with the company's records and given to each member.
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What Should Be Included in an LLC Operating Agreement?
Basic Information
An Operating Agreement should be drafted for both single-member and multi-member LLCs, kept alongside the company's records, and distributed to each member in copy.
- LLC Name
- Effective Date of the LLC
- Alaska Registered Agent (if applicable)
- Purpose of the LLC
- Duration of the LLC
- Taxation method of the LLC
LLC Ownership
The Operating Agreement will list all LLC Members and their ownership percentages, known as LLC Membership Interest. Membership Interest is usually represented as a percentage (e.g., 5%, 50%, 100%).
Initial Capital Contributions
Once your LLC is approved, open an LLC bank account and deposit money into it. The initial capital contributions made by each Member should be listed in the Operating Agreement. If the amounts change later, you can update the Operating Agreement accordingly.
Statement about Taxes
How the LLC will be taxed should be outlined in the Operating Agreement. For LLCs, there are four typical tax structures:
- Taxed as a Sole Proprietorship
- Taxed as a Partnership
- Taxed as an S-Corporation
- Taxed as a C-Corporation
✎ Note:
Alaska LLCs cannot be taxed as a Qualified Joint Venture LLC since Alaska is not a community property state.
Voting Rights of LLC Members
The LLC Members' voting rights must be specified in the Operating Agreement. Voting power in a member-managed LLC is based on membership interest. In an LLC controlled by managers, members elect managers who make decisions without requiring further votes from members. However, major decisions like adding or removing Members require a Member vote.
Distribute Copies
Ensure all Members receive a copy of the finalized Operating Agreement. Keep a copy of your LLC’s business records.
This approach ensures clarity and straightforwardness in managing your Alaska LLC.
Is an Operating Agreement required for an LLC in Alaska?
According to Section 10.50.095 of the Alaska LLC Act, an Operating Agreement is not required for an LLC in Alaska. However, it is strongly recommended to have one. It helps maintain your LLC’s limited liability status, which protects your personal assets.
Additionally, financial institutions and other organizations might request a copy of this document to conduct business with your LLC.
Why should an LLC with only one Member still have an Operating Agreement?
Even if you are the sole Member of your Alaska LLC (a Single-Member LLC), it is best to have an Operating Agreement. This document helps establish that your LLC operates as a separate legal entity, which is crucial for protecting your assets if legal issues arise.
Does a Multi-Member LLC need an Operating Agreement?
Yes, a Multi-Member LLC should have an Operating Agreement. This document outlines ownership percentages, profit distribution, and management structure and responsibilities. It is important to prove that the LLC is operating as a separate legal entity.
Do I have to send my Operating Agreement to the state?
No, you do not need to submit your Operating Agreement to the Alaska Secretary of State or any other government agency. This document is considered an internal document that should be kept with your business records. However, it may need to be presented to financial institutions or in legal matters in the future.
Does my LLC Operating Agreement need to be notarized?
No, your Operating Agreement does not need to be notarized. Each Member only needs to sign it for it to become a legal document.
Can I write my own Operating Agreement?
Yes, you can draft your own Operating Agreement. However, using a template is recommended to ensure that all necessary details are covered. Templates help avoid mistakes and ensure completeness.
How do you write a simple Operating Agreement?
To write a simple Operating Agreement for an Alaska LLC, you should include essential details such as the LLC name, Registered Agent information, business purpose, names of LLC Members, and initial capital contributions. For completeness and accuracy, starting with an existing template is usually easier.
What is the difference between an LLC and an Operating Agreement?
An LLC (Limited Liability Company) is a legal business entity formed by filing the Articles of Organization with the state. An Operating Agreement is an internal document that outlines how the LLC will be run, including ownership, management, and tax details. The LLC is the entity itself, while the Operating Agreement is the rulebook for its operations.
How do I set up an LLC in Alaska?
To set up an LLC in Alaska, follow these steps:
- Choose an LLC name and ensure it’s available.
- Choose a Registered Agent for your Alaska LLC.
- File the Alaska LLC Articles of Organization.
- Complete and sign an LLC Operating Agreement.
- Obtain a Tax ID Number (EIN) from the IRS.
- Research business license requirements.
- Open an LLC bank account.