ike the water a fish swims in without recognizing it, LLCs are everywhere. Not just the limited liability companies themselves; the letters are part of the background of everyday commerce. The abbreviation appears in business names so often that it becomes invisible.
Similar suffixes suffuse signage, saturating scenery with “Inc.,” “Corp.,” and “Co.” Yet these short forms are descriptive and understandable, whereas “LLC” is opaque and technical, often irrelevant and left unmentioned.
“It is typical to omit ‘LLC’ from a company name in casual conversations, social media, and marketing materials,” says Sarah Gillstrom, a partner at the law firm of Davis Wright Tremaine. “However, the full company name should be used, including the LLC designation, in legal documents, banking documents, and tax documents.”
Three little letters are the key to an LLC’s true name, a talisman that unlocks its power.
“Although similar in certain ways, each entity type has distinct characteristics that impact legal rights, obligations, and protections,” says Shane Coffey, an attorney at Manley Brautigam Bankston. One of the key features of an LLC, contained in its name, is that it limits liability.
Coffey explains, “To the extent the LLC fails to fulfill an obligation for which it is responsible (such as paying rent pursuant to a lease it signed or compensating a person for injuries it caused), the person(s) harmed by such failure can generally only pursue the property owned by the LLC to recover the debt; property owned personally by the LLC’s members generally cannot be used to satisfy the debts of the LLC.”
Gillstrom adds, “It generally limits the liability of its owners to the amount of their investment in the entity.”
Other types of corporations likewise limit liability, and they carry further distinctions: a tax classification. C-corporations and S-corporations are tax classifications, referring to how a business is taxed by the relevant taxing authority, such as the IRS. “An entity’s tax classification determines tax rates, reporting requirements, and, ultimately, tax liability,” notes Coffey.
According to the US Small Business Administration, a C-corp is a legal entity separate from its owners. “Unlike sole proprietors, partnerships, and LLCs, corporations pay income tax on their profits. In some cases, corporate profits are taxed twice: first, when the company makes a profit and again when dividends are paid to shareholders on their personal tax returns,” the agency states. An S-corp is designed to avoid double taxation by allowing profits (and some losses) to pass through as income to the owners, avoiding corporate tax rates.
LLCs share this feature of S-corps, but self-employment taxes can sometimes be higher than taxes paid by S-corp shareholders. However, LLCs generally have fewer formalities and reporting requirements than S corps, which can simplify management.
Emily Berliner, the founder and COO of EBO Consulting, says, “I advise clients to select their entity type based on several factors: liability protection needs, tax considerations, administrative requirements, and growth plans. LLCs are popular because they provide personal liability protection while maintaining tax flexibility and requiring less paperwork and administrative overhead than corporations.”
Wyoming enacted the first LLC statute in 1977, but most other states waited until 1988, when the IRS ruled that LLCs could be treated like partnerships for tax purposes. By the mid-‘90s, every state passed LLC legislation.
The wave reached Alaska in 1994. Gene Therriault, then a state representative from North Pole, sponsored House Bill 420 to define LLCs in state statutes. Therriault recalls, “Having graduated from college with a business degree, I felt it was appropriate for Alaska business owners to have the new structure available to them similar to what so many other states offered.”
In his sponsor statement, Therriault noted that S-corps have the disadvantage of limiting ownership by certain types of shareholders, and while S-corps can avoid the “double taxation” problem, “they do not enjoy all the advantages of partnerships when it comes to allocating income and deductions.”
Limited partnerships, Therriault noted, restrict how active some partners can be, so LLCs “protect all members while imposing no limits on their involvement in operation of the business.”
Observing the adoption of LLCs in other states, Therriault stated, “LLCs have tended to be family businesses, professional service firms, venture capital companies, real estate businesses, and startups. I believe the LLC will provide these business owners with an efficient and flexible investment vehicle that allows both limited liability and federal income tax treatment as a partnership.”
Then-Governor Wally Hickel signed the bill into law on June 8, 1994, and it took effect on July 1 of the following year. A new era of business formation dawned in Alaska.
Berliner says, “We see a lot of professional services choosing LLCs: real estate agents, consultants, small law practices, accountants. Trades love them too—such as electricians, plumbers, and tree care companies. The LLC structure works well for these businesses because they often have liability concerns but want simpler tax treatment than a corporation.”
She adds that, as LLCs became mainstream, “There were several established Alaska businesses that converted from corporations to LLCs in the late ’90s and 2000s, especially smaller professional practices that found the corporate requirements too much. The conversion process involves some paperwork and potential tax implications, so it wasn’t automatic.”
The IRS cautions that certain types of businesses, such as banks or insurance companies, generally can’t form LLCs.
Most states permit “single member” LLCs, and Gillstrom notes that Alaska is one.
But why advertise these esoteric qualities in the name of the business?
Quite simply, per AS 10.50.020(a): The name of a limited liability company stated in the company’s articles of organization must contain the words “limited liability company” or the abbreviation “L.L.C.” or “LLC.” The word “limited” may be abbreviated as “Ltd.,” and the word “company” may be abbreviated as “Co.”
This becomes part of the official name for signing contracts, opening a bank account, or other business dealings. “LLC” does not necessarily have to be part of a trade name or “doing business as” (DBA) used for marketing.
Berliner points out, “Restaurants and retailers are often LLCs behind the scenes but rarely put it on the storefront. Most use DBAs for branding while keeping the LLC designation for legal documents.” Online maps, however, tend to draw information from official names, so a search reveals LLCs that might be invisible from the street.
In other words, “LLC” signals that the business took the step of registering as such. “Including ‘LLC’ in branding can exhibit professionalism and legitimacy to some clients,” Berliner adds. “However, from a marketing perspective, many businesses use a trade name or DBA for branding purposes while maintaining their legal name with ‘LLC’ for official documents. This provides flexibility while maintaining compliance.”
This reasoning is partly why Therriault put the naming requirement in the 1994 bill. He recalls, “It was still a relatively new form of business structure allowing business owners to combine the benefits of sole proprietorships, partnerships, and corporations. As such, I felt it was appropriate to require LLCs to give notice to people doing business with them.”
Berliner says, “I’ve noticed more retail businesses going the LLC route lately, especially smaller operations, since people are more liability-conscious now.”
That route does not include her own EBO Consulting Inc., where the suffix alludes to its S-corp status. “Including ‘Inc.’ in our branding was a deliberate decision based on a few factors,” Berliner explains. “First, the corporate designation conveys established professionalism and credibility to clients and partners. We have observed that certain industries, particularly those providing B2B professional services, benefit from the perception of formality and longevity that corporate designation implies. Second, maintaining consistency across all areas of our business—from legal documents to email signatures and marketing materials—mitigates potential confusion and reinforces brand recognition.”
She prefers to use “EBO Consulting Inc.” in all official communications, contracts, and financial documents, but “Inc.” might be dropped in marketing. “For marketing contexts, we evaluate each case based on format constraints and audience expectations,” she says.
No, not PLC, a public limited company that sells shares to raise revenue; that’s a Britishism and less relevant to Alaska business since BP p.l.c. exited the state.
However, there is the LLP, a limited liability partnership. Like many law firms, Davis Wright Tremaine is an LLP, and Gillstrom is one of its many partners. Gillstrom explains, “A limited liability partnership is a legal business entity which is separate from its partners. Similarly, a limited liability company is a legal business entity which exists separate from its members. The roles of the members or partners are generally governed by the entity’s governing documents. LLCs generally have more tax options than LLPs.”
Another P under the pillow is the PC, a professional corporation available to certain highly skilled workers, like lawyers or engineers. Manley Brautigam Bankston is a PC based in Anchorage. Coffey explains that his firm takes advantage of three unique characteristics: 1) only members of the same licensed profession can be shareholders in the PC; 2) when a shareholder leaves, the PC must redeem that owner’s shares; and 3) a person may not be a shareholder, director, or officer in more than one PC at a time.
In contrast with LLCs, Coffey says, “A PC may only render one type of professional service and is controlled by a board of directors, while LLCs may conduct any number of lawful purposes and is controlled either by its member(s) or its manager(s). Finally, a PC may only be classified as a C-corporation or S-corporation for tax purposes, while an LLC may elect to be taxed as a sole proprietorship or partnership in addition to such classifications.”
Practicing what he preached, Therriault registered his own LLC, GT Services, in 2015. “I have formed my personal businesses under the LLC structure and find the filing process is convenient,” he says. “I offer consulting and lobbying services to a limited number of nonprofit entities that need insight into how the legislative process works in Alaska.”
After a stint as president of the Alaska Senate, Therriault worked at Golden Valley Electric Association and the Alaska Energy Authority, and he is currently board president of Fairbanks Community Food Bank. Midnight Sun Council, Scouting America honored Therriault and his wife, Jo Kuchle, last December as 2024 Distinguished Citizens.
Yet another lasting honor is present in every LLC in Alaska. Those three letters on a business sign are monuments to his legislation, which altered the state’s corporate landscape.