What does it cost to start an LLC in Alabama?
- To file the Certificate for Formation, the Alabama Secretary of State requires that you pay $200. A separate Probate Court filing fee must be paid, at minimum of $50.
- By filing an LLC name reservation, you can reserve your business name. Online filing costs $28 and mail filings cost $10.
- Alabama LLCs must file an annual and combined state tax report every year. This requires that you pay at least $100 tax.
While filing on your own can often be the most cost-effective option, completing all forms and filing them yourself can be difficult. You can also hire a lawyer, which will cost you hundreds to thousands of dollars.
How to Form an LLC in Alabama
1. Select a name for your LLC
Before you file your LLC formation documents, you must register your LLC’s name with the Secretary of State. You may do so online for a $28 fee. The availability of your proposed name will automatically be checked, and you will receive your name reservation at the end. You can also mail the Name Reservation Request form for Domestic Entities to the Alabama secretary of state’s office with a $25 fee.
The name of your LLC must be distinct from other business names already filed with the Alabama Secretary. To ensure that the name you are proposing is in the database of the Alabama Secretary-of-State, please search this database before you submit the form.
Alabama law requires that an LLC’s name contain these words:
- Limited Liability Company
- LLC; or
The name of your LLC may not include any word or phrase that indicates or implies that it was organized for a purpose other than those stated in its articles.
Using a Tradename
When you are doing business in the real world, your LLC does not need to be registered under your Articles of Organization. You can instead use a Trade Name, also known as a “DBA” (short for Doing Business As), assumed name or fictitious company name. You can simply use the trade name to identify the LLC in Alabama. An Application To Register Trade Name in Alabama may be filed with the Secretary Of State via mail. The $30 fee will be charged. Although registration is not required and does not give you any legal rights, it does notify others that the name is being used in Alabama.
2. Appoint a Registered Agent
Each Alabama LLC must have a registered agent to serve process in the State. This agent is an individual or corporate that accepts legal papers on behalf of the LLC in the event that it is sued. Before being designated, the agent must agree to receive service of process for the limited liability company. You may choose to be the registered agent.
- An individual who resides in Alabama
- an Alabama business entity, or
- An out-of-state entity that has an Alabama office.
3. Register Certificate of Formation at County Probate Court
A Certificate of Formation can be filed with the Office of the Judge of Probate of the county in which the LLC’s first registered office is. The Probate Court will file the form and provide you with a stamped copy. The certificate is then sent to the secretary of the state with the fee. The Alabama Secretary Of State website contains a list of all the addresses and names of probate judges in Alabama.
These information must be included in the certificate of formation:
- Name of the LLC
- The name and address the registered agent of the LLC
- An indication of whether the LLC’s type is series LLC, professional LLC or non-profit LLC
- The effective date that the LLC will start is
- The signature of the organizer/agent-in-fact.
Attach a copy from the Secretary to State of the Name Reservation Certificate.
The Secretary of State charges $200, and the Probate Court charges $50.
4. Make an Operating Agreement
Although an LLC operating agreement is not mandatory in Alabama, it is strongly recommended. This document is internal and outlines how your LLC will be managed. This document outlines the rights and responsibilities for members and managers and how the LLC is managed. This document can help you to protect your limited liability and show that your LLC is a separate business entity. Your LLC’s operation will be governed by the state LLC law, if there is no operating agreement.
5. Filing an Alabama State Tax Return/Annual Report
Alabama requires LLCs file an annual Business Privilege Tax Report and Annual Report to the Department of Revenue every year. Each year, LLCs must pay at least $100 tax. The Alabama Department of Revenue website has more information and forms.
You must register with the Alabama Department of Revenue if you plan to sell goods or collect sales tax, or if your employees will be using your account. You can register online (via the My Alabama Taxes (MAT) website) or on paper (using DOR Form COM:101, Combined Registration/Application).
6. Get an EIN and comply with other tax & regulatory requirements
Your LLC may be subject to additional tax and regulatory requirements. These could include:
EIN A LLC that has more than one member must have its own IRS Employer ID Number (EIN). If your LLC must file a separate return, then you will need an EIN even if you have only one member. An online EIN Application can be completed by you to obtain an EIN. There is no filing fee.
Business licenses: Your LLC may need other state and local business licenses depending on the type of business it operates and where it is situated. For information, contact the county probate or county licensing office for the county in which your LLC is located.
LLC Records Alabama LLCs must maintain the following records at their principal office and make them accessible to LLC members for inspection:
- A current list of all members and managers with their full names and last known addresses
- A copy of all amended articles and filed articles of organization
- Any powers of attorney must be executed in duplicate
- Copies of the LLC’s most recent federal, state and local income tax returns from the three most recent year
- Copies of operating agreements, including amendments, are available.
- Copies of the LLC’s financial statements for the last three years.