How to Form an LLC in Alabama
An Alabama LLC, or Limited Liability Company, is a type of business entity formed under the specific laws and regulations of the state of Alabama.
It offers the owners, who are known as members, limited liability protection. This means that the members are not personally responsible for the company’s debts and liabilities.
Alabama LLCs combine elements of partnerships and corporations, offering flexibility in terms of management structure, the benefit of pass-through taxation (where profits are only taxed once, at the member level, not at the company level), and the ability to exist perpetually.
Forming an LLC in Alabama involves filing a certificate of formation with the Alabama Secretary of State and adhering to any other state-specific requirements.
Start an Alabama LLC for $0 + state fee
To form an LLC in Alabama for free + state fee, we have listed 3 options to consider:
You can go online and visit the Alabama Secretary of State’s website and do it yourself or you can use the ‘free’ service from Incfile or ZenBusiness.
- DIY $0 + state fee
- Incfile $0 + state fee
- ZenBusiness $0 + state fee
Want to Keep Things More Private?
- Northwest $39 + state fee ‘Privacy by Default’
Our Top 3 Recommended Services
Forming an LLC in Alabama for $0 (DIY Summary)
Here’s a brief step-by-step guide to help you through the DIY process, along with relevant links to official resources:
Step 1: Choose a Name for Your LLC
Choosing a unique and descriptive name is crucial when forming an LLC in Alabama.
The name should comply with the state’s naming requirements, which include using the words “Limited Liability Company” or its abbreviation, “LLC.”
You can check the availability of your desired name on the Alabama Secretary of State’s business entity search website.
Step 2: Appoint a Registered Agent
Every Alabama LLC must have a registered agent who can receive legal documents on behalf of the company.
The registered agent can be an individual resident of Alabama or a business entity authorized to operate in the state.
You can choose to act as your LLC’s registered agent or hire a professional registered agent service.
Step 3: File Certificate of Formation
To officially form your LLC, you need to file a Certificate of Formation with the Alabama Secretary of State.
The form requires basic information about your LLC, such as its name, registered agent’s name and address, principal office address, and the names of the LLC members or managers.
You can download the form from the Alabama Secretary of State’s website and submit it along with the filing fee.
Step 4: Create an Operating Agreement
Although not required by Alabama law, having an operating agreement is highly recommended for LLCs.
This document outlines the ownership structure, management responsibilities, profit and loss distribution, and other important provisions of your LLC.
It helps establish clear guidelines and minimizes conflicts among members. It’s advisable to consult an attorney when drafting the operating agreement.
Step 5: Obtain Required Permits and Licenses
Depending on your LLC’s activities, you may need to obtain certain permits and licenses to comply with state and local regulations.
Alabama offers an online licensing portal called Alabama One Stop Business Portal where you can search for specific licensing requirements applicable to your LLC’s industry or profession.
Step 6: File Annual Reports
As an LLC in Alabama, you are required to file an Annual Report with the Alabama Secretary of State’s office.
The report includes information about your LLC’s current contact details, principal office address, and names of members or managers.
Failure to file the report by the due date may result in penalties or even the dissolution of your LLC.
Step 7: Comply with Tax and Employment Requirements
LLCs in Alabama must fulfill their tax obligations by obtaining an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).
You may also need to register for state and local taxes, such as sales tax or withholding tax.
Visit the Alabama Department of Revenue website for more information on tax requirements.
Extended Version
Learn how to get an LLC name, registered agent, Certificate of Formation, Alabama LLC operating agreement, and EIN.
This guide on starting an LLC in Alabama includes step-by-step instructions on how to file formation documents, obtain tax IDs, and set up company records.
If you want to use an LLC formation service, visit our list of the best LLC services in Alabama.
Forming an LLC in Alabama
To form an Alabama LLC, you’ll need to file a Certificate of Formation with the Alabama Secretary of State. You can apply online or by mail for $200.
The Certificate of Formation is the legal document that officially creates your Alabama limited liability company.
This guide for starting an LLC in Alabama includes step-by-step instructions on how to file formation documents, obtain tax IDs, and set up company records.
This page will provide you with all the necessary steps to do an Alabama entity name search, draft an Alabama LLC operating agreement, and answer questions like, can I be my own registered agent in Alabama? and how long does it take to get an Alabama LLC? and ensure your Alabama LLC is properly formed.
Form an LLC in Alabama With These Steps
The most widely used business structure is the LLC. They are cheap to create, allow for flexibility, and are easy to run.
Legally forming an LLC establishes your company, reduces personal liability, and allows for tax flexibility. This guide will walk you through the process step by step.
Verify Alabama LLC Name Availability
To form an LLC in Alabama you need to do a business name search. The legal name of your LLC cannot be confused with any other registered name. Do a name search to find the availability of the name you are interested in. Your name must be distinct from all registered businesses.
Name Search Alabama Secretary Of State – Business Services Division
Suffix: The phrase “Limited Liability Company” (or the abbreviation L.L.C. or “LLC”. These words or abbreviations shall be the final words of the name.
Next, verify that your name is available against any trademarks that have been registered with the Alabama Secretary-of-State and the USPTO.
Alabama Trademark:
Alabama Search for a State TrademarkFederal Trademark:
USPTO trademark SearchYou can also use common sense to search for the public domain use of your business name. Common law rights to name come from their actual use, and not registration. You can search the internet and telephone directories for information about trade magazines, professional or business license records, as well as other sources such as the Internet, telephone directories, trade magazines, and so forth.
Register a Name for Your Alabama Limited Liability Company
Alabama law requires that you make a name reservation.
Send to: Alabama Secretary Of State
Filing Method Send mail, courier, or Online. Email and Fax are NOT Accepted Fee: $10 mail standard processing. $25 for mail processing in less than three business days. $28 online, 24hr processing Turnaround: Standard mail: Once the order has been received. Expedited mail takes less than 3 business day. Online: within 24 hours. Notes: - We recommend filing electronically.
- You will need to submit your Certificate of Formation with a Name Reservation certificate.
- Evidence of licensing is required for names with a professional designation in their names (e.g., engineering).
Designate an Alabama Registered Agent
Before you file to establish your Alabama LLC, it is necessary to determine who your Alabama registered representative will actually be. Registered agents allow a business to be notified of legal notices, such as government or lawsuit notices, and act as their legal representative.
Each LLC must be registered by an agent according to state law. You must designate the registered agent when you file Alabama articles with the Alabama Secretary Of State – Business Services Division.
Alabama Articles of Organization
Alabama calls the articles a “certificate of formation”. You must file this document to create a limited liability corporation.
Agency: Alabama Secretary Of State – Business Services Division Form:
Domestic LLC Certificate Of FormationFiling Method Online, Mail, and Agency Fee $100 + minimum $50 Office of the Judge of Probate fees + optional $100 expedite fees Turnaround: You will receive your certificate within 7-10 business days from the probate’s bureau. Unless you pay the $100 expedite charge for a 10-14 day turnaround, the wait time at the secretary of the state is 6 months. Law:
Code of Alabama. Title 10A: Alabama Business and Nonprofit Entities Code. Chapter 5: Limited Liability Companies.Notes: - One original and two signed copies should be mailed to the Office of the Judge of Probate of the County where the corporation’s registered address will be.
- You will need to include a $100 filing fee for the state and the applicable filing fees in your county (minimum $50 – ask your Office of the Judge of Probate).
- Attach your Name Reservation Certificate.
Establish Company Records
Your LLC must maintain correct and complete books, records, and financial statements. Your LLC’s initial documents are your filed articles. The LLC will also produce many other official records, such as:
- Minutes from meetings
- Operating Agreement
- EIN verification letter
- Amendments and other filings to the LLC throughout its life
An organization needs a central tool to manage and access sensitive records. Our records manager software allows LLCs to easily store and track members and managers as well as customize meeting notifications.
Create an Alabama LLC Operating Agreement
Create an Operating Contract (potentially with a template), which will be the governing document for your LLC. It outlines the rules and procedures of how the LLC should operate. At your organizational meeting, you will review the agreement and vote on it.
The Organizational Meeting will be held
The organizational meet is the first meeting for members of the LLC. This meeting will require your operating agreement as well as your filed articles of organization. Keep the minutes of the meeting in writing and place them in your company’s record book.
Receive a Federal Employer Identification Number (EIN).
An EIN must be obtained if your LLC has more members or plans to hire employees. To open a bank account, an EIN is often required.
Agency: Internal Revenue Service Form:
IRS Form HTML4Filing Method Mail, phone, or Online. IRS fee $0 Turnaround: You can order online immediately or by telephone. 4 business days by fax. 4-5 weeks by post Notes: The IRS website is not available after hours. Print your EIN before you close your session. For additional guidance, refer to IRS Public 1635: Understanding your EIN. Get Alabama State Tax Identification Numbers/Accounts
Alabama offers a consolidated tax registration application.
Send to: Alabama Department of Revenue
Form:
Form COM-101: Alabama Department of Revenue Combined Registration/ApplicationFiling Method Mail or online Fee: $0 Turnaround: Online orders take 3-5 days Filing the Initial Business Privileges Tax Return
Alabama Code SS40-14A-229 requires all new LLCs to file a Business Privilege Tax Return (BPR) and to pay the business privilege tax within 2 and 12 months of their formation.
Submit to: Alabama Department of Revenue
Form:
BPTIN: Initial Business Privilege ReturnInstructions:
Instructions on Preparation of Alabama Department of Revenue Alabama Businesses Privilege Tax Initial Privilege Income Tax ReturnFiling Method Mail Fee: Minimum $100 Consider Electing C-Corp Taxation / S-Corp Governance
Your LLC is subject to pass-through taxes by default. Most LLCs retain this tax classification. Some LLCs may be eligible for C-Corp or S-Corp tax treatment.
- S-Corp treatment may help owner-employees with more than $75,000 a year to save on self employment taxes. File Form 2553: S-Corp Election.
- C-Corps are subject to double taxation. The corporation pays taxes on profits, and members pay taxes for distributions. C-Corp treatment may allow you to benefit from low tax rates on retained earnings. File Form 8832: C-Corp Election.
Apply for Alabama Business Licenses & Permits
Licenses and permits are required to legally run your business. You can search for your type of business and the location you live in using the Small Business Administration Business License & Permit Look-up Tool. This will allow you to quickly navigate through the many federal, state, local, and international requirements.
Alabama Business Privilege license
Agency: Alabama Department of Revenue, Section Business Licensing Law:
Alabama Code SS 40-12-2Notes: While licenses are required by the state, they can be issued at the local level. For more information, please contact the appropriate county probate judge’s bureau. For your LLC, you will need to continue filings
You must file tax returns for both the federal and state levels.
In many states, business entities must file an annual reporting to keep good standing with their secretary of state. For LLCs that were formed in Alabama, see the table below to learn if an annual report is required.
Alabama Corporation Annual Report Requirements:
NOT REQUIRED
Alabama LLC FAQs
What is the cost of forming an LLC in Alabama?
To start an LLC in Alabama, there is a $200 filing fee and a $10-$28 name reservation filing fee.
Alabama LLCs: Is there an annual fee?
In addition to the Business Privilege tax, a $10 annual report must be filed every year.
What is the average time it takes to create an LLC in Alabama?
Alabama usually takes 7-10 business days for LLC approval. However, for an additional fee, Alabama can process your LLC within one business day.
Can I become my own registered agent?
Anybody can be a registered agent provided that they are a resident of the state and available during business hours.
Do I need a business license if I own an LLC?
Sometimes it is believed that an LLC and a business license are one and the same in Wyoming. However, they are not. The business entity is also known as an LLC. It is the way the business is organized in order to do business.
A permit or business license is approved by a government agency to allow you to legally operate. Depending on the business’s location and its activities, different types of licenses may be required.
Alabama Related Posts
Cost to Form an LLC in Alabama
Brian Wilson is the content manager and founder of LLC Radar.
Brian grew up in North Texas, just outside of Dallas, and has a bachelor’s degree in business journalism from Southern Methodist University. Since graduating from SMU, Brian has gained over 10 years of experience in business writing for several online publications.
Brian resides in Plano, Texas and he can be reached by email: info@llcradar.com
Phone: 972-776-4050
Great article, Brian! Clear and concise steps for forming an LLC in Alabama. Thanks for sharing!
Thanks Erica
Great article, Brian! Your guide on forming an LLC in Alabama was well-structured and comprehensive. I particularly enjoyed your emphasis on the benefits and advantages of choosing this business structure, such as personal liability protection and flexibility in taxation.
Your inclusion of the necessary forms and resources, along with the associated fees, was particularly useful for those who want to dive deeper into the process. However, one suggestion I have is to include some practical examples or case studies to further illustrate the key points.
Nonetheless, your article successfully delivers the key takeaway of the importance of careful planning and adherence to legal requirements when establishing an LLC in Alabama. Thank you for sharing your expertise!
Thanks Benjamin
Thank you for sharing this informative article, Brian! As someone who has been considering forming an LLC in Alabama, your step-by-step guide was incredibly helpful. I appreciate how you broke down the process into clear and concise instructions, making it easy to follow along. Your emphasis on the importance of conducting thorough research and seeking professional advice is a valuable reminder for anyone embarking on this journey.
Overall, your article provided a great overview and key insights on forming an LLC in Alabama.
Thanks Laura
This is exactly what I needed, Brian. Your post made the LLC formation process in Alabama seem less daunting. Much appreciated!
Patrick
Thanks Patrick
Having an S-elected company really does offer many benefits to the owners.