Alabama LLC – How to Form an LLC in Alabama

Form an LLC in Alabama. Learn how to get an LLC name, registered agent, Certificate of Formation, 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.

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 Alabama includes step-by-step instructions on how to file formation documents, obtain tax IDs, and set up company records.

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.

 

  1. Verify 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

    Name search

    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.

    AC §10A-1-5.06

    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 Trademark
    Federal Trademark:
    USPTO trademark Search

    You 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.

  2. Register a Name for Your Alabama Limited Liability Company

    Alabama law requires that you make a name reservation.

    Send to: Alabama Secretary Of State

    http://www.sos.alabama.gov/

    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).
  3. 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.

  4. 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 Formation
    Filing 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.
  5. 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.

  6. 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.

  7. 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.

  8. 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 HTML4
    Filing 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.
  9. Get Alabama State Tax Identification Numbers/Accounts

    Alabama offers a consolidated tax registration application.

    Send to: Alabama Department of Revenue

    http://revenue.alabama.gov/

    Form:
    Form COM-101: Alabama Department of Revenue Combined Registration/Application
    Filing Method Mail or online
    Fee: $0
    Turnaround: Online orders take 3-5 days
  10. 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

    http://revenue.alabama.gov/

    Form:
    BPTIN: Initial Business Privilege Return
    Instructions:
    Instructions on Preparation of Alabama Department of Revenue Alabama Businesses Privilege Tax Initial Privilege Income Tax Return
    Filing Method Mail
    Fee: Minimum $100
  11. 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.
  12. 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 40-12-2
    Notes: 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.

     

  13. 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 an approval 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.

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