Ready to start an LLC in Alabama? Follow these 6 easy steps:
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Forming an LLC in Alabama Is Easy
Starting an Alabama limited liability company (LLC) is the best way to protect your personal assets and add credibility to your small business.
To create an Alabama LLC, you will need to submit the Certificate of Formation — a legal document that officially establishes your company — to the Alabama Secretary of State. You can apply online or by mail, and the filing fee is $200.
Follow our How to Start an LLC in Alabama guide below to get started.
For more information on how to get an LLC in any state, visit our How to Start an LLC guide.
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Get StartedStep 1: Create a Name For Your Alabama LLC
Before you register your Alabama LLC, you’ll need to come up with a name. Your brand name needs to be catchy for branding purposes and legitimate for legal purposes.
Naming Your LLC
First, brainstorm some possibilities. Use our LLC name generator to get the ideas flowing.
Next, make sure your name meets the following guidelines:
- it contains the words limited liability company, limited company, LLC, or L.L.C.
- it generally can’t include words that imply the company is a banking or financial institution or that it’s affiliated with a local, state, or federal government agency
- it’s distinguishable from any other entity or trade name registered in Alabama
- full list of Alabama naming guidelines
Next, do an Alabama LLC name search with the Secretary of State to find out if your name is available.
Reserving Your LLC Name
If you plan to mail in your LLC registration, you’ll need to complete the Name Reservation Request for Domestic Entities form at least two weeks prior to registration for a $25 fee. If you plan to register your LLC online, you’ll reserve your business name when you complete the online registration process.
If you don’t plan on registering your company right away, you can reserve your LLC name online for 1 year.
Is the URL available? Before you commit 100% to a name, check to see if there’s a good web domain available.
We recommend buying your domain right away because even if launching a business website isn’t on your radar right now, it will be soon.
Using an Alabama Trade Name (DBA)
A DBA (doing business as), also known as a trade name, is any registered name that a company operates under that isn’t its legal business name. A trade name can be used by any type of business, including a sole proprietorship, partnership, or limited liability company.
Learn how to get a DBA in our Alabama DBA guide.
Step 2: Appoint an Alabama Registered Agent
When filing the Articles of Organization, Alabama LLCs need to list a registered agent. A registered agent’s job is to accept legal documents like service of process and tax notices for your LLC.
Your registered agent in Alabama can be a person or a professional service. You can act as your own registered agent, but many LLC owners choose to use a registered agent service.
Here are a few things to think about before you decide to act as your own registered agent:
- You’ll need to be available during normal (9 am – 5 pm) business hours at the address you provide
- If you run your company from home, you’ll have to make your personal address public
- You could be served with a lawsuit in front of your family or coworkers
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Get StartedStep 3: File the Alabama LLC Certificate of Formation
It’s time to officially form your LLC by completing a name reservation and filing your Certificate of Formation with the Alabama Secretary of State.
Name Reservation Step
If you’re filing the Certificate of Formation online, you’ll complete the name reservation when you complete the online Certificate of Formation.
If you’re filing your Certificate of Formation by mail, you’ll need to mail in the Name Reservation Request for Domestic Entities form first. You’ll get a name reservation certificate from the state within a few weeks, and once it’s approved, you’ll mail it in with your Certificate of Formation.
Certificate of Formation Step
You can file online with Alabama Interactive or fill out a hard copy of the Certificate of Formation and mail it in with your approved name reservation certificate. The filing fee is $200.
You’ll need to know the following information to complete the form:
- Entity Name
- Copy of the Name Reservation certificate from the Alabama Secretary of State (If filing by mail)
- Registered Agent Name and Registered Office Address
- Type of LLC being formed (conditional)
- Effective Date
For more detailed help with completing the form, visit our Alabama Articles of Organization guide.
Mail Your Articles of Organization:
Send the form and payment (payable to the Secretary of State) to:
Secretary of State
Business Services
PO Box 5616
Montgomery, AL 36103
How long does it take to get an Alabama LLC approved? LLC processing time is 10 days online or by mail, but can be expedited for an additional fee.
Step 4: Create an Alabama LLC Operating Agreement
Creating an Alabama LLC operating agreement (also known in the state as a limited liability company agreement) is the only way to legally lock down your LLC’s management and ownership structure. Having an operating agreement in place will give you something to return to if a dispute or lawsuit arises.
Even single-member Alabama LLCs benefit from having an operating agreement.
Your operating agreement should outline the following:
- Each member’s responsibilities
- How new members will be admitted
- How existing members may transfer or terminate their membership
- How profits and dividends will be distributed
You can add as many provisions as you want, as long as they don’t conflict with the state’s law. Take a look at our What is an Operating Agreement guide to learn more.
Download a template or create a custom Free Operating Agreement using our tool.
Step 5: Get an Employer Identification Number (EIN)
An Employer Identification Number (EIN) is like a Social Security number (SSN) for your company. The IRS and the state will use this number to track your business activity.
An EIN is also known as a Federal Employer Identification Number (FEIN), or Federal Tax ID Number (FTIN).
Your EIN will come in handy when it’s time to:
- Open a business bank account
- File Federal and State taxes
- Hire employees
The best way to get an EIN for your LLC in Alabama is by using the free online application on the IRS website.
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Best LLC ServicesStep 6: File a Beneficial Ownership Information Report
When forming an Alabama LLC, one of the important steps is to complete the Beneficial Ownership Information (BOI) Report with the Financial Crimes Enforcement Network (FinCEN).
This report — also known as the FinCEN BOI report — is designed to combat money laundering, terrorist financing, and other illicit activities by requiring LLCs to disclose information about their beneficial owners.
This is free to file through the FinCEN website.
New LLCs must complete this filing within 90 days of formation. Existing LLCs must file before January 1, 2025.
Failure to complete this filing requirement will result in a $500 per day fine.
Steps After Forming an LLC in Alabama
After forming an Alabama LLC, it’s important for every business owner to complete the following:
Open A Business Bank Account
A business bank account helps separate personal expenses and company expenses, which is required to maintain your Alabama LLC’s corporate veil. A corporate veil protects your personal assets from creditors in potential lawsuits against your company.
Learn more by reading this guide to Banking for Entrepreneurs. For a multi-member LLC, you’ll also want to set up capital accounts for LLC members. We also recommend checking out our review of the best business bank accounts.
Get A Business Credit Card
A business credit card will help separate personal and business expenses while building your company’s credit history. A strong credit history will be useful for raising capital in the form of venture capital, angel investment, or small business loans.
Set Up Business Accounting
Hiring a business accountant is one of the best ways to ensure you’re taking advantage of LLC tax benefits; possibly saving you and your company thousands of dollars per year.
When forming an LLC in Alabama, it’s a good idea to start a relationship with a business accountant as soon as you start your venture to help set your company up for success.
Get Business Insurance
Business insurance helps manage risk. The most common forms are general liability, professional liability, and workers’ compensation.
Find out the real cost of getting insurance for your business. Get a free quote or call 855-965-3168.
Keep Your Company Compliant
Research Business Licenses and Permits
To operate an LLC in Alabama, you will need to comply with federal, state, and local government regulations such as health permits, building permits, and signage permits.
Licensing and permit requirements vary from state to state. To get started, visit our How to Get a Business License in Alabama guide. To help facilitate this process, you can also utilize a professional service to help obtain business licenses for you.
All Alabama businesses are required to purchase a Business Privilege License annually to conduct business in the state. You are required to purchase a license in each county your LLC does business (costs vary by county). Consult the state’s County Probate Office Directory to get started.
File your LLC Business Privilege Tax Report
Every Alabama LLC is required to submit Form PPT: Alabama Business Privilege Tax Return and Annual Report annually either online or by mail to the Alabama Department of Revenue. The minimum business privilege tax is $100, but the total amount will vary depending on your LLC’s income from the previous tax year.
Understand State Tax Requirements
Businesses selling a physical product are generally required to register for a seller’s permit through the Alabama Taxation website. Visit our Alabama Sales Tax guide to learn more about seller’s permits and sales tax.
Additionally, if you have employees in the state, you will need to register for unemployment insurance tax through the Alabama Department of Labor as well as sign up for employee withholding tax through the Alabama Department of Revenue.
Understand Your LLC’s Federal Tax Requirements
Most Alabama LLCs will need to report their income to the Internal Revenue Service (IRS) each year using Form 1065: Partnership Return (multi-member LLCs) or Form 1040 – Schedule C (single-member LLCs).
How you pay yourself will affect your federal taxes. Visit our guide to learn more about how to pay yourself from your LLC.
Know Your Alabama LLC’s Federal Tax Election Options
Pass-through taxation entails a business’s profits passing through to the LLC member’s individual tax returns. Like a sole proprietorship, an LLC is taxed as a pass-through entity, also known as a disregarded entity.
Once this process is completed and after any tax-deductible expenses are taken out, the LLC members pay self-employment taxes and income tax on their portion of the business income.
Alternatively, Alabama LLCs can choose to elect to be taxed as an S corporation (S corp) or C corporation (C corp). If S corporation tax status is elected, LLC members can be taxed as employees of the company, potentially reducing tax burden.
Additional Resources
- Alabama Foreign LLCs: Forming a foreign LLC allows your company to operate as one entity in multiple states. Download the Alabama foreign LLC form to get started.
- Alabama Certificate of Good Standing: A certificate of good standing verifies that your LLC was legally formed. To order, follow our Alabama certificate of good standing guide.
- Dissolving an Alabama LLC: If you are ready to dissolve your LLC, follow the steps in our Alabama LLC Dissolution Guide.
- LLC Legal Forms: TRUiC offers a number of free LLC legal forms including operating agreements, LLC resolutions, and hiring documents.
