How to Form an LLC in Alabama
This guide to starting an LLC in Alabama provides step-by-step instructions on filing formation documents, obtaining tax IDs, and setting up company records.
Overview
LLCs are the most popular business structure because they are inexpensive to form, provide flexibility to the owners, and are easy to run. Forming your LLC legally establishes your business, limits your personal liability, and gains tax flexibility. The following step-by-step will help you as you undertake this process.
Fast Facts: Your Budget and Timeline
Here is an overview of the total paperwork, cost, and time it takes to form an LLC in Alabama. Be sure to read the final step in this guide - "Ongoing Filings" - to understand your ongoing costs to maintain a compliant Alabama LLC.
- Name Reservation Certificate
- Form SOSDF-8: Domestic LLC Certificate of Formation
- Operating Agreement
- IRS Form SS-4: Obtain an EIN
- Form COM-101: Alabama Department of Revenue Combined Registration/Application
- BPT-IN: Initial Business Privilege Tax Return
- Name reservation: $28
- Formation: $100 + minimum $50 Office of the Judge of Probate fee + optional $100 expedite fee
- Alabama business privilege tax: Minimum $100
- Formation: ~7-10 business days at the probate's office. Then ~6 months at the secretary of state unless you pay the $100 expedite fee for ~10-14 day turnaround.
Step-by-Step Alabama LLC Instructions
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Check Name Availability
The legal name of your LLC may not conflict with any other registered name. Check availability of your desired name by conducting a name search. Your name must be "distinguishable" from all registered business entities.
Name Search: Alabama Secretary of State - Business Services Division
Name searchSuffix: The words "Limited Liability Company" or the abbreviation "L.L.C." or "LLC". These words or their abbreviation shall be the last words of the name.
AC §10A-1-5.06
Next, check availability of your desired name against trademarks registered with the Alabama Secretary of State and the USPTO.
Alabama Trademark: Alabama Secretary of State trademark search Federal Trademark: USPTO trademark search
Finally, use your common sense to search use of your desired business name in the public domain. Common law rights to a name arise from actual use, not registration. Search the internet, telephone directories, trade magazines, business or professional license records, and so on.
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Obtain a Name Reservation
In Alabama, a name reservation is mandatory.
Submit to: Alabama Secretary of State
http://www.sos.alabama.gov/Filing Method: Mail, courier, or online. Fax and email are NOT accepted. Fee: $10 mail standard processing. $25 mail less than 3 business days processing. $28 online 24hr processing. Turnaround: Standard mail: in order received. Expedited mail: less than 3 business days. Online: less than 24 hours. Notes: - We recommend filing online.
- The state will issue a Name Reservation Certificate that you will need to submit with your Certificate of Formation.
- Names using a professional designation in the name (i.e., engineering) require evidence of licensing.
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Appoint a Registered Agent
Before you officially file to create your Alabama LLC, you will need to decide who your Alabama registered agent will be. A registered agent is a business's legal appointee to receive notice of lawsuit and other legal or government notices.
State law requires every LLC to have a registered agent. The registered agent is designated when you file Alabama articles of organization with the Alabama Secretary of State - Business Services Division.
Our reliable registered agent service fulfills this requirement. You get:
- Same-day documents from our local office in Dothan
- Immediate online access to state forms with our address and, where required, our signature
- Annual fees from $89 to $99 per state with no additional charges
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File Alabama Articles of Organization
Alabama calls the articles of organization the "certificate of formation". File this document to create your limited liability company.
Agency: Alabama Secretary of State - Business Services Division Form: Filing Method: Mail and online.
Agency Fee: $100 + minimum $50 Office of the Judge of Probate fee + optional $100 expedite fee
Turnaround: ~7-10 business days at the probate's office. Then ~6 months at the secretary of state unless you pay the $100 expedite fee for ~10-14 day turnaround.
Law: Notes: - Mail one original and two signed copies to the Office of the Judge of Probate in the county where the corporation’s registered office will be located.
- Include a $100 state filing fee plus the applicable filing fee in your county (minimum $50, ask your Office of the Judge of Probate).
- Attach your Name Reservation Certificate.
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Establish Company Records
Your LLC must keep correct and complete books and records. Your filed articles of organization are the first documents for your LLC’s records. Your LLC will generate many other official records such as:
- Meeting minutes
- Operating agreement
- EIN verification letter
- Amendments and other filings made to the LLC throughout its lifetime
Organizations need a secure, centralized tool for managing and accessing sensitive records. Our Records Manager software offers a simple, efficient way for LLCs to store records, track members and managers, and customize meeting notifications.
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Create the Operating Agreement
Draft an Operating Agreement (potentially using a template) which is the governing document for the LLC. It defines the formalities of how the LLC will run itself such as holding an annual meeting. You will review and adopt the agreement at your organizational meeting.
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Hold the Organizational Meeting
The first meeting of the members of the LLC is the organizational meeting. You will need your filed articles of organization and your operating agreement in order to conduct this meeting. Keep minutes of this meeting and store them in your company record book.
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Get a Federal Employer Identification Number (EIN)
If your LLC has more than one member or will hire employees, it must obtain an EIN. An EIN is also often required to open a bank account.
Agency: Internal Revenue Service (IRS) Form: Filing Method: Mail, phone, fax, or online.
IRS fee: $0
Turnaround: Immediately online or by phone. 4 business days by fax. 4-5 weeks by mail.
Notes: The IRS website is only available during certain hours. Print your EIN before closing your session. For additional guidance, see IRS Pub 1635: Understanding Your EIN.
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Get Alabama State Tax Identification Numbers/Accounts
Alabama offers a consolidated state tax registration application.
Submit 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: ~3-5 business days online -
File Initial Business Privilege Tax Return
The Code of Alabama §40-14A-29 requires new LLCs to file an initial Business Privilege Tax Return and to pay the business privilege tax within two and one-half months after formation.
Submit to: Alabama Department of Revenue
http://revenue.alabama.gov/Form: BPT-IN: Initial Business Privilege Tax Return Instructions: Instructions for the Preparation of Alabama Department of Revenue Alabama Business Privilege Tax Initial Privilege Tax Return Filing Method: Mail Fee: Minimum $100 -
Consider Electing S-Corp or C-Corp Taxation
By default, your LLC receives pass-through taxation and the vast majority of LLCs keep this tax classification. Some LLCs benefit from electing S-Corp or C-Corp tax treatment:
- S-Corp treatment can help owner-employees who earn more than ~$75,000 per year save on self-employment taxes. File Form 2553: S-Corp Election.
- C-Corps suffer from double taxation: the corporation pays taxes on profits then members pay taxes on their distributions. If profits exceed $250,000 per owner, you provide employee benefits, or you will re-invest most of your profit in the business, you may benefit from the low tax rates on retained earnings under C-Corp treatment. File Form 8832: C-Corp Election.
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Obtain Business Licenses & Permits
To run your business legally, you must obtain applicable licenses and permits. The easiest way to navigate the wide range of federal, state, and local requirements is to search by your business type and locality using the Small Business Administration Business License & Permit look-up tool.
Alabama Business Privilege License
Initial Registration
Filing Method: In person or mail.
Agency Fee: Varies by county.
Notes: The application process for state business privilege licenses is handled at the county level and therefore varies from county to county.
Registration Renewal
Filing Method: In person or mail.
Agency Fee: Varies by county.
Due: Licenses expire on September 30 of each year and must be renewed annually by October 31.
Notes: The renewal process for state business privilege licenses is handled at the county level and therefore varies from county to county.
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Ongoing Filings to Maintain Your LLC
You must file federal and state tax returns.
Many states also require business entities to file an annual report to maintain good standing with the secretary of state. If an annual report is required for LLCs formed in Alabama, view the table below.
Alabama Corporation Annual Report Requirements:
Not required
There is no standalone annual report requirement for corporations in Alabama, although entity information is requested annually as a part of the business privilege tax return.
For more details, see our Alabama annual report information center page.
As your LLC grows, you will need to demonstrate your company’s good standing to banks, customers, and other state agencies. After all the work involved in forming your Alabama LLC, don’t let a missed annual report filing cause your new business to fall out of compliance.
Tracking and filing annual reports on your own can be time consuming and lead to accidental lapses. Protect your LLC’s good standing with Managed Annual Report Service, which tracks and automatically files reports on time, every time, so you can focus on your business.
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