Form a Corporation in Alabama
Everything you need to know about forming a Corporation in Alabama. Filing fees, requirements, timeline, and step-by-step guidance.
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How to File
Choose a Corporate Name
Select a unique name for your corporation that includes a required designator such as 'Corporation,' 'Incorporated,' 'Company,' or an abbreviation thereof. Search the Alabama Secretary of State's business name database to confirm availability before filing.
30 minutes
Appoint a Registered Agent
Designate a registered agent with a physical street address in Alabama who will accept legal and official documents on behalf of the corporation. The registered agent can be an individual Alabama resident or a business entity authorized to do business in the state.
15 minutes
File Articles of Incorporation
Prepare and file the Articles of Incorporation with the Alabama Secretary of State, which must include the corporate name, number of authorized shares, registered agent information, and incorporator details. Filing can be completed online through the SOS website or by mail with the $200 filing fee.
1-2 hours
Pay Alabama Privilege Tax
Pay the initial Alabama Business Privilege Tax, which has a minimum of $100, to the Alabama Department of Revenue as part of the formation process. This tax is based on net worth apportioned to Alabama and must be paid before the corporation can begin transacting business.
30 minutes
What's Next After Filing
Once your Corporation is officially formed, you'll want to complete these important steps:
- •Create Corporate Bylaws and Organizational Minutes — Draft corporate bylaws governing the internal operations and structure of the corporation, then hold an organizational meeting of the board of directors to adopt bylaws, elect officers, and issue initial shares of stock. These documents are not filed with the state but must be maintained in the corporation's internal records.
- •Obtain an EIN and Open a Bank Account — Apply for a Federal Employer Identification Number (EIN) from the IRS at no cost, which is required for tax purposes, hiring employees, and opening a business bank account. Use the EIN to open a dedicated corporate bank account to maintain separation between personal and business finances.
- •Register for Alabama State Taxes and Licenses — Register with the Alabama Department of Revenue for applicable state taxes, including sales tax, employer withholding, and the annual Business Privilege Tax. Obtain any required local business licenses from the county or municipality where the corporation will operate.
Advantages
- ✓Limited liability protection shields shareholders' personal assets from corporate debts and legal judgments
- ✓Ability to raise capital by issuing multiple classes of stock and attracting investors, including venture capital
- ✓Perpetual existence allows the corporation to continue operating regardless of changes in ownership or the death of shareholders
- ✓Enhanced credibility and professional image with customers, vendors, and financial institutions compared to unincorporated entities
- ✓Potential for significant tax advantages through deductible employee benefits, retirement plans, and S-Corp election to avoid double taxation
Considerations
- •Subject to potential double taxation at the federal level — the corporation pays corporate income tax and shareholders pay personal income tax on dividends
- •More complex and costly to form and maintain than an LLC or sole proprietorship, with stricter recordkeeping, bylaws, and meeting requirements
- •Required to pay Alabama Business Privilege Tax annually based on net worth, adding an ongoing tax burden beyond standard income taxes
Annual Obligations
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