Form a LLC in Alabama
Everything you need to know about forming a LLC in Alabama. Filing fees, requirements, timeline, and step-by-step guidance.
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How to File
Choose a Business Name
Select a unique name for your Alabama LLC that includes the words 'Limited Liability Company' or an abbreviation such as 'LLC' or 'L.L.C.' Search the Alabama Secretary of State's online business entity database to confirm the name is available and not already in use.
30 minutes
Designate a Registered Agent
Appoint a registered agent with a physical street address in Alabama who will accept legal and official documents on behalf of your LLC during business hours. The agent can be an individual Alabama resident or a company authorized to do business in the state.
15 minutes
File the Certificate of Formation
Complete and submit the Certificate of Formation (formerly called the Articles of Organization) to the Alabama Secretary of State online via the SOS website or by mail, along with the $200 filing fee. Include the LLC name, registered agent information, and organizer details.
45 minutes
File with the Alabama Probate Court
After state approval, file a copy of your Certificate of Formation with the probate court in the county where your LLC's principal office is located. A county-level filing fee applies and varies by county, typically ranging from $35 to $50.
1-2 business days
What's Next After Filing
Once your LLC is officially formed, you'll want to complete these important steps:
- •Draft an Operating Agreement — Although not legally required by Alabama law, it is strongly recommended to create an operating agreement that outlines ownership percentages, member roles, voting rights, profit distribution, and procedures for major decisions. This document governs internal operations and helps prevent disputes.
- •Obtain an EIN and Open a Bank Account — Apply for a federal Employer Identification Number (EIN) from the IRS for free at IRS.gov, which is needed for tax filings, hiring employees, and opening a business bank account. Use the EIN to open a dedicated business checking account to keep personal and business finances separate.
- •File the Initial Business Privilege Tax Return — Alabama requires LLCs to file an Initial Business Privilege Tax Return (Form BPT-IN) with the Alabama Department of Revenue within 2.5 months of formation, with a minimum tax of $100 due. Register with the Alabama Department of Revenue and obtain any required state or local business licenses before commencing operations.
Advantages
- ✓Personal liability protection shields members' personal assets from business debts and lawsuits, similar to a corporation but with fewer formalities.
- ✓Pass-through taxation by default avoids double taxation—profits and losses flow directly to members' personal tax returns, though LLCs can elect corporate tax treatment.
- ✓Alabama does not require annual reports to the Secretary of State, reducing ongoing administrative paperwork compared to many other states.
- ✓Flexible management structure allows members to manage the LLC themselves or appoint outside managers, with an operating agreement tailored to the business's unique needs.
- ✓Single-member LLCs are permitted, making it an accessible structure for solo entrepreneurs who want liability protection without needing partners.
Considerations
- •Alabama's annual Business Privilege Tax (minimum $100) adds an ongoing cost not found in all states, and the tax increases with the LLC's net worth apportioned to Alabama.
- •The dual-filing requirement—both with the Alabama Secretary of State and the county probate court—adds an extra step and cost compared to many other states that only require state-level filing.
- •Self-employment taxes apply to active members on their share of LLC income since it is treated as pass-through income, which can be a significant tax burden compared to electing S-Corp status for higher earners.
Annual Obligations
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