Why Incorporate in Alabama?
Like many states in the country, Alabama offers a variety of tax incentives that are attractive to new and existing businesses looking to expand their operations within the state.
For example, the Alabama Enterprise Zone Program provides certain tax incentives to corporations, partnerships, and proprietorships that locate or expand within designated Enterprise Zones. In addition to state-level tax incentives, businesses may also receive local tax and non-tax incentives for locating or expanding within a designated Enterprise Zone.
For most entrepreneurs looking to create a larger business, forming an Alabama corporation may be the best choice. As a corporation, your business is able to buy and trade stock, and when it comes to excess profits, corporations offer more flexibility than a limited liability company (LLC). A corporation is allowed to pass income and losses to its shareholders, who report taxes on an individual tax return at ordinary levels.
Is an LLC Better Than a Corporation?
It all depends on your goals. Limited liability companies are generally better for smaller businesses. An LLC is easier to set up, and you receive many of the same benefits as a corporation, but with less regulation.
Learn more about forming an Alabama LLC so you can decide which business entity is right for you.
Benefits of Forming an Alabama C Corp
Benefits of Forming an Alabama S Corp
It offers several advantages similar to those provided by a C Corp including, but not limited to:
- Options for creating, transferring and selling stock, though not as many as a C Corp
- The capacity for up to 100 shareholders
- Simpler rules than those applicable to C Corporations
- Easy transfer of ownership simply by selling your stock
- The possibility of saving money by allowing you to pay less self-employment tax
In this guide, you’ll find information on naming your corporation, getting a Registered Agent, the fees you’ll need to pay, business taxes and much more. We also cover what you'll need to register your corporation and how you'll interact with the AL Secretary of State.
To help you along the way, use our Starting a Business checklist to keep track of everything you need to do to get your business up and running.
How to Form an Alabama Corporation Yourself in 6 Steps
Choose a Unique Business Name and Complete a State Corporation Search
Every Alabama business must have a unique name that hasn't already been claimed by another business in the state. If you’re having difficulty coming up with a name, try using our Business Name Generator to gather ideas. You'll need to follow a few naming rules, which you can read about in detail on the Alabama Corporation Names page.
Once you’ve chosen a name, you’ll need to make sure it’s available in Alabama. To learn whether another company in the state is using your desired business name, use our tool to do an Alabama entity search.
You can also carry out a name search on the AL Secretary of State website.
Provide an Official Business Address for your Corporation
Every Alabama corporation must have a designated address. That could be the address of your home (if you’re running the company from your residence), a building where your office is located or any physical address of your preference. The address can be outside the state of Alabama and can be a P.O. Box.
You may also be able to use a virtual mailbox for your business address. Incfile can provide you with an Alabama virtual mailbox where we'll receive your mail, and scan it for your online review. This can be especially convenient if you run a home-based business and don't want your home address published publicly as part of your business record.
Assign a Registered Agent
A Registered Agent is someone who receives official correspondence and is responsible for filing reports with the Secretary of State. Every Alabama corporation is required to have a Registered Agent.
You can fill this position yourself, assign another manager in your business or use a Registered Agent service. If your Registered Agent in Alabama is a person, they must have a physical street address in Alabama and must be present during business hours to receive important documents on behalf of your company.
You'll appoint your Registered Agent when you file your Alabama Certificate of Formation to create your business with the Secretary of State.
All of Incfile’s business formation packages include Registered Agent service. It’s free for the first year and just $119 per year after that. You can also access a digital dashboard to view any document we've received on your behalf.
File Your Certificate of Formation with the AL Secretary of State
Once you've gathered all the information for your corporation, you’ll need to complete your filing online with the Secretary of State to receive your Alabama Certificate of Formation. This will officially create your business.
Here’s what is typically included:
- Your business name and type
- Registered Agent's name and address
- Names and addresses of directors
- The corporation’s capital structure (number of shares to be issued, who owns them, pricing, etc.)
- Your corporation's purpose, which is the Alabama default "the transaction of any lawful business for which corporations may be incorporated in Alabama" under Title 10A, Chapter 2A of the Code of Alabama
- The organizer's name and address
File by Mail
Secretary of State
P.O. Box 5616
Montgomery, Alabama 36103-5616
You only need to file your Alabama Certificate of Formation once, but every year after, you'll also need to report and pay AL business privilege tax (if applicable to your business) and file an annual report. Incfile can remind you about this every year, or we can do it for you if you have us handle the paperwork.
What are the fees and requirements to incorporate in Alabama?
Annual Year: April 15th Fiscal Year: 3½ months after beginning of tax year
Schedule AL-CAR filed with Business Privilege Tax Return is accepted in lieu of a separate Annual Report. C Corps must file Form CPT. S Corps must file Form PPT.
Business Privilege Tax
Get an Employer Identification Number (EIN) from the Internal Revenue Service
You'll need an EIN to identify your business to the IRS. You use this number when filing and paying taxes, when submitting payroll information and payments for your employees and for opening a business bank account. You can obtain one directly from the IRS, or Incfile can get one for you as part of the Alabama corporation formation process.
A set of rules that govern how a corporation will be run, bylaws detail how many directors the corporation will have, whether the board of directors will have annual meetings and what the voting requirements are, among other things.
Some states require companies to create bylaws — including Alabama. It’s always a good idea to write them to protect your business from any future changes and events, regardless of the legalities of your state.
Alabama Corporation Types
Per Alabama code, Title 34, a few of the professions permitted to form an Alabama Professional Corporation include, but may not be limited to:
Check with the AL Secretary of State to confirm whether your business should and can be a Professional Corporation.