How Much Does It Cost to Form a Corporation in Alabama?
Legal business registration — and maintaining business compliance — involves necessary expenses and investment. Some of these costs are payable to the Secretary of State, while others are due to additional state entities or the federal government. Here are some common requirements and fees.
Please note that fees for a permit or business license in Alabama may be due when you first form your business, on an ongoing schedule or on an ad hoc basis. Find more details below.
Initial Alabama Corporation Filing Fee
When setting up a corporation in Alabama, you’ll need to file a form and pay a filing fee. Here are the current Alabama corporation fees and filing times:
When you use Incfile to form a corporation in Alabama, we charge you the state filing fee and forward it to the Secretary of State when we file your incorporation paperwork.
Employer Identification Number
Every corporation in the country should have a unique EIN (Employer Identification Number) from the Internal Revenue Service. You'll use it when you open a business bank account, file taxes and pay employees. You can get one directly from the IRS, or Incfile can get one for you.
If you want to do business in a state other than the one where your business is based, you must create a Foreign Corporation.
Alabama Foreign Corporation Registration
Before you can bring an arm of your business from another state into Alabama, you must request Foreign Entity Registration in Alabama. This means the state gives you permission to conduct business there.
To request registration of an Alabama Foreign Corporation, you must complete an Application for Registration and pay a processing fee of $150. The state may have additional registration requirements, so contact the Secretary of State directly for more information and to ensure you're in compliance with state law.
Foreign Qualification to Operate in Another State
If you plan to expand your Alabama corporation into another state, you’ll first need Foreign Qualification or a Certificate of Authority from that state. This is necessary before you can create a physical presence, hire employees or bank in that state.
You'll likely have to complete at least one application and pay a filing fee, but each state has its own requirements. Before you start the process, compare state filing times and state filing fees so you can plan accordingly.
Above all, contact the state government entity that administers business (usually the Secretary of State) to confirm their requirements and for specific instructions.
If you need assistance, Incfile provides a complete Foreign Qualification service for all states.
Alabama Annual Report Requirements
Most states require business entities to file an annual (or other periodic) report. Alabama is a little different in that it combines the annual report with the Business Privilege Tax.
The Business Privilege Tax is considered a type of franchise tax, and you'll find more information about the necessary Alabama Department of Revenue forms and reporting requirements in the AL Business Privilege Tax section on the business taxes page of this guide.
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
Alabama Business Licenses and Permits
Before you start doing business, you must secure the necessary state, federal or local business licenses and permits to operate your corporation. Some of the fees will only need to be paid once, while others may be ongoing charges.
Permits and licenses vary based on:
Although you are legally required to have Alabama corporation bylaws, you are not required to file them with the state. Simply keep them at your corporation's primary place of business, adopt them and continue to follow them.
Bylaws will outline rules for carrying out tasks related to managing your corporation including, but not limited to:
- the number of directors the corporation has
- how they'll be elected, their qualifications and the lengths of their terms
- when, where and how your board of directors can call and conduct meetings
- voting requirements
The bylaws must then be adopted (and amended, if necessary) by the board of directors and shareholders.
Drafting a set of bylaws can be extremely beneficial in making sure you’re organized and can help protect your business from any future changes and events that may affect your business.
Other Alabama Corporation Filing Requirements and Fees
The State of Alabama requires you to complete a few more tasks before you can begin conducting business.
Appoint a Director
Some states require corporations to appoint a full board of directors. Alabama corporation law (Title 10A, Chapter 2A, Article 8) requires all corporations to have at least one director on the board of directors. A single person can be the president, secretary, sole director and sole shareholder.
In Alabama, the board of directors (or the single director) elects officers, such as the president, CEO, etc. Alabama corporation law requires corporations to have at least one officer who is responsible for maintaining and authenticating the records of the corporation. A single person can be the president, secretary, sole director and sole shareholder.
Issue Stock to Shareholders
To raise business capital and keep it separate from company owners' money, every corporation in the state must sell stock to its shareholders. The Certificate of Formation must authorize the sale of at least one share, and the corporation cannot sell more shares than are authorized.
Hold Annual General Meetings
This is one area where Alabama differs from other states. You may hold annual meetings, and it's generally a good idea to do so. But if you decide not to, Alabama business code Title 10A, Chapter 2A, Article 7, Subsection 1 states, "The failure to hold an annual meeting at the time stated in or fixed in accordance with a corporation's certificate of incorporation or bylaws does not affect the validity of any corporate action."
Change the Registered Agent
If your corporation is based in Alabama, then you must have a Registered Agent in Alabama. You'll need to appoint one when you file your Certificate of Formation. You can also change to a new Registered Agent later by filing a form and paying a fee of $100.
Reserving a Name for Your Corporation
If you're not quite ready to start your business, you can reserve a name for 365 days with the Secretary of State by filing a form and paying a fee of $25. First, conduct an Alabama corporation search and learn the state's business naming rules to ensure you choose a name that meets legal requirements.
Amending Facts About Your Corporation
When you incorporate, the Alabama Secretary of State forms you fill out include certain facts about your business at that time. Through the years, some or all of this information may change. If it does, you'll need to file an Amendment to Certification with the Secretary of State along with a filing fee of $100. You can do this yourself or Incfile can do it for you.
You'll need to file a Certificate of Amendment when you:
- Change the company's name
- Add, remove or change a director
- Change the Registered Agent
- Change the number of shares your corporation is authorized to issue
- Change any other facet of your business that was listed on the original Certificate of Formation
Get a Certificate of Existence
Some organizations may request that you prove your corporation's compliance with laws and tax requirements. In most states, this proof is provided with a Certificate of Good Standing or Certificate of Status. In Alabama, it's called a Certificate of Existence.
If you need to prove you have met your commitments, you’ll need to request an Alabama Certificate of Existence from the Secretary of State. You can do this by filing a form and paying a processing fee of $25.
The information listed above details many of the fees a standard corporation will be required to pay in Alabama. In some circumstances, there may be other one-off, periodic or ad hoc fees not listed above.
Of course, your corporation will also probably need to pay federal, state, self-employment (if it's an S Corp) and other taxes. You'll find more information on the Alabama taxes page.