ALABAMA

Why Form a Limited Liability Company (LLC)?


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Starting an Alabama LLC

Alabama is located in the southeast portion of the U.S. and is bordered by Tennessee, Georgia and Florida. Known as both the Yellowhammer State and the Cotton State, Alabama’s economy has diversified significantly over the last few decades.

If you want to start your own business in Alabama, one of the best ways to do so is by forming an Alabama LLC. Limited liability companies (LLCs) are a business entity designed for startups and small- and medium-sized businesses. Alabama LLCs give you many of the protections and advantages of larger corporations without all the rules, regulations and compliance issues common to larger business entities. 

Briefly, the benefits of forming an Alabama LLC include:

  • Separating and limiting your personal liability from your business liability and debts
  • Quick and simple filing, management, compliance, regulations and administration of your Alabama LLC
  • Easy tax filing and potential advantages for tax treatment

Learn more about the benefits of the LLC business structure here.

Six Quick Steps to Setting Up an Alabama LLC

This guide has plenty of information on how to form your Alabama limited liability corporation, but you can break down the basics of starting a business in AL into just a few simple steps.

STEP 1: Gather Information for Your Members

The first step of Alabama LLC formation is gathering basic information about your LLC, including the names and addresses of the managers or members. The LLC members are typically the people who own and run the business. They are also the ones who can take profits out of the business to pay themselves.

STEP 2: Search for and Choose a Unique Business Name for Your Alabama LLC

You will need a distinctive and original name for your Alabama LLC that’s not used by any other business in AL. To find out if another company is using your chosen business name, carry out an Alabama business entity name search on the AL Secretary of State website.

There are a few rules you’ll need to follow when choosing an LLC name. You can find out more in our guide to searching for and naming your Alabama LLC.

Learn about Alabama LLC business naming rules

STEP 3: Provide an Official Address for Your AL LLC

Every Alabama LLC must have a designated street address. That could be your home address (if you’re running the company from your residence), your company’s office building or any physical address of your preference. The address must be inside the state of Alabama, but it cannot be a P.O. Box.

STEP 4: Assign a Registered Agent for Your Alabama LLC

Every AL LLC must have a “Registered Agent” when it is formed. This is an official position; the Registered Agent is someone who receives official legal and tax correspondence and has responsibility for filing reports with the Alabama Secretary of State.

This position can be filled by you, another manager in the business or a dedicated Registered Agent service. Your AL Registered Agent must have a physical street address in Alabama and must be present to receive important documents for your company during business hours. 

At Incfile, all of our packages include an Alabama Registered Agent service that is free for the first year and just $119 per year afterward. We also have a dashboard where you can log in and easily view any document your Registered Agent has received on your behalf. 

Learn more about Alabama Registered Agents

STEP 5: Get an Employer Identification Number (EIN) from the Internal Revenue Service

You will need an EIN to identify your business to the IRS. You use this number when filing and paying taxes or when submitting payroll information and payments for your employees. You can obtain one directly from the IRS, or we can get one for you as part of the Alabama LLC business formation process.

STEP 6: File a Certificate of Formation with the Alabama Secretary of State

Once you've gathered all the information for your Alabama LLC, you’ll need to file a formal document with the AL Secretary of State. This document is known as your “Certificate of Formation,” and filing the document creates your Alabama LLC. Here’s what is typically included:

  • Your business name and address
  • Details of your Registered Agent
  • Name of the incorporator

You can file your Alabama LLC Certificate of Formation online, mail in a form or have Incfile do it on your behalf. There is a fee to file and start an LLC in Alabama. You only need to file your Certificate of Formation once. 

Form Your LLC Now

Review Information from the Alabama Secretary of State

The AL Secretary of State has plenty of information on forming and running a business in Alabama.

These are all the basic steps for forming an LLC in Alabama. You’ll find other useful information below.

Alabama Secretary of State for forming and running your AL LLC

Alabama Department of Labor for AL employers and hiring

Alabama Department of Revenue for AL taxes

Special Types of Alabama LLCs

A regular Alabama LLC is suitable for most business needs, but you also have a few other options to incorporate a special type of LLC.

Form an Alabama Series LLC

In Alabama, you also have the option to set up a “Series LLC” — these are specialized LLCs designed to allow you to manage multiple separate LLCs under one master umbrella LLC. These can be very useful if you don’t want to set up a separate Alabama LLC for every individual business you run. 

Decide if an Alabama Series LLC is right for your new business.

Form a Foreign LLC in Alabama

If your business is already operating in another state and expanding to Alabama, you’ll need to form a foreign LLC. 

More information on Alabama filing and licensing requirements here. <link to state subpage once published>

What to Do After Filing Your Alabama LLC

Want to know your next steps after creating a new LLC in Alabama? We’ve got you covered. Here’s our guide to understanding your ongoing requirements, setting up new bank accounts, protecting your business name, getting accounting in place and more. 

Detailed Information for Your Alabama LLC

You’ll find plenty more insight and guidance on the other pages of this guide, including:

Naming Your Alabama LLC

How to search the Alabama business registry of the AL Secretary of State and find the right name. Includes information on naming rules, fictitious names, reserving an Alabama LLC name and more.

Alabama Registered Agents for Your LLC

How to appoint an Alabama Registered Agent to your new LLC or change to a different Registered Agent. Includes information on Registered Agent rules and searching for Alabama Registered Agents.

Fees and Requirements for Your Alabama LLC

How to understand the various fees you’ll need to pay and the requirements you’ll need to meet for both federal and Alabama rules. Includes details of Employer Identification Numbers (EINs), Alabama and federal business licenses, Alabama annual reports and more.

Federal, State, Sales and Other Taxes for Your Alabama LLC

How to understand the various taxes you will need to pay to the federal and Alabama government. Includes details of federal taxes like income and self-employment, and Alabama taxes like sales tax and income tax.

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What are the fees and requirements to form a business in Alabama?

Filing Time and Price

The state charges this amount to file a new business entity. This fee goes directly to the Secretary of State.

State Fee State Filing Time Expedited Filing Time
$175 4 Weeks 15 Business Days

Compliance Requirements

This report is mandatory and must be filed within the specified time frame in order for the entity to remain in good standing with the state. Failure to file this report can lead to the company being revoked or administratively dissolved.

Annual Report

Frequency: Annually

Due: Annual Year: April 15th Fiscal Year: 3½ months after beginning of tax year

Note: LLCs elected to be taxed as corporations follow corporation rules.

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