Everything You Need to Know About Alabama Corporations:
Alabama Incorporation Options
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How to Incorporate in Alabama
To start a corporation in Alabama, you’ll need to do three things: appoint a registered agent, choose a name for your business, and file a Certificate of Incorporation with the Alabama Secretary of State. You can file this document online or by mail. The filing alone costs a minimum of $200, but there’s also a mandatory name reservation ($28 online) and a 4% convenience fee for online filings. Once processed by the state, the Certificate of Incorporation formally creates your Alabama corporation.
Per AL Code § 10A-1-5.31 (2019), every Alabama corporation must appoint a registered agent. You don’t need to hire a registered agent, but if you do, make sure your registered agent will list their address on your filing wherever possible to ensure maximum privacy.
If you’re starting a new business, you probably already know what you want to name your corporation. But you’ll need to know if your preferred name is available. To find out, visit Alabama’s business entity records and search until you find the perfect name for your corporation. Alabama is also the only state that requires a name reservation before filing. Getting your name reservation is included in the filing instructions below.
Once you know who your registered agent will be and what your corporation name is, you’re ready to file your Alabama Certificate of Incorporation. Follow along with our filing instructions below:
Filing the Alabama Certificate of Incorporation
Learn more about each Certificate of Incorporation requirement below. Note that the information you provide becomes part of the public record—permanently.
Better yet, skip the form entirely and hire us to incorporate your Alabama business. We provide a free business address to list whenever possible throughout the filing to better keep your personal address private.
1. Name Reservation and Name
Name reservations are a unique requirement—Alabama is the only state that requires one. On the upside, they’re processed immediately online. On the downside, the name reservation sets you back $28. On your Certificate of Incorporation, enter your business name and include a copy of the Name Reservation Certificate with your formation paperwork. When you hire us, we’ll reserve your name for you as well.
2. Principal Office
This is the main business office of your corporation and will become part of the permanent public record. Hire us as your registered agent, and you can use our Alabama address here.
3. Registered Agent
For your Alabama registered agent, you can either list an individual Alabama resident (such as yourself) or an authorized business (like Northwest). We recommend Northwest.
4. Registered Agent Address
This Alabama street address is where your registered agent will be available to accept legal notifications during business hours. Avoid listing your personal or home office address on this public document when you hire a registered agent service. Our address will go here when you hire Northwest. Note that in addition to the street address, you’ll also need to list the county where your registered office is located (ours is in Houston County).
On the first page of the paper form, there’s a box with space for the name and address of the person who prepared the form (typically the same person as your incorporator). When you hire Northwest to form your Alabama corporation, we’ll prepare your Certificate of Incorporation.
It sounds existential, but this section is really just asking about what your business will actually be doing. The form already includes a general purpose, so a short phrase or sentence describing your business activities (for example, “motorcycle repair and maintenance”) is sufficient.
7. Amount of Authorized Stock
List how many shares you wish to create (you need at least one). You can distribute some or all of these shares later on at your organizational meeting. You can also list the par value (initial price) of these shares, but this is optional, so you’re free to skip that part.
All corporations will exist continuously (“perpetually”) by default. If you want your corporation to exist only for a set amount of time or to have a particular end date, you’ll need to attach an exhibit with your corporation’s specified duration.
9. Alabama Incorporator
Someone has to sign and submit your Certificate of Incorporation, and that person is your incorporator. Incorporators don’t have to be directors, officers, or anyone in the corporation. They do, however, have to include their name and street address. We’ll be your incorporator when you hire us, and our name and address will go here instead of yours.
10. Director Liability and Attachments
The form explains that directors are not generally liable to business or shareholders for financial losses or damages, with a few exceptions, such as intentional harm and violation of law. The only action you need to take in this section is to tick the box for attachments if you’re including any exhibits.
Your incorporator(s) sign and date the form, and can put “incorporator” under their “Title/Capacity to Sign.” Again, we’ll be your incorporator when you hire Northwest.
Why Have a Registered Agent Form Your Alabama Corporation?
Professionals in Alabama hire registered agent services like Northwest Registered Agent for incorporation—but why?
Standard filing companies don’t have employees or offices in every state. But as a national registered agent, it’s a requirement for us, which is a benefit for our clients. Our office is in Dothan, AL. We’re on a first name basis with the people who work in the Secretary of State Office.
As your registered agent, we list our Dothan registered office address on your corporation’s formation documents. Why? If you’re starting a business from your apartment in Mobile, do you really want your apartment address as your business address? (Hint: the answer is no.) We’ll list our address, so you don’t have to list yours. Plus, we never sell your data. We don’t list your personal information on filings if we don’t have to. It’s all standard and part of our commitment to Privacy by Default®.
Free Mail Forwarding & Business Address
At Northwest, we do everything a registered agent should do and more. You can list our address as your business address on your state filings. We include limited digital mail forwarding with registered agent service (up to 5 pieces of regular mail per year; $15 a doc after that).
We know the in’s and out’s of each state—and we use this knowledge to help you when you need it most. Our team of Corporate Guides® has over 200 local business experts. You can call or email us for answers to all your questions about your corporation in Alabama. Our Corporate Guides are dedicated solely to helping you with your business—not selling you services or meeting quotas.
What Do I Do After My Alabama Corporation Is Formed?
After your Alabama Certificate of Incorporation are approved, you still have a few more important steps to take, including getting an EIN, drafting bylaws, holding your first meeting, opening a bank account, and learning about state reporting and tax requirements.
Get an EIN
Your federal employer identification number (commonly known as an EIN or FEIN) is similar to a social security number for your business. The IRS assigns these numbers and uses them to easily identify individual corporations on tax filings, including federal corporate income tax returns.
Why does my Alabama corporation need an EIN?
The IRS requires corporations to get an EIN for their federal tax filings. You may also be asked for your EIN when opening a bank account, securing a loan, or applying for local business permits and licenses.
How do I get an EIN for my corporation?
You can get an EIN directly from the IRS. The application is free, and most businesses can apply online. However, if you don’t have a social security number, you’ll need to submit a paper application form. Can’t bear to fill out yet another application? Hire Northwest to get your EIN for you. Just add on EIN service during checkout when you sign up for our incorporation service.
Write Corporate Bylaws
Bylaws are the internal rules you set for your business. They put into writing how decisions will be made and who gets to make those decisions. All the major organizational processes and procedures for your corporation will go in your bylaws.
For more on Alabama Corporate Bylaws (including a free Alabama Corporate Bylaws template), see our Alabama Corporate Bylaws resource.
Do I need bylaws for my Alabama corporation?
Absolutely. AL Code § 10A-2-2.06 (2019) states that bylaws shall be adopted either by the board of directors, unless that right is reserved by shareholders in the formation documents.
You don’t have to submit bylaws to the state though. Corporate bylaws are internal documents you keep with your other corporate records, such as meeting minutes and resolutions.
What should bylaws include?
Corporate bylaws cover basic policies and procedures for issues such as company finances and management. Bylaws should cover a range of topics, answering key questions like those below:
Meetings: When and where will meetings for shareholders and directors be held? How many attendees are required to transact business? What are the procedures for voting or proxy voting? How do you call a special meeting? What actions can be taken without a meeting?
Stock: How are stock certificates issued and transferred? How is voting affected by issues such as corporate stock owners or fractional shares?
Directors and officers: How many directors must there be? Which officer positions are required? What powers do they have? How do you fill a vacancy or remove a director or officer?
Finances: What are the procedures for retaining profits, issuing dividends, and paying bills? Who can withdraw money from the corporate bank account or sign checks?
Records: Where is the corporate book to be kept? What information will be maintained? How are requests for review or access honored? Can records or copies be kept or distributed digitally?
Amendments and emergencies: Who can amend bylaws and how? Can emergency bylaws be adopted in the case of disaster?
AL Code § 10A-2-2.06 (2019) explains that Alabama bylaws can make any other provisions for managing and regulating the corporation as well, assuming additions are in accordance with state law.
How do I write bylaws?
Creating bylaws can be overwhelming—where do you start? Northwest can help. We give you free corporate bylaws when you hire us to form your Alabama corporation. We know what kinds of topics and questions corporations need to address, and we’ve spent years refining and improving our forms. We offer many other free corporate forms as well, including templates for resolutions and meeting minutes.
Hold an Organizational Meeting
An organizational meeting is the first official meeting of the corporation after the business is legally formed with the state. At this meeting, bylaws are adopted, officers are appointed, and any other initial business is conducted. The first meeting minutes should also be recorded and added to your corporate record book.
Are there any special rules for Alabama organizational meetings?
An organizational meeting is required, per AL Code § 10A-2-2.05 (2019) and is held at the call of the majority of directors. The meeting doesn’t have to be held in Alabama.
Open a Corporate Bank Account
Businesses that mix personal and business finances together risk losing their liability protections, so your corporation will need its own bank account. In addition, a corporate bank account is essential for easily accepting payments, paying bills and holding funds.
How do I open a bank account for my Alabama corporation?
To open a corporate bank account in Alabama, you’ll need to bring the following with you to the bank:
A copy of the Alabama corporation’s Certificate of Incorporation
The corporation’s bylaws
The corporation’s EIN
If your bylaws don’t specifically assign the power to open a bank account, you may also want to bring a corporate resolution to open a bank account. The resolution would state that the person going to the bank is authorized by the business to open the account in the name of the corporation. At Northwest, we provide free corporate bank resolutions, along with many other free corporate forms, to help you get started fast.
File Alabama Reports & Taxes
In Alabama, corporations file a combined Annual Report and Business Privilege Tax. In addition, Alabama corporations are subject to state tax requirements, including a corporate income tax.
What is the Alabama Annual Report and Business Privilege Tax?
Alabama combines its annual report with an annual tax called the Alabama Business Privilege Tax. The Annual Report ($10) updates the state on your current ownership and contact information. The Business Privilege Tax is based on the net worth of your corporation in Alabama. There’s a minimum tax of $100. The Alabama Annual Report and Business Privilege Tax are included together on one form. The annual report section of the form is known as Schedule AL-CAR.
When is the Alabama Annual Report and Business Privilege Tax due?
For C corps operating on a calendar year, annual filings are due by April 15th each year and use Form CPT. (S corps use Form PPT, which is due by March 15th.)
These filings can be easy to forget—which is why we send our clients automatic reminders for your Alabama Annual Report and Business Privilege Tax filings. Or better yet, let us file for you. With our business renewal service, we send you the completed annual report for you to add your tax info and signature, then we submit the report for you for $100 plus the state fee and any tax owed.
Is an Initial Report required?
Yes—although it’s really just the tax and not the report. Your first filing must be submitted within 2.5 months of incorporation. This initial filing uses a different from (Form BPT-IN) and has a minimum tax due of $100. You don’t have to include the $10 annual report fee or include Schedule AL-CAR.
What should I know about Alabama corporate taxes?
In addition the Business Privilege Tax discussed above, Alabama has a flat corporate net income tax rate of 6.5%. There is no minimum tax payment.
The state sales tax is 4%, but local areas can add on additional sales taxes as well. The average total sales tax in the state is 7.792%.
Do corporations have to register with the Alabama Department Of Revenue?
Alabama Corporation FAQs
How can I submit the Alabama Certificate of Incorporation?
You can file Alabama certificate online or by mail. Online filings can be completed using Alabama Secretary of State Online Services. Mailed filings must be submitted in duplicate, along with the name reservation, self-addressed stamped envelope and filing fee. Mailed filings should be sent to:
Secretary of State
PO Box 5616
Montgomery, AL 36103-5616
How much does it cost to start an Alabama corporation?
$236 online. That’s $200 for the state filing fee, $28 for the online name reservation fee and $8 for the online convenience fee (4%). Mailed filings total $228 for the state fee and the name reservation fee.
How long does it take to start an Alabama corporation?
Online filings are usually processed within 2 days. Mailed filings are also processed by the Secretary of State in about 2 days, but be sure to factor in additional time for postage and handling.
Does an Alabama corporation need a business license?
The Code of Alabama Title 40 Chapter 12 lists all sorts of licensing requirements—pretty much every business will need some kind of license. Although required by the state, most licenses are obtained locally through the county probate office or county licensing commission.
Cities and towns often have their own municipal licensing requirements as well. For example, Birmingham requires those conducting business in city limits to get a general business license.
For some license applications you may need an EIN or a certified copy of your Certificate of Incorporation. At Northwest, we can streamline the process and get these for you—simply add on these items during checkout.
What is a foreign Alabama corporation?
A corporation formed outside of Alabama—but which conducts business in the state—is considered a foreign Alabama corporation. For example, if you incorporated in Georgia but decide to open a storefront in Alabama, you would be a foreign Alabama corporation. This also means you would need to register with the state by filing an Application for Registration with the Alabama Secretary of State. Foreign corporations are required to file the Alabama Annual Report and Business Privilege Tax each year as well.
Can Northwest help me form an Alabama nonprofit corporation?
Absolutely! We’re happy to start a nonprofit corporation for you. Note that incorporating an Alabama nonprofit requires a different form, the Domestic Nonprofit Corporation Certificate of Formation.
How can I get an Alabama phone number for my corporation?
It’s a conundrum: you need a local number to display on your website and give to customers, but you don’t want to make your personal number quite so…public. We get it. And we’ve got you covered with Northwest Phone Service. We can provide you with a virtual phone number in any state—plus unlimited call forwarding and tons of easy-to-use features. You can try Phone Service free for 60 days when you hire us to form your corporation, and maintaining service is just $9 monthly after that. No contract required.
How to Order Alabama Incorporation Service
Our Alabama incorporation service is designed to be fast and easy—signing up takes just a couple minutes. Here’s how it works:
We’ll form your Alabama corporation for $461 total and include one year of registered agent service, a secure online account filled with business maintenance tools and all the state forms you’ll need, and the lifetime support of our expert Corporate Guides. Just choose Hire Us below, answer a few easy questions about your business, and submit your payment.
Next, we’ll prepare and submit your Alabama Certificate of Incorporation to the Secretary of State. In the meantime, you’ll have immediate access to your online account, where you can find useful state forms, pre-populated with your business information.
Once the Alabama Secretary of State has approved your filing, we notify you that your Alabama corporation has been legally formed. You can now move on to next steps, like holding your organizational meeting and opening a bank account.