Start an LLC in Alabama
Use the form on this page to complete your Alabama LLC Certificate of Formation.
File directly with the Alabama Secretary of State for a $225 state filing fee ($236 online), or hire us and we will form your LLC in Alabama for $225 plus state fees.
How to Start an LLC in Alabama
An Alabama limited liability company (LLC) is a business structure that offers liability protection, a straightforward management structure, and—by default—pass-through taxation. To form an LLC in Alabama, you must file a Name Reservation Certificate and Certificate of Formation with the Alabama Secretary of State. Filing these two documents will cost you $225 (or $236 if filed online).
Before you can file the name reservation or formation paperwork, your LLC needs a business name and a registered agent. The LLC formation process in Alabama can take a few days or a few weeks, depending on filing method and the time of year. Keep reading and we’ll break down each step of the process to get your LLC ready for business.
1. Name Your LLC
The first step in forming your LLC is naming it. In Alabama, you’re supposed to reserve your LLC name before you can form an LLC. But recent changes in Alabama have made this step easier, as you can now reserve your name and file your Certificate of Formation together when you file online. You’ll just want to make sure that your LLC’s name meets Alabama’s requirements.
Alabama spells out the naming guidelines for an LLC in ALA Code §10A-1-5.06. To summarize, your LLC’s name must:
- Include either “limited liability company,” “L.L.C.,” or “LLC.”
- Be one-of-a-kind among businesses registered in Alabama.
Already have a business name? Check to see if it’s available.
What’s the difference between my LLC’s name and an assumed business name?
Your LLC’s legal name is the one you list on the Certificate of Formation. An assumed business name, sometimes referred to as a doing business as name (DBA) or trade name, is any other other name your LLC uses to do business.
LLCs sometimes use an assumed business name for marketing or branding purposes. Doing so allows you to do business under a different name without forming a completely new LLC. Alabama requires LLCs to register assumed business names with the Secretary of State.
Thinking about using a DBA? Learn more about How to Get an Alabama DBA.
2. Designate a Registered Agent
The next step is choosing a registered agent in Alabama. A registered agent is a person or company appointed to accept state and legal mail for your business. Alabama requires all of its registered LLCs to have a registered agent. Once your registered agent is officially hired, you can list their name and address on your Certificate of Formation.
Learn why the pros use a registered agent service.
What does a registered agent do?
You can find an outline of Alabama registered agent duties and requirements in Alabama Code §10A-1-5.31. The basic duties of a registered agent are to:
- Have a physical address (no PO boxes or virtual offices) in the state of Alabama.
- Keep regular business hours.
- Accept legal mail and correspondence from the Alabama Secretary of State on behalf of your business and get them to you fast.
Can you be your own registered agent in Alabama?
Yes. However, being your own Alabama registered agent also means listing your name and address on the public record. You’ll be responsible for keeping regular business hours to accept any legal correspondence in person.
Can I change my registered agent after I start an LLC?
Yes. It’s possible to change your registered agent in Alabama by submitting the Change of Registered Agent form with the state’s Business Services Division for a fee of $25.
3. Submit LLC Certificate of Formation
To officially form your LLC, you’ll need to complete and submit the Certificate of Formation along with the Name Reservation Certificate to the Alabama Secretary of State either online, in person, or by mail.
Note: All of the information on this form will become part of the public record.
The form will ask you to provide the following information about your LLC:
- Company name. Include an indicator like “LLC.”
- Effective date. You can choose a specific date for your LLC filing to take effect (no more than 90 days after the signed date). Leave this blank and the filing becomes effective the day it’s received by the state.
- Registered agent. This is an individual or company appointed to accept service of process on behalf of your LLC.
- Series, professional, or non-profit. Check the appropriate box that may apply to your LLC.
- Optional attachments. If you or your members have any other matters you would like to include, attach them to this filing.
How can I keep my personal information off the public record?
It’s a fact that all the information provided in the Certificate of Formation will become part of the public record. When your personal information is accessible by anyone, it opens your business up to hassles like junk mail.
To keep your information off the public record, you can hire a registered agent company—like us. We’ll list our address on this form so you don’t have to. Your personal addresses will stay off the public record and away from prying eyes.
What’s a Series LLC?
A series LLC, or SLLC, is a unique form of LLC that can hold independent divisions within itself. Each division (or “series”) has individual assets, finances, and limited liability. A Series LLC is often used by holding companies that want to separate out assets like real estate investments.
Find out if a series LLC is a good fit for you by visiting our How to Start a Series LLC in Alabama page.
What’s the difference between a member-managed and manager-managed LLC?
If you choose a member-managed LLC, the members (owners) will be in charge of the day-to-day operations. If you choose a manager-managed LLC, members hire managers to run the LLC. These managers will be in charge of tasks like hiring and firing employees, managing credit and bank accounts, and signing agreements and contracts.
For help in choosing the best management structure for you, check out our page on LLC Member Vs Manager.
How do I file the Alabama Certificate of Formation?
You can submit your certificate online, by mail, or in person.
Mail and in person:
Secretary of State, Business Services
P.O. Box 5616
Montgomery, AL
36103-5616
Online:
Alabama Online Services
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4. Write an LLC Operating Agreement
An operating agreement is a document outlining the rules and regulations for running your business. It dives into all the big-picture details of how your company will run, including functions like voting, transferring membership interest, and even eventually dissolving the business.
Check out our attorney-drafted Alabama LLC Operating Agreement.
Does Alabama require an LLC to have an operating agreement?
No. It’s not a legal requirement in Alabama for your LLC to have an operating agreement, consistent with Ala. Code 10A-5A-1.08.
Despite this law (or lack thereof), it’s essential for your LLC to have a custom operating agreement in writing. Otherwise, your LLC will be governed by the state’s default LLC laws. An operating agreement is arguably the most important document your business will keep. It’s internal, so you won’t need to file with the state or make it public.
What should be included in an operating agreement?
A custom operating agreement covers both the daily operation and big picture concerns of your company—everything from member duties to business dissolution. Here is a list of common topics covered by operating agreements:
- initial investments
- profits, losses, and distributions
- voting rights, decision-making powers, and management
- transfer of membership interest
- dissolving the business
Does a single-member LLC need an operating agreement?
Yes. Every corner of your business still needs the coverage of an operating agreement. Whether it’s opening a business bank account or showing the legitimacy of your LLC, an operating agreement helps to maintain limited liability.
5. Get an EIN
An employer identification number (EIN) is your business’s unique nine-digit number assigned by the IRS. This number allows you to submit both state and federal tax filings. It’s free to apply for an EIN, and we recommend doing so online for the quickest turnaround (apply by paper form if you don’t have a social security number).
Do I need an EIN for my Alabama LLC?
Yes. An EIN is required for businesses with employees, multi-member LLCs, and companies taxed as corporations. Even if your LLC isn’t legally required to get an EIN, it’s still a good idea. Having an EIN lets you open bank accounts and apply for business licenses, making it virtually impossible to run a business without one. Providing an EIN also lets you keep your SSN private during your business affairs, as well.
We’ll start your business off right when you hire us to form your LLC.
6. File a Beneficial Ownership Information Report
Starting in 2024, most LLCs will need to file a Beneficial Ownership Information (BOI) Report with the Financial Crimes Enforcement Network (FinCEN). Since this is a new requirement, the deadlines are a little confusing. LLCs formed in 2024 need to file within 90 days of company formation. LLCs registered before 2024 have until January 1st, 2025 to file. Starting in 2025, new LLCs will need to file within 30 days of formation. On the BOI Report, you’ll need to provide identifying information about your company applicant and all beneficial owners, as well as some information about the LLC itself.
A Beneficial Owner is anyone with at least 25% membership interest in your LLC or with substantial control over its operations or finances.
Your Company Applicant is the person who filed your Alabama Certificate of Formation with the Secretary of State, aka your LLC organizer.
What information is required on the BOI Report?
The full name, birth date, address, and government-issued ID for each beneficial owner and your company applicant. (LLCs formed before 2024 don’t need to give company applicant information.)
You’ll also need to include the legal business name of your LLC, any DBAs/assumed business names, physical business address, and EIN (or Social Security Number if your LLC doesn’t have an EIN).
How do I file the BOI Report?
Starting in 2024, you can file this report online using the Beneficial Ownership Secure System (BOSS). Filing the BOI Report is free.
Will I need to update the BOI Report?
Yes. If any information on your BOI Report changes, such as the LLC members, business name, or address, you’ll need to file an updated report within 30 days. Updating your report is done through BOSS and is free.
Does information on the BOI Report go on the public record?
No. Unlike your Certificate of Formation, the BOI Report isn’t visible to the public. The information on your BOI Report will only be accessible to government agencies, law enforcement, and financial institutions for the purpose of confirming customer identity.
Are there exemptions from the BOI Report?
Yes, there are 23 classes of exemption from the BOI Report, including (but not limited to):
- Large operating companies
- Most financial companies, such as banks and credit unions
- Investment companies registered with the Securities and Exchange Commission (SEC)
- Insurance companies registered with a state or federal agency
- Public utilities companies registered with a state or federal agency
- Tax-exempt entities
7. Open a Bank Account
Your LLC needs its own bank account. Why? You need to demonstrate that you and your LLC are separate financial entities in order to maintain the liability protection afforded by the LLC structure.
When you’re ready to open a bank account for your Alabama LLC, have the following documents ready to show:
- Alabama LLC Certificate of Formation (a copy is fine)
- the LLC’s operating agreement
- the LLC’s EIN
- an LLC Resolution to Open a Bank Account (if your LLC has more than one member).
If your LLC has more than one member, use our free LLC Resolution to Open a Bank Account.
8. Fund the LLC
Now that your LLC is equipped with its very own bank account, you’ll need to get some funds in there. The first contributions should be the membership interest paid by the members. This interest is usually paid for via check to the LLC’s bank account or as a contribution of property or services (which might also trigger a tax event).
What is LLC membership interest?
Membership interest in an LLC represents the percentage of ownership. The more you invest, the more membership interest you’ll own. For instance, if you invest $6,000 in the company while four other members invest $1,000 each, you’ll own 60% of the company while the members each own 10%. Membership interest correlates directly to voting power in most LLCs.
9. File State Reports & Taxes
As an Alabama LLC, you’ll need to file an annual report each year with the Alabama Department of Revenue. The report serves two purposes: to confirm or update your LLC’s contact information on file with the state and satisfy the privilege tax.
Unlike annual reports in other states, Alabama’s annual report is a combination of a report and a business privilege tax return, jointly referred to as the Alabama Business Privilege Tax Return and Annual Report. The cost depends on how much you make, but you can expect to pay a minimum of $200.
There is no standalone annual report in Alabama. When you file the Alabama Business Privilege Tax (ABPT), you’re also completing your annual report requirement.
Worried you’ll forget? Let us file your annual report for you.
When is the Alabama Annual Report due?
Alabama annual reports for LLCs are due by the 15th day of the 3rd month after the beginning of the taxable year. For most LLCs, this is March 15th.
How are Alabama LLCs taxed?
By default, every LLC in Alabama can expect to be classified as a pass-through tax entity. This means the net profits will “pass through” the LLC itself and fall onto the owners (members) to report on their personal tax return as earnings. Additionally, the state mandates an annual Business Privilege Tax (BPT) on all LLCs. The BPT varies based on income and has a $100 minimum tax. LLC owners have the option to file paperwork with the IRS to have their business taxed as a corporation instead of a pass-through entity.
Learn more about S-Corp Vs LLC tax designation.
*This is informational commentary, not advice. This information is intended strictly for informational purposes and does not constitute legal advice or a substitute for legal counsel. This information is not intended to create, nor does your receipt, viewing, or use of it constitute, an attorney-client relationship. More information is available in our Terms of Service.
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