How to Start a Series LLC in Alabama
To start a Series LLC in Alabama, you must submit a Certificate of Formation to the probate judge in the county where your are forming your Series LLC. The judge will then pass on your approved paperwork to the Alabama Secretary of State. The Certificate of Formation and required name reservation cost $228 in combined fees, but you will also pay a variable county filing fee.
The steps required to start an Alabama Series LLC resemble the steps to forming a traditional limited liability company in Alabama, but there are several key differences you’ll need to know. This how to start an Alabama Series LLC guide can help you get started.
Alabama Series LLC Guide:
- Understand the Alabama Series LLC
- Reserve your AL Series LLC's name
- Submit the AL LLC Certificate of Formation
- Create an AL LLC Operating Agreement
- Get Federal EINs from the IRS
- Open bank accounts for your AL Series LLC
- Obtain any required business licenses
- File the Alabama initial and annual reports
What is an Alabama Series LLC?
An Alabama Series LLC is a type of limited liability company that can create divisions within itself, called “series,” that can have separate limited liability, assets, and finances. The Alabama Series LLC business structure is commonly used by holding companies to separate out assets (such as real estate investments), but the Series LLC can serve other business purposes as well. If properly formed and maintained, the series of your Alabama Series LLC will not be liable for losses or actions taken against the parent organization or any other series within it.
Learn more about the Series LLC business structure in general at Northwest’s Series LLC Guide.
AL Series LLC Name Reservation Requirement
Alabama is the only state that requires you to reserve your Series LLC’s name before filing the Certificate of Formation. Luckily, you can do this online. An Alabama Series LLC’s name must contain the words “Limited Liability Company” or the abbreviation “L.L.C” or “LLC.” You may also add the term “Series” before “Limited Liability Company,” though this isn’t required by the state.
It costs $28 to reserve your Alabama Series LLC’s name online if you’re a non-subscriber (or $27 for subscribers). You can also mail a paper copy of the Alabama Name Reservation Request Form for Domestic Entities to the Alabama Secretary of State and pay $10 for standard processing or $25 for expedited 24-hour state processing. Once you’ve reserved the name, print your name reservation certificate and include it with your Alabama Series LLC’s Certificate of Formation.
AL Series LLC Certificate of Formation Requirements
To form an Alabama Series LLC, you must complete and file one signed original and two copies of your Certificate of Formation. This is the same Certificate of Formation submitted by ordinary LLCs, but an Alabama Series LLC must check the box in article 5 identifying the organization as a Series LLC. See the document below and click on any number to see what information is required in the corresponding section.
Enter the name of your Series LLC. The name must include the words “Limited Liability Company” or the abbreviation “L.L.C.” or “LLC,” and it may also include the word “Series” before Limited Liability Company. We recommend naming your organization in a way that clearly indicates it is a Series LLC.
Attach a copy of your Series LLC's name reservation certificate. The company name on the certificate of name reservation must be the same as the name included on your Certificate of Formation.
Include the name and street address of your Alabama registered agent (and the agent's mailing address if different).
This article simply indicates that your Series LLC has at least one member. No action is required here unless you're creating your own Certificate of Formation, in which case you should include this as it appears on the state form.
The state's form includes three check boxes to indicate if your organization is a Series LLC, a Professional LLC, or a Nonprofit LLC complying with the relevant state statutes. You'll check the box labeled “Series LLC.”
Your Series LLC's effective date will be the date the state files your documents unless you indicate otherwise. You can postpone your organization's effective date up to 90 days.
Alabama requires the signature, typed name, and title of your Series LLC's organizer. An organizer doesn't have to be otherwise affiliated with your Alabama Series LLC. The organizer is just someone authorized to sign and submit your Alabama Series LLC’s Certificate of Formation.
How much does it cost to start an Alabama Series LLC?
The Certificate of Formation for your Alabama Series LLC costs $200 to file, and the name reservation fee is $28 if your reserve your Alabama Series LLC’s name online. But each county also has its own probate fee, and that fee isn’t the same in every county, so your total cost will depend on the county where you submit your filing (in Houston County, for instance, the county filing fee is $63). Additionally, you can pay $100 more for expedited (faster) processing.
How long does it take to form an Alabama Series LLC?
Alabama can take up to a month to process your filing after receiving it if you don’t pay the $100 expedite fee. This is mainly because your Alabama Series LLC’s Certificate of Formation goes first to the county probate judge and then gets transferred to the Alabama Secretary of State. Expedited filings usually get processed in around a few days to a couple of weeks, depending on the county where you file.
Does an Alabama Series LLC need a registered agent?
Yes. Your Alabama Series LLC is required to appoint and maintain an Alabama registered agent to receive service of process on its behalf. Your Series LLC’s Alabama registered agent must be available during ordinary business hours at the registered office address listed on your Certificate of Formation.
Does each series of an Alabama Series LLC need its own registered agent?
No. Your Series LLC’s Alabama registered agent can be the registered agent for each series of your Alabama Series LLC. If your Alabama Series LLC or any of its series register as a foreign business entity in another state, however, your organization will also need to appoint a registered agent in that state.
Create an AL Limited Liability Company Agreement
Does an Alabama Series LLC need an LLC Company Agreement?
Yes. Your Alabama Series LLC’s Limited Liability Company Agreement (called an LLC operating agreement in most states) authorizes your Series LLC to establish individual series, but it does far more than that. A limited liability company agreement defines how your organization is structured, who owns it, which members are associated with which series, and how your Alabama Series LLC will handle challenges and disputes in the future (along with a host of other details).
Creating an effective Limited Liability Company Agreement for an Alabama Series LLC isn’t easy, which is why we provide a template for creating an LLC operating agreement that you can adapt to the needs of your Alabama Series LLC. Feel free to explore this and our other free and adaptable LLC templates included below.
Get Federal EINs from the IRS
Does My Series LLC Need a Federal EIN?
Yes. Getting a federal employer identification number (FEIN or EIN) is pretty much a must for any Alabama series LLC. You’ll need an EIN if you’re going to hire employees or take advantage of tax elections like the S corporation, and most banks will expect your Series LLC to have an EIN to open a bank account. You will submit IRS Form SS-4, the Application for Employer Identification Number, to get an EIN. You can submit IRS Form SS-4 through the IRS website, by fax, or by mail.
Should I Get a Separate EIN for Each Series in My Series LLC?
Likely, yes. One of the most important things to do when establishing an Alabama Series LLC is to maintain each series’ limited liability protections, and that means maintaining separate finances and financial records. This means you’ll need to establish separate bank accounts for each series, which will require each series to get its own EIN.
6. Open Bank Accounts For Your Series LLC and Each Series
To open a bank account for your Alabama Series LLC, you will need to bring the following with you to the bank:
- A copy of your Alabama Certificate of Formation
- Your Series LLC Limited Liability Company Agreement
- Your Alabama Series LLC’s EIN
If your Alabama Series LLC has multiple members, you may also want to bring an LLC resolution to open a bank account that states that the person going to the bank is authorized by the members to open the account in the name of your Alabama Series LLC.
Should I open separate bank accounts for each series?
Opening separate bank accounts (and keeping separate finances) is crucial to maintaining each series’ limited liability, so it isn’t a good idea for your parent LLC and its individual series to share the same bank account.
However, many banks are not accustomed to starting multiple, independent bank accounts for what can appear, on the surface, to be a single organization. It’s best to call the bank ahead of time, explain your organization’s business structure, and make sure that the bank is willing to open separate bank accounts for your Alabama Series LLC and each series within it.
Obtain any Required Business Licenses
Does an Alabama Series LLC need a business license?
You can learn about Alabama’s various licensing requirements from Title 40, Chapter 12, of the Code of Alabama, but the short answer is yes, pretty much every type of business in Alabama needs a business license of some kind. This will also likely apply to each series you establish within your Alabama Series LLC, depending on the type of business you conduct, and the various cities and counties in Alabama often have licensing requirements of their own.
File the Alabama Initial and Annual Reports
What is the Alabama initial report?
Alabama requires Series LLCs, like ordinary LLCs, to submit a combined Initial Report / Business Privilege Tax Return (Form BPT-IN) within 2.5 months of forming with the state. The tax base is your Series LLC’s net worth, and there’s a minimum tax of $100. Fortunately, neither the Initial Report nor the Annual Report (described below) are required for each individual series within your Alabama Series LLC. One report will cover every series of your Alabama Series LLC.
What is the Alabama annual report?
The annual report, like the initial report, is a report/tax combo. The annual report will confirm or update your Series LLC’s information on the state’s records, and the form is combined with the Business Privilege Tax. The report and the tax are due together each year. Note that this is a different form from the one you submitted for your Initial Report. The Annual Report requires Form PPT.
Learn more at Northwest’s Alabama Annual Report Filing Instructions.