Follow our step-by-step How to Start an LLC in Alabama guide to get started today.
- Name Your Alabama LLC
- Choose a Registered Agent in Alabama
- File the Certificate of Formation
- Create an Operating Agreement
- Get an EIN
- Business Privilege License
- Business Privilege Tax
- Keep Your Company Compliant
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Step 1: Name Your Alabama LLC
Choosing a company name is the first and most important step of forming an LLC in Alabama. Be sure to choose a name that complies with Alabama naming requirements and is easily searchable by potential clients.
1. Follow the naming guidelines:
- Your name must include the phrase “limited liability company” or one of its abbreviations (LLC or L.L.C.).
- Your name cannot include words that could confuse your LLC with a government agency (e.g., FBI, Treasury, State Department, etc.).
- Restricted words (e.g., Bank, Attorney, University) may require additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.
- Your name must be distinguishable from any other Alabama limited liability company, corporation, limited partnership, or registered limited liability partnership.
2. Is the name available in Alabama? Make sure the name you want isn't already taken by doing a Business Entity Search on the Alabama Secretary of State's website.
To learn more about searching for an Alabama LLC name, read our full guide.
3. Reserve the name. If you plan to mail in your LLC registration, you will need to complete the Name Reservation Request for Domestic Entities form at least two weeks prior to registration. If you plan to register your LLC online, you will reserve your business name when you complete the online LLC registration.
If you don't plan on registering your LLC right away, you can reserve your LLC name online for 1 year.
4. Is the URL available? We recommend that you check online to see if your business name is available as a web domain. Even if you don't plan to make a business website today, you may want to buy the URL in order to prevent others from acquiring it.
Find a Domain Now
Once you have verified your name is available, you may now select a professional service to complete the LLC formation process for you.
We reviewed and ranked the best LLC services. Find out which is best for you.
Step 2: Choose a Registered Agent in Alabama
You are required to nominate an Alabama registered agent for your Alabama LLC.
What is a registered agent? A registered agent is an individual or business entity responsible for receiving important tax forms, legal documents, notice of lawsuits, and official government correspondence on behalf of your business. Think of your registered agent as your business's point of contact with the state.
Who can be a registered agent? A registered agent must be a resident of Alabama or a corporation, such as a registered agent service, authorized to transact business in Alabama. You may elect an individual within the company including yourself.
Recommended: Check out these best registered agent services.
Step 3: File the Alabama LLC Certificate of Formation
To register your LLC in Alabama, you'll need to reserve your LLC name and file the Certificate of Formation with the Secretary of State.
If you're filing the Certificate of Formation online, you’ll complete the name reservation when you complete the online Certificate of Formation.
If you're filing your Certificate of Formation by mail, you’ll need to mail in the Name Reservation Request for Domestic Entities form first. You'll get a name reservation certificate from the state within a few weeks. Then, you'll mail in the approved name reservation certificate with your Certificate of Formation.
Now is a good time to determine whether your LLC will be member-managed vs. manager-managed.
File the Certificate of Formation
OPTION 1: File Online With Alabama Interactive
- OR -
OPTION 2: File by Mail
State Filing Cost: $200
When filing by mail you must attach the Name Reservation certificate from the Office of the Secretary of State.
Secretary of State
P.O. Box 5616
Montgomery, AL 36103-5616.
For help with completing the form, visit our Alabama Certificate of Formation guide.
If you’re expanding your existing LLC to the State of Alabama, you will need to form a foreign LLC.
Step 4: Create Your Alabama LLC Operating Agreement
An operating agreement, known in Alabama as a limited liability company agreement, isn’t required for Alabama LLCs, but it’s a good practice to have one.
What is an operating agreement? An operating agreement is a legal document outlining the ownership and operating procedures of an LLC.
Why are operating agreements important? A comprehensive operating agreement ensures that all business owners are on the same page and reduces the risk of future conflict.
For more information on operating agreements, read our Alabama LLC operating agreement guide.
Recommended: Download a template or create a Free Operating Agreement using our tool.
Step 5: Get an Alabama LLC EIN
You can get an Employer Identification Number (EIN) from the IRS for free. It is used to identify a business entity and keep track of a business’s tax reporting. It is essentially a Social Security number (SSN) for the company.
Why do I need an EIN? An EIN number is required for the following:
- To open a business bank account for the company
- For federal and state tax purposes
- To hire employees for the company
Where do I get an EIN? An EIN is obtained from the IRS (free of charge) by the business owner after forming the company. This can be done online or by mail.
FOR INTERNATIONAL APPLICANTS: You do not need an SSN to get an EIN. Learn more here.
Step 6: Get a Business Privilege License
In Alabama, all businesses are required to purchase a business privilege license. You must purchase a license in every county where you do business. Licenses can be purchased from the local county probate judge.
Get a Business Privilege License
Find Your County to Get an Alabama Business Privilege License
Fee: Varies by county
Step 7: Sign Up for Business Privilege Tax
Every LLC that conducts business in Alabama is required to submit an annual PPT form, or Privilege Tax Form for Pass-Through Entities, before the third week of April. This tax is between 0.00025% - 0.00175% of the net worth of your LLC.
File your Alabama Privilege Tax
File by Mail with the Alabama Department of Revenue
Fee: $100+, depending on your business's income
Instructions: Follow the steps provided by the Alabama Department of Revenue.
The exact tax rate depends on your business's income during the previous taxable year. The minimum Business Privilege Tax amount is $100.
Steps After LLC Formation
Read all the steps you’ll need to maintain your LLC’s personal liability protection, open a business bank account, get business insurance, and stay up to date with state reporting requirements.
Visit our After Forming an LLC guide to learn more.
Step 8: Keep Your Company Compliant
Alabama LLC Business Permits and Licenses
To operate your LLC, you must comply with federal, state, and local government regulations. Fees and requirements for licenses and permits will vary depending on what sort of business license you need.
Find out how to get the necessary Alabama business licenses and permits for your LLC with our Alabama Business License guide.
Recommended: Consider having a professional service research your business’s licensing requirements. Read our best business license services review.
Alabama LLC Tax Filing Requirements
It's important to stay up to date on Alabama LLC taxes.
Depending on the nature of your business, you may be required to register for one or more forms of tax:
If you are selling a physical product, you’ll typically need to register for a seller's permit through the Alabama Department of Revenue website.
Alabama’s base state sales tax is 4%. Depending on your location in the state, you may be required to pay an additional local sales tax of up to 7%.
Alabama has a graduated individual income tax structure. Depending on your LLC’s income, your tax rate could range from 2% to 5%.
State tax returns are due each year at the same time as your federal tax return. To calculate your tax or determine your tax bracket, visit the Alabama Department of Revenue.
Hiring Employees in Alabama
If you plan to hire employees for your Alabama LLC, stay compliant with the law by following these steps:
- Verify that new employees are able to work in the US
- Report employees as "new hires" to the state
- Provide workers' compensation insurance for employees
- Withhold employee taxes
- Print workplace compliance posters and place them in visible areas of your workspace
Find more information at the Alabama Department of Labor.
Recommended: Check out our Hiring for your Small Business Guide for resources like sample job descriptions, payroll service reviews, and more.
Common Questions About Alabama LLCs
What is an LLC?
LLC is short for limited liability company. It is a simple business structure that offers more flexibility than a traditional corporation while providing many of the same benefits.
An LLC is one of several business structures, such as a sole proprietorship, partnership, and corporation (which includes C corp and S corp). For more information, read our What is an LLC guide.
Watch our video: What is an LLC?
How do I name my Alabama LLC?
You must follow the Alabama LLC naming guidelines when choosing a name for your LLC:
- Include the phrase "limited liability company" or one of its abbreviations (LLC or L.L.C.).
- Do not use words that could confuse your business with a government agency (FBI, State Department, CIA, etc.).
- Receive the proper licensing when using the words such as lawyer or doctor.
If you are having trouble coming up with a name for your LLC use our LLC Name Generator. That will not only find a unique name for your business but an available URL to match.
After you get your business name, your next step is getting a unique logo. Get your unique logo using our Free Logo Generator.
Do I need to get a DBA or trade name for my business?
Most LLCs do not need a doing business as (DBA) name. The name of the LLC can serve as your company’s brand name and you can accept checks and other payments under that name as well. However, you may wish to register a DBA if you would like to conduct business under another name.
To learn more about DBAs in your state, read our How to File a DBA guide.
Can I be my own registered agent in Alabama?
Yes. You or anyone else in your company can serve as the registered agent for your Alabama LLC.
Read more about being your own registered agent.
Is a registered agent service worth it?
Using a professional registered agent service is an affordable way to manage government filings for your Alabama LLC. For most businesses, the advantages of using a professional service significantly outweigh the annual costs.
For more information, read our article on Alabama registered agents.
What is the processing time to form my Alabama LLC?
10 days online or by mail, but can be expedited for an additional fee.
What is the difference between a domestic LLC and foreign LLC?
An LLC is referred to as a "domestic LLC" when it conducts business in the state where it was formed. Normally when we refer to an LLC we are actually referring to a domestic LLC. A foreign LLC must be formed when an existing LLC wishes to expand its business to another state.
Read our What Is a Foreign LLC article to learn more.
How much does it cost to start an Alabama LLC?
The cost to start an Alabama LLC is $200.
To learn more, read our guide on the cost to form an Alabama LLC.
Do I need to file my operating agreement with the State of Alabama?
No. The operating agreement is an internal document that you should keep on file for future reference. However, many states do legally require LLCs to have an operating agreement in place.
How do I get an EIN if I don’t have a Social Security number?
A Social Security number is not required to get an EIN. You can simply fill out IRS Form SS-4 and leave section 7b blank. Then call the IRS at (267) 941-1099 to complete your application. Learn more here about applying as an international applicant.
What tax structure should I choose for my Alabama LLC?
When you get an EIN, you will be informed of the different tax classification options that are available. Most LLCs elect the default tax status.
Do I need an EIN for my LLC?
All LLCs with employees or businesses with multiple LLC members must have an EIN. This is required by the IRS.
Learn why we recommend always getting an EIN and how to get one for free in our Do I Need an EIN for an LLC guide.
What is the minimum wage in Alabama?
The minimum wage in Alabama is $7.25 per hour
How often do I need to pay employees in Alabama?
There are no regulations specified in Alabama on pay frequency.