STEP 1: Name your LLC


This is the first and most important step in starting your LLC. Do some research to make sure the name you choose is suited to your business venture and is easily searchable by potential clients.

  1. Follow the Alabama naming guidelines: Your entity name must contain the words Limited Liability Company or the abbreviation L.L.C. or LLC. Restricted words (e.g. Bank, Attorney, University) require additional paperwork and may require a licensed individual, such as a doctor or lawyer, to be part of the LLC. Prohibited words are those that would confuse the name of your LLC with a federal or state agency (e.g. FBI, Secret Service, Treasury etc.)
  2. Is the name available in Alabama? Make sure the name isn't already taken by doing a name search on the State of Alabama website.
  3. Reserve the name. You must complete the name reservation request online or by mail with the Alabama Secretary of State.
    Online Instruction: Choose Name Reservation. Select Non-Subscriber toward the middle of the page to complete the Online Name Reservation form. The fee for Online Name Reservation in Alabama is $28.
    By Mail Instruction: Download the PDF and follow the instructions. The fee for the Mail In Name Reservation in Alabama is $10.
  4. Is the URL available? Check to see if the name of your LLC is available so that you can reserve your domain name. Even if you don't plan to make a website today, you may want to buy the domain name in order to prevent others from acquiring it.

Find a Domain Now

Powered by GoDaddy.com

An email address is also something to consider when choosing a name. Get a professional email (@yourcompany.com) with Google apps. Also get access to the top business tools, cloud storage, and business-grade security. - Try it for free

STEP 2: Choose a Registered Agent


You are required to nominate a Registered Agent for your Alabama LLC.

What is a Registered Agent? A registered agent is a person or business that agrees to send and receive legal papers on behalf of your LLC. Such papers include service of process of legal action (if you are sued) and state filings.

Who can be a Registered Agent? The registered agent must be a resident of Alabama or a corporation authorized to transact business in Alabama. You may elect an individual within the company including yourself.

Click here to learn more about the role of a registered agent, and why you may wish to consider hiring a professional registered agent service.

* Recommended: INCFILE.COM provides free registered agent service for the first year as part of their LLC Packages.

STEP 3: File the Certificate of Formation


To register your LLC, you will need to file the Certificate of Formation with the State of Alabama.

When filing the Articles of Organization you will need to decide if your LLC will be member managed or manager managed. Read our article on the topic to learn more

File the Certificate of Formation for a Domestic LLC.

Download PDF

Fee: Nonrefundable $100 payable to Secretary of State. An additional $100 for expedited services.

Follow the instructions on the PDF.

Filing with the Probate Judge:

The Probate Judge will collect the Secretary of State Filing fee and expedite fee, if applicable. Please be sure to check with the Office of the Judge of Probate prior to filing to determine payment methods and ability to expedite processing as well as county fees. You can look up probate judge by county.

Important: If you're expanding your existing LLC to the State of Alabama you are forming a Foreign LLC. Learn how.

STEP 4: Create an Operating Agreement


An operating agreement is not required in Alabama, 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 your LLC. Learn more about operating agreements here.

* Recommended: Check out our free sample operating agreement

STEP 5: Obtain an EIN


What is an EIN? The Employer Identification Number (EIN), or Federal Tax Identification Number, is used to identify a business entity. It is essentially a social security number for the company.

Why do I need an EIN? An EIN is required when filing state and federal taxes. In addition, banks may require an EIN to open a business checking account.

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 by one of two ways:

Click here to learn more about EINs and further details on how to register for one with the IRS.

Considering using a Formation Service?

We have detailed reviews on IncFile and LegalZoom LLC formation Services.
Find out exactly what to expect when using their services.

Start Here

Six Key Steps
After Forming A Business

1. Separate Personal Assets from the LLC


Opening a business bank account is an important first step, as it:

  • Separates your personal assets from your company's assets, which is necessary for personal asset protection.
  • Makes accounting and tax filing easier.

Getting a business credit card allows you to:

  • Separate personal and business expenses.
  • Build your company's credit history, which can be useful to raise money for your company later.

2. Register Your LLC for Alabama State Tax


Do I need to register for State taxes?

*Recommended: Learn more about sales tax by reading our informative guide: Sales Tax for Small Businesses.

3. Accounting


Even if you haven't officially opened for business - it's critical to get your books in order. A well managed accounting system will help you:

  • Track your business finances, including bills, expenses and income.
  • Simplify your annual tax filings.

The right software makes accounting easy. Look for software that:

  • Syncs with your bank automatically.
  • Matches transactions to invoices, bills and purchase orders.
  • Can be accessed from your phone.

*Recommended: Xero has the features that all small businesses need.
Try Xero FREE for 30 days and get 50% off your first 3-months.

4. Obtain Business Licenses & Permits


Do I need business licenses and permits?

To operate your LLC you must comply with federal, state, and local government regulations. For example, restaurants likely need health permits, building permits, signage permits, etc.

Find out how to obtain necessary licenses and permits for your business:

The details of business licenses and permits vary from state to state. Make sure you read carefully. Don't be surprised if there are short classes required as well.

Fees for business licenses and permits will vary depending on what sort of license you are seeking to obtain.

5. Get Insurance


What is Workers Compensation Insurance? This form of insurance is required for most businesses with employees, but varies by state. Click here to learn more.

What is General Liability Insurance? This is an important service, but is not required in most states. Click here to learn why.

How much will the right insurance cost you? Click here to find out.

6. Employee Hiring Compliance


Once a business decides to hire employees, certain legal obligations are required, such as:

  • Ensuring that potential employees are eligible to work in the US
  • Reporting employees as "new hires" to the State
  • Providing workers compensation insurance for employees
  • Withholding income taxes
  • Printing compliance posters and place in a conspicuous location
  • Ensuring payment of employees in specific increments as required by the state

Alabama Department of Labor provides resources and information for employers.

A great resource for posting jobs and finding qualified employees is Indeed.com

How to Start a Business in Alabama

5 easy steps to starting a business in Alabama.
We have a far more detailed guide - How to Start a Business which will go over the points in more details.

Identify a suitable business idea that works for you - Check out our Business Ideas Tool.

Critically analyze your idea with our Lean Business Model Canvas Tool. You can then go on to create a full business plan with our Free Online Business Plan Tool.

Formally organize your Business into a company. An LLC is the most popular way to structure your business. Learn how to Form your LLC in Alabama.

Build your website and develop your brand. Learn more about marketing and brand establishment.

How to Maintain Your LLC

To maintain an Alabama LLC, it is necessary to make periodic filings with the State of Alabama. Learn how to keep your LLC in good standing and avoid state penalties.

Alabama Business Privilege License


In Alabama all businesses are required to purchase an annual license to do business known as the Business Privilege License/Tax. It must be purchased from every County your business is located in.

How to Purchase an Alabama Privilege License

Business Privilege Licenses are obtained
from the Probate Judges in your County

List of Probate Judge by County

Fee: Varies by County - Dependent on Population

Alabama - Business Licensing Section

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 0.025% - 0.175% of the net worth of the business your LLC conducted in the State of Alabama during the previous taxable year.

Avoid Dissolution


Each year, thousands of LLCs are unknowingly dissolved or suspended for failing to file an annual report. When this happens, LLC owners risk loss of limited liability protection. A registered agent service can help prevent this outcome by notifying you of upcoming filing deadlines and by submitting reports on your behalf.

Want More?

Gain access to our FREE Guides and Tools to help you start and grow your business.
Created by entrepreneurs for entrepreneurs.

Obtain a Certificate of Good Standing

A Certificate of Good Standing verifies that your LLC was legally formed and has been properly maintained. In Alabama, a Certificate of Good Standing is known as a Certificate of Compliance. Several instances where you might need to get one include:

  • Seeking funding from banks or other lenders
  • Forming your business as a foreign LLC in another state
  • Obtaining or renewing specific business licenses or permits

Request a Certificate of Good Standing in Alabama through the Alabama Department of Revenue.

ORDER ONLINE

How to Dissolve an Alabama LLC

If you no longer wish to conduct business with your LLC, it is important to officially dissolve it. Failure to do so in a timely fashion can result in tax liabilities and penalties, or even legal trouble. To dissolve your LLC, there are two broad steps:

  • Close your business tax accounts
  • File the Articles of Dissolution

Learn More Here


Foreign LLC in Alabama

If you have an existing LLC and want to register to do business in Alabama, you will need to form a foreign LLC.

File a Foreign LLC in Alabama

Download PDF

- or -

File Online
Select Non-Subscriber, located down the page, to begin application

Fee: Mail-in Form - $150. Online Form - $250. Follow the instructions on the Form you choose.

Benefits of Forming a Foreign LLC
The major benefit of becoming a foreign corporation is that it allows your company to operate as one entity in many jurisdictions. For example, if you originally incorporate your LLC the State of Delaware, you can file your existing domestic LLC as a foreign corporation in other states.