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 require additional paperwork (e.g. Banc, Bank, Banque, etc) and/or licensed individuals (e.g. Doctor, Engineer, etc). 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.

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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 nominated by your company to officially receive and send papers on your behalf including annual 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 find out why you may want to use a 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.

File the Certificate of Formation for a Domestic LLC.

Download the 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. Some Probate Judge's Offices do not accept expedited processing fees to be forwarded to the Secretary of State and some do not accept credit cards as a payment method. 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

What is an Operating Agreement? An operating agreement is a legal document outlining the ownership and operating procedures of your LLC. This agreement allows you to form financial/working relationships with co-owners into an established system suitable to your business. An Operating Agreement is not required to form an LLC in Alabama, but is good practice to have one.

* Recommended: We provide a free sample operating agreement however we recommend getting one professional drafted by a lawyer, especially if you are starting a multi-member LLC.

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 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 by one of two ways:

* Important: An EIN is obtained after the LLC is formed. Obtaining an EIN registers the company for federal taxes.

Not sure where to start?

Read our Starting a Business Guide
and try our Business Tools

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. Accounting

Set up your accounting system early to manage your finances and avoid future complications. It's important for many reasons including:

  • Tracking the financial wellbeing of your business, including bills, expenses and income.
  • Also makes filing your tax returns a lot easier.

Bookkeeping and accounting can be frustrating for many people but the right accounting software can make the process simple and hassle-free.

* Recommended: Try Xero Small Business Accounting Software for free, with an easy mobile app to manage your finances on-the-go.

3. Register Your LLC for Alabama State Tax

Do I need to register for State taxes?

- If you have Employees in Alabama you will have to register for Unemployment Insurance Tax, and State Income Tax Withholding on behalf of your Employees

- If you are selling a Product in Alabama, you will likely need to register for Alabama Sales Tax

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.

  1. Identify a suitable business idea that works for you - Check out our Business Ideas Tool.
  2. 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.
  3. 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.
  4. Complete important key steps after formation such as acquiring business licences & permits, registering for state taxes, and opening a business bank account.
  5. 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

Prevention

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.

* Recommended: INCFILE.COM offers a reliable registered agent service.

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 the 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.