How Much Does It Cost to Start an LLC in Alabama?

The cost to start an LLC (limited liability company) online in Alabama is $200. This fee is paid to the Alabama Secretary of State when filing the LLC’s Certificate of Formation.

We recommend Northwest ($29 + State Fees) to help form your LLC.

How Much Does an LLC Cost in Alabama?

Alabama LLC Online Filing Fee: $208

The main cost to start an LLC in Alabama is the $200 fee to file your LLC's Certificate of Formation online with the Alabama Secretary of State.

For a look at LLC costs in every state, read our other Cost to Start an LLC and How to Form an LLC guides.

Alabama Business Privilege Tax and Annual Report: $100+

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% and 0.00175% of the net worth of your LLC.

The exact tax rate depends on your business's income during the previous taxable year. The minimum Business Privilege Tax amount is $100.

Alabama Business Privilege License: Varies

In Alabama, all businesses are required to purchase an annual license to do business known as the Business Privilege License. You must purchase a license in every county where you do business. Licenses can be purchased from your local county Probate Judge. Fees vary by county.

Cost to Form a Foreign LLC in Alabama

If you already have an LLC that is registered in another state and you’d like to expand your business into Alabama, you’ll need to register your LLC as a foreign LLC in Alabama.

The cost for registering an Alabama foreign LLC is $156 online or $150 by mail. You can register a foreign LLC in Alabama by filing a Foreign Limited Liability Application for Registration with the Alabama Secretary of State. This can also be done by mail.

Optional LLC Formation Costs

There are optional fees associated with LLC formation:

LLC Name Reservation

Reserve your name for up to 12 months prior to LLC formation by filling the Name Reservation Request Form for Domestic Entities. The filing fee is $28 for online fillings and $25 if filing by mail.

Foreign LLC Name Reservation

Reserve your name for up to 12 months prior to LLC formation by filing the Name Reservation Request Form for Foreign Entities. The filing fee is $28 for online fillings and $25 if filing by mail.

Trade Name

File a trade name application to create a name other than your legal LLC business name. The filing fee is $30 for online fillings and $31.20 if filing by mail.

Ready to Start Your Alabama LLC?

Read our LLC formation services review to choose the best service for you.

Alabama LLC Annual Fee

Maintaining an LLC in Alabama includes various costs influenced by several factors:

  • Annual Business Privilege License and Tax: Compliance in Alabama also necessitates an Annual Business Privilege License and tax. Privilege license costs vary by county, and the tax carries a minimum cost of $100.
  • Additional Business License Fees: In Alabama, the fee for a business license varies, influenced by your business type and location.
  • Registered Agent: Your LLC needs to appoint a registered agent who is based in Alabama. Though a registered agent service may not be necessary for all businesses, the pros outweigh the cons. 

Remember, always keep your LLC information up-to-date to avoid penalties, and adhere to the annual filing requirements, such as the Business Privilege Tax, to avoid late fees. Using these tips, you can efficiently manage the costs associated with maintaining your Alabama LLC.

How to Register an Alabama LLC Yourself

Forming your own LLC in Alabama is an achievable task that you can handle independently. Just follow these eight steps, and you'll be on the right path. 

These straightforward instructions will guide you through the whole process of registering your Alabama LLC, making it simple and hassle-free.

Recommended: Using an LLC formation service like Northwest ($29 + State Fees) saves time and ensures compliance. Besides the low cost, we like their streamlined approach and excellent customer service.

Eight Basic Steps to Start an LLC in Alabama

Step 1: Name Your Alabama LLC
Step 2: Choose a Registered Agent
Step 3: File a Certificate of Formation
Step 4: Create an Operating Agreement
Step 5: Get an EIN
Step 6: Get a Business Privilege License
Step 7: Sign Up for Business Privilege Tax
Step 8: Keep Your Company Compliant

Step 1: Name Your Alabama LLC

When you name your Alabama LLC, you’ll need to choose a name that:

  1. Is available for use in the state of Alabama
  2. Meets Alabama naming requirements
  3. Is available as a web domain

Recommended: Visit our Start an LLC in Alabama guide for detailed naming rules and instructions for registering a business name in Alabama.

Not sure what to name your business? Check out our How to Name a Business guide and free LLC Name Generator.

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 create a business website today, you may want to buy the URL in order to prevent others from acquiring it.

Find a Domain Now

Step 2: Choose a Registered Agent

All LLCs in Alabama must appoint a registered agent. A registered agent primarily acts as your LLC’s main point of contact with the state. But most importantly, they are responsible for accepting service of process in the event your business is sued.

Your Alabama registered agent must:

  • Be at least 18 years or older
  • Have a physical address in Alabama
  • Be available during normal business hours to accept service of process

Recommended: Get a free year of registered agent services when you hire Northwest Registered Agent to form your LLC. $29 (plus state fees).

Get Started

Step 3: File the Certificate of Formation

The Alabama Certificate of Formation is a document that is filed with the Alabama Secretary of State to form an LLC. The fee for filing a Certificate of Formation is $208 online.

For detailed instructions for completing the Certificate of Formation, visit our How to File the Alabama Certificate of Formation guide.

File an Alabama Certificate of Formation

OPTION 1: File Online With Alabama Secretary of State Online Services

File Online

- OR -

OPTION 2: File the Certificate of Formation by Mail

Download Form


State Filing Cost: $200 by mail and $208 online, payable to the Secretary of State

Mailing Address:
Secretary of State
Business Services
P.O. Box 5616
Montgomery, AL 36103-5616

Step 4: Create an 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.

Step 5: Get an EIN

What is an EIN? An EIN or Employer Identification Number is a nine-digit number issued by the Internal Revenue System (IRS) to identify a business for tax reporting purposes. An EIN is essentially a Social Security number (SSN) for your company.

Why do I need an EIN? An EIN number is required for the following:

Free EIN: You can get an EIN from the IRS website (free of charge) after forming your business.

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

VIEW DIRECTORY

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

DOWNLOAD FORM

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.

Step 8: Keep Your Company Compliant

Compliance requirements for Alabama LLCs encompass obtaining relevant business licenses and permits, adhering to tax regulations, and following employee hiring laws.

  • Business Licenses and Permits: Your LLC needs to comply with all federal, state, and local regulations, including obtaining appropriate licenses and permits. For more details, refer to our Alabama Business License guide, or consider using professional license services.
  • Tax Requirements: Taxes applicable to your LLC may include a 4% base state sales tax, employer taxes for hired employees, and a graduated income tax ranging from 2% to 5%, depending on your LLC’s income (in addition to federal income taxes). You may also need to register for employer taxes through the Alabama Department of Revenue website if you have employees.
  • Employee Hiring: Verify new hires' eligibility to work in the US, report them to the state, provide workers' compensation insurance, withhold their taxes, and prominently display workplace compliance posters.

By keeping track of all licenses, permits, and taxes and adhering to employment laws, you can ensure your Alabama LLC remains compliant and avoids penalties.

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.

Alabama LLC Cost FAQ

What is the filing fee to form an LLC in Alabama?

The filing fee to form an LLC in Alabama is $200. This payment is made to the Alabama Secretary of State to officially recognize your business.

How much does it cost to reserve a business name in Alabama?

Reserving a business name in Alabama incurs a cost of $25. You have to reserve a name before filing the Certificate of Formation (or when you file if you file online).

What is the cost of a registered agent for my Alabama LLC?

A registered agent is a necessary part of forming your LLC in Alabama. The cost for this service can vary, but generally, you might expect to pay around $100 per year. The agent's role is to accept legal documents and other important notices on behalf of your business.

What is the cost of the annual report for an LLC in Alabama?

Every LLC in Alabama is required to file an annual report with the Secretary of State. This costs $100 and serves to update the state with your business's current details.

Are there additional expenses associated with forming an LLC in Alabama?

Yes, aside from the filing, name reservation, registered agent, and annual report fees, there could be other costs. These could include creating a business website or using LLC formation services which offer comprehensive packages to handle most aspects of forming an LLC. The actual cost can vary based on individual needs and preferences.

What does limited liability mean for my Alabama LLC?

Limited liability is a key feature of LLCs. This means the owners, also known as members, are not personally responsible for the business's debts and liabilities. In case of financial trouble or legal action, your personal assets, such as your home or personal bank accounts, are usually safe.

How does pass-through taxation work for an Alabama LLC?

Pass-through taxation is the method by which LLCs are taxed. Instead of the business being taxed, the income and losses of the LLC are reported on the personal tax returns of the owners. This method can often result in tax savings, as it avoids the double taxation faced by corporations.

How does an LLC in Alabama offer flexibility?

An LLC offers significant flexibility in Alabama. You can choose how to structure and manage your business in a way that suits you best. This might involve deciding how profits are shared or how the business makes decisions. This flexibility makes the LLC a popular choice for many entrepreneurs.

Can LLC formation services assist in setting up an LLC in Alabama?

Yes, there are several LLC formation services that can help streamline the process of setting up an LLC in Alabama. These services handle much of the paperwork and ensure all necessary steps are taken, making the process much easier. These services do have a cost, which can vary based on the level of service provided.

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