How to Start a Corporation in Alabama
To get your Alabama corporation off the ground, start by filing the Certificate of Incorporation with the Alabama Secretary of State, creating corporate bylaws, and choosing your initial director(s).
We’ll show you how to start a corporation in Alabama yourself.
Or simply use a professional service:
It's Easy to Incorporate in Alabama
Step 1: Name Your Alabama Corporation
Step 2: Choose a Registered Agent
Step 3: Hold an Organizational Meeting
Step 4: File the Certificate of Incorporation
Step 5: Get an EIN
For a look at corporation formation in every state, check out our other How to Start a Corporation guides.
Not sure if a corporation is right for you? Check out our LLC vs. Corporation guide to help you make your decision.
Step 1: Name Your Alabama Corporation
Choosing a business name is the first step in starting a corporation.
1. Alabama naming guidelines:
- You MUST reserve your corporation’s name online or by mail before registering it. Corporations filing by mail must reserve their name two weeks prior to registration.
- Your corporation’s name has to include the terms “corporation” or “incorporated” either in its abbreviated form or written out in full.
- Any banking-related name needs a letter from the Alabama Banking Commissioner’s Office, and any insurance-related name needs a letter from the Alabama Insurance Commissioner’s Office.
- Any name using a professional designation in the name (e.g., engineering, attorney) requires a copy of the license of one officer/member or a letter from the governing agency.
- You cannot choose a name that is indistinguishable from a name that is already included in the Alabama Secretary of State’s records.
Read the Alabama state statute regarding corporation naming guidelines for more information.
2. Is my corporation name available in Alabama?
Your Alabama corporation name must be unique and distinguishable from other business names in Alabama. Use the Alabama Secretary of State’s Business Entity Search Portal to determine if your desired business name is available.
3. Alabama Name Reservation Form
You must complete the Name Reservation Request Form for Domestic Entities before or at the time of registration, depending on how you file. This can be done online or by mail with the Alabama Secretary of State. The filing fee is $25 for mailed requests, $27 for online subscribers, and $28 for online non-subscribers.
Corporations that form their business online can reserve their name at the time of registration, while corporations that mail in their Certificate of Formation must reserve their name at least two weeks in advance.
4. Is the URL available?
Before registering your Alabama corporation, you’ll need to check if a good URL is available for your business name. It’s important to secure your URL right away.
Step 2: Choose an Alabama Registered Agent
You must appoint an Alabama registered agent, also known as a resident agent, when registering your corporation with the Secretary of State, Business Services Division.
A registered agent is an individual or entity appointed to receive service of process, government correspondence, and compliance documents on behalf of a business.
Your registered agent can be an individual, business entity, or professional registered agent service. Any member of the corporation or individual can serve as your Georgia resident agent as long as the person:
- is 18 years or older
- has a physical address in the state where business activity is conducted
- is available (in person) during normal business hours
Recommended: Northwest offers one year of free registered agent services with their corporation formation package ($29 + State Fees).
Step 3: Hold an Organizational Meeting
Before you officially file the Certificate of Incorporation in Step 4, you will need to hold an organizational meeting to complete the following tasks:
- Fill out and execute the Certificate of Incorporation
- Create and approve bylaws
- Select your initial director(s)
- Determine your share structure
- Execute an Incorporator’s Statement
Create and Approve Corporate Bylaws
Bylaws are the rules that determine how your organization will be governed and run. For detailed instructions on creating your bylaws, read our corporate bylaws guide.
Appoint Initial Directors
You must appoint at least one director who will oversee your Alabama corporation until the first shareholder meeting.
A corporate director is in charge of the adoption, amendment, and repeal of operational bylaws as well as the election, supervision, and removal of officers.
After forming the corporation, the incorporator(s) — or initial director(s), if named on the formation documents — should call an organizational meeting. During this initial meeting, either the incorporator(s) will elect the board of directors or the initial director(s) will appoint the officers.
Choose a Share Structure and Strategy
A share of stock is the unit of ownership of a corporation. Each share of stock represents a percentage of ownership of the company. For example, if a corporation issues one share of stock the shareholder (stock owner) would then own 100% of the corporation.
Shares can be structured into classes. Each class, termed a share class, holds different rights and privileges. You can have multiple classes and each class can hold any number of shares.
Authorized Shares: the number of shares the corporation is allowed to issue.
Issued Shares: the total number of shares actually issued to shareholders.
Share Class: a group of shares that has a unique set of rights and privileges.
In Alabama, the standard Certificate of Incorporation form for corporations only has space to list one share class. If your corporation has more than one class of stock, you can attach that information separately and check the box on the Certificate of Incorporation that indicates there is additional information attached.
Create and Execute an Incorporator’s Statement
The incorporator(s) should sign an Incorporator’s Statement with complete names and addresses of each initial director and store it in the corporate records book.
This document names the initial director(s) that will serve until the board of directors is elected during the first shareholder’s meeting. It should be stored with the rest of your corporate records.
Step 4: File the Alabama Certificate of Incorporation
You will need to file the Alabama Certificate of Incorporation to set up a corporation in Alabama. You can file it online or by mail with the Secretary of State. The filing cost is $200.
This document will cover the basics of your corporation, including:
- Corporate name and principal address
- Corporate service of process agent name and street address
- The number of authorized shares the corporation is allowed to issue
In Alabama, the standard Certificate of Incorporation form for corporations only has space to list one share class. If your corporation has more than one class of stock, you can attach that information separately and check the box on the Certificate of Incorporation that indicates there is additional information attached.
File the Alabama Certificate of Incorporation
Option 1: File Online With the Alabama Secretary of State
File Online- OR -
Option 2: File the Certificate of Incorporation by Mail
Download FormFiling Cost: $200
Mailing Address:
Secretary of State, Business Services
P.O. Box 5616
Montgomery, AL 36103-5616
Step 5: Get an EIN for Your Alabama Corporation
An Employer Identification Number (EIN) is used by the federal government to identify a business entity. It is essentially a Social Security number for the company. An EIN is needed:
- To open a bank account for the company
- For federal and state tax purposes
- To hire employees
Get an EIN
Option 1: Request an EIN from the IRS
- OR -
Option 2: Apply for an EIN by Mail or Fax
Mail to:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
Fee: Free
Subscribe to our YouTube channel
Running Your Corporation
It is very important to adhere to the formalities of running a corporation. Read our How to Run a Corporation guide to learn more.
Taxes, Annual Reports, & Licensing
Alabama State Corporation Tax Requirements
Depending on the nature of your business, you may be required to register for one or more forms of state tax:
Alabama Sales Tax
If you’re selling a product, you’ll typically need to register for a seller's permit through the Alabama Department of Revenue's My Alabama Taxes website. This allows a business to collect sales tax.
Alabama Employer Taxes
If you hire employees, you will need to register for Alabama employer taxes through the Department of Revenue’s My Alabama Taxes website. This includes Employee Withholding Tax, Unemployment Insurance Tax, and Disability Insurance.
Alabama Corporation Licenses and Permits
To operate your corporation in Alabama, you must comply with federal, state, and local government regulations. For example, restaurants likely need health permits, building permits, signage permits, etc.
Learn more in our Alabama Business License guide.
File the Alabama Annual Report and Business Privilege Tax Return
You must file the Alabama Business Privilege Tax Return and Annual Report (Form CPT) each year. Alabama provides detailed instructions about how to fill out the report.
Corporate Dissolution & Alabama Good Standing
How to Get an Alabama Certificate of Good Standing
A Certificate of Good Standing verifies that a corporation was legally formed and has been properly maintained. Alabama has two forms that serve this purpose: a Certificate of Existence and a Certificate of Compliance.
A Certificate of Existence verifies that your Alabama corporation is on record with the state. A Certificate of Compliance shows if your corporation has filed its annual reports and paid its taxes.
To order a Certificate of Existence in Alabama, you must complete an Application for Certificate of Existence of Registered Entities form. You can submit this form to the Secretary of State in person, by mail, or online.
To order a Certificate of Compliance in Alabama, you must fill out the online order form with the Alabama Department of Revenue.
File a Certificate of Existence
Option 1: Request a Certificate Online
Request Online- OR -
Option 2: Request a Certificate by Mail
Download FormFee: $27 online for subscribers, $28 online for non-subscribers; $10 by mail
Mailing Address:
Office of the Alabama Secretary of State
Business Services Division/Business Entities
P.O. Box 5616
Montgomery, Alabama 36103-5616
File a Certificate of Compliance
Request a Certificate of Compliance With Alabama’s Department of Revenue
Request OnlineFee: $14
How to Dissolve a Corporation in Alabama
If at any point you would like to permanently stop doing business, or close your business, it is important to officially dissolve your corporation. Failure to do so in a timely fashion can result in tax liabilities, penalties, or even legal trouble.
There are five main steps to close your Alabama corporation:
- Stop doing business
- Hold a board meeting, vote on dissolution, and record the meeting in the corporation minutes
- File the Articles of Dissolution with the Judge of Probate in the county where the corporation was formed
- Close your federal and state business tax accounts with the IRS and Alabama Department of Revenue
- Close your business bank accounts
File Dissolution Documents
You must dissolve or close your corporation in Alabama by filing the Domestic Business Corporation Articles of Dissolution with the Judge of Probate in the county where the corporation was formed.
Is a Corporation Right For You?
An LLC provides limited liability protection without corporate complexity.
Find out if an LLC is the right structure for you.
Steps After Forming a Corporation
After forming a corporation, you’ll want to protect your personal and business assets and build credit.
Taking these steps will set your business up for success:
- Open a Business Bank Account
- Open a Business Credit Card
- Establish and Build Business Credit
- Get Insurance
- Protect Your Corporate Veil
Form a Corporation with Northwest for $29 Plus State Fees
Alabama Corporation FAQ
In Alabama, it will cost you $200 to file your Certificate of Incorporation with the Secretary of State. This is the case regardless of whether you submit it online or by mail.
Your registered agent fees will also contribute to the startup cost of your corporation. Our article on How Much Does a Registered Agent Cost explores this topic in greater depth.
The primary differences between these two business entities are the taxation, startup cost, and regulations that apply to each of them.
Since corporations are not considered “pass-through” entities, they are liable to pay Alabama’s corporate tax rate of 6.5% and the federal rate of 17%.
Despite this, corporations are highly appealing to investors and thus recommended if you are looking to attract them. The reasons for this are explored in our Why Investors and Venture Capitalists Like C Corporations article.
If you don’t need to attract investors, you should form an LLC.
The turnaround time of your business’s incorporation documents can take anywhere from 6-8 weeks, according to how busy the Secretary of State is.
That being said, this process can be sped up to 4-5 weeks for an additional fee if you desire.
Due to this lengthy turnover time, it is important to ensure the corporation is the right structure for your business. You can read more about this in our What is a Corporation article.
While more difficult and costly than setting up an LLC, the process of setting up a corporation in Alabama is still very straightforward.
There are five simple steps involved in starting your corporation here:
- Choosing an acceptable name
- Electing a registered agent
- Hosting an organizational meeting
- Submitting your Certificate of Incorporation
- Acquiring an EIN
If you are having difficulties with any of these steps, make sure to refer to our How to Start a Corporation in Alabama article.
LLCs do not require as much paperwork as corporations to launch or manage. While the difference in startup difficulty is not very noticeable, LLCs are much lower maintenance.
This is due to the fact that stricter regulations are imposed on corporations. As an example, they must hold annual meetings and appoint directors, whereas this is not necessarily the case with an LLC.
To see a full comparison of the two structures, check out our LLC vs Corporation article.