LLCs can protect your personal assets (car, house, savings) if your real estate business is sued. LLCs also offer credibility and options to save on taxes.
Recommended: Use Northwest ($29 + State Fees) to form your real estate LLC for you.
Starting a Real Estate LLC in Alabama Is Easy
You can set up a real estate LLC in Alabama by registering the Certificate of Formation with the AL Secretary of State. The cost to get a real estate LLC in Alabama is $200.
Important: If you already own property and you have a mortgage, it’s important to understand your lender’s requirements before transferring title to a new LLC.
Follow our How to Set Up a Real Estate LLC in Alabama guide below to get started.
Step 1: Name Your Real Estate LLC
Choosing a company name is the first step in forming a real estate LLC. You’ll need to give your business a unique name that meets Alabama naming requirements.
You’ll officially register your name when you file your Certificate of Formation.
- Choose a name that meets Alabama naming requirements:
- Your name must include the phrase “limited liability company” or one of its abbreviations (LLC or L.L.C.)
- Your name can’t include words that suggest your LLC is affiliated with a government agency (FBI, Treasury, State Department, etc.)
- Read the full list of Alabama naming guidelines for more information
- Check if the name is available in Alabama. Make sure the business name you want isn’t already taken by doing an LLC name search online. To learn more about searching for an Alabama LLC name, read our full guide.
- Use naming tools like our LLC Name Generator and How to Name a Business guide if you need help brainstorming real estate business names.
- Reserve the name either online or by mail. If filing by mail, you must submit a name reservation at least two weeks prior to formation. If filing online, you may file your name reservation alongside your Certificate of Formation.
- Check to see if your business name is available as a web domain. You may want to buy the URL to prevent others from using it.
After you get your business name, your next step is getting a unique logo. Get your unique logo using our Free Logo Generator.
Step 2: Choose an LLC Registered Agent
When you file your Certificate of Formation, you'll need to list a registered agent.
A registered agent's job is to accept legal documents like service of process and tax notices for your LLC.
Your real estate LLC’s registered agent can be a person or a registered agent service. You can be your own registered agent, but many business owners choose to use a registered agent service.
Things to think about before choosing a registered agent include:
- Availability: You’ll need to be available during normal business hours (i.e., 9 a.m.–5 p.m. Monday through Friday) at the address you provide
- Public Records: If you run your business from home, you’ll have to make your personal address public
- Privacy: You could be served with a lawsuit in front of your family or coworkers
To learn more about Alabama registered agents, read our full guide.
Step 3: File Your LLC's Certificate of Formation
To register your Alabama LLC, you'll need to file the Certificate of Formation with the Alabama Secretary of State. This can be done online or by mail.
When filing the Certificate of Formation by mail, you must submit a copy of your Name Reservation Certificate. Online filers may reserve their name at the time of formation.
Now is a good time to decide whether your LLC will be member-managed vs. manager-managed.
Recommended: For help with completing the form, visit our Alabama Certificate of Formation guide.
Step 4: Create a Real Estate LLC Operating Agreement
An LLC operating agreement is a legal document that outlines the ownership and member duties of your real estate LLC.
Even single-member LLCs can benefit from having an operating agreement.
Your operating agreement should outline the following:
- Each member’s responsibilities
- How new members will be admitted
- How existing members may transfer or terminate their membership
- How profits and dividends will be distributed
- How and when capital calls will be made
- Manager indemnification regarding mistakes made in good faith
- Tax and reporting timing
- Interest transfer and first right of refusal to members if property is to be sold
You can add provisions to your real estate LLC operating agreement, as long as they don't conflict with Alabama law.
Recommended: Download a template or create a custom free operating agreement using our tool.
Step 5: Get an EIN
An Employer Identification Number (EIN) is a number that’s used by the US Internal Revenue Service (IRS) to identify and tax businesses. It’s basically a Social Security number for a business.
Steps After Forming a Real Estate LLC
After forming your real estate LLC, you’ll need to do the following:
- Open a Business Bank Account. A business bank account legally separates personal finances from business finances. This separation is required to maintain your LLC's corporate veil (i.e., your limited liability protection).
- Transfer Existing Property(s) to Your New LLC. If you already own property that you’ll be transferring to your new LLC, you’ll need to record a deed that reflects this change. This can be done with the help of a title company or on your own. We recommend contacting a title company or your county clerk to get started.
- Update Your Lease. If you are transferring existing rental property to a new LLC, you’ll need to update your residential lease agreement to reflect new ownership.