How To Start A Series LLC In Alabama

We have created a step by step guide to help business owners with the formation of their Alabama series LLC. A series LLC is a form of LLC that allows its members to divide the assets and operations of a “parent” LLC into a set of “child” series.

The child series, also known as “individual protected series,” are protected against liability and losses that might be incurred by the other child series and the parent LLC.

If you are unfamiliar with the series LLC, you can also take a look at our guide about what the series LLC is, including its risks and benefits.


Step 1: Name Your Series LLC

Before naming your series LLC, you should know the answers to these questions:

  • What are the laws for naming an Alabama series LLC?
  • What are some general tips for naming a series LLC?
  • Is my business name available in Alabama?
  • Is my business name available as a URL and if so, how do I buy it?

1. Naming Rules: Series LLC naming rules vary from state to state. In Alabama, you are only required to follow traditional LLC naming laws. You will also need to complete the Certificate of Name Reservation for the parent LLC before filing your series LLC Articles of Formation. 

Alabama LLC Naming Rules:

  • Your name must include the phrase “limited liability company,” or one of its abbreviations (LLC or L.L.C.).
  • Your name cannot include words that could confuse your LLC with a government agency.
  • Restricted words (e.g. Bank, Attorney, University) may require additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.

2. Consider these general tips for making your series’ names more recognizable, uniform, and clear:

  • Use the word “protected series” within the name of each company.
  • Name the parent LLC in a way that distinguishes it from the child series.
  • Include the full name of the parent LLC in the name of each child series.
  • The name of the child series should include the name of the assets it holds. This creates a clearer asset picture to the public and creditors.

 

Example of a series LLC naming system that uses both State requirements and general tips:

My Holdings Co., LLC, a series LLC

123 Main Street., LLC, an individual protected series of My Holdings Co., LLC, a series LLC

123 Division Street, LLC, an individual protected series of My Holdings Co., LLC, a series LLC

TIP: Use a DBA (doing business as) for the child series if the name is too long for good business branding.

 

3. Is my business name available in Alabama? Make sure the name you want isn't already taken by doing a name search on the State of Alabama website.

4. Reserve the name. You must complete the name reservation request online or by mail with the Alabama Secretary of State. (Fee: $28 online, $10 by mail).

5. Is my business name available as a URL? We recommend that you check to see if your business name is available as a web domain. Even if you don't plan to make a business website today, you may want to buy the URL in order to prevent others from acquiring it.

Find a Domain Now

Powered by GoDaddy.com

After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free

Step 2: Choose a Registered Agent

You are required to nominate a Registered Agent for your Alabama series LLC. The Registered Agent for the parent LLC will need to be the same for each child series.

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? A 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.

Learn more about the role of a registered agent and why you should consider hiring a professional service.

Recommended action box icon

*RecommendedNorthwest provides registered agent service for series LLCs. A subscription will need to be purchased for each LLC in the series ($125/year/LLC).

Step 3: File The Certificate of Formation

To register your series LLC, you will need to file the Certificate of Formation with the State of Alabama. This can be done online or by mail.

The Certificate of Formation includes a checkbox in section 5 to indicate you are forming a series LLC. You can find the form here.

Recommended action box icon

We recommend working with an Attorney to help you complete your series LLC Certificate of Formation.

Or read our free guide to form a standard single or multi-member LLC in Alabama.

How to File Online

Select "non-subscriber" and fill out the online form.

Note

If you wish to subscribe to Alabama Interactive, the annual fee is $95. However, this service is designed for attorneys, serial entrepreneurs, and real estate investors who need to track many LLCs simultaneously. It is not recommended for most LLC owners.

How to File by Mail

Mail the following to the Office of the Judge of Probate in your Registered Agent's county:

  • One (1) signed original Certificate of Formation document
  • Two (2) completed copies
  • $100 check payable to the Secretary of State
  • Additional check payable to the Judge of Probate Office in your Registered Agent's county. Exact fee varies by county. Contact your local Probate Office for more information.

 

Note

DO NOT mail any of these documents or payments directly to the Secretary of State. Your local Probate Office will submit all payments and paperwork on your behalf.

 

Step 4: Creating An Operating Agreement

An operating agreement is required when forming a series LLC in Alabama. The operating agreement doesn’t have to be filed with the state.

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? For a series LLC, the operating agreement is very important because it outlines the liability limitations (asset protection) of the series. 

The series LLC operating agreement should usually be written with the help of an attorney.

TIP

 New child series can be added to the series LLC by amending the operating agreement. Remember to file a Name Reservation Form for the new child series.

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. Each of the child series in your series LLC will require an EIN.

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

How do I create an EIN for my series LLC? The IRS doesn’t have specific guidelines for creating an EIN for the child series of a series LLC. Experts suggest using the name of your series LLC combined with the child series name for each additional EIN.

 

Example Series LLC EIN

 

Series LLC Name: My Holdings Co., LLC, a series LLC

EIN entry: My Holdings Co LLC a series LLC

 

Child Series Name: 123 Main St., LLC, an individual protected series of My Holdings Co., LLC, a series

EIN Entry: 123 Main St LLC an individual protected series of My Holdings Co LLC a series

Get an EIN

Option 1: Request an EIN from the IRS

Apply Online

- OR -

Option 2: Apply for an EIN by Mail or Fax

Download Form

Mail to:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999

Fax: (855) 641-6935

Fee: Free

Key Steps After Forming a Series LLC

OPEN A BUSINESS BANKING ACCOUNT

A dedicated business banking account is required for each child series of a series LLC. Without dedicated accounts, the child series are NOT protected from liabilities incurred by the other child series or the parent LLC.

SET UP ACCOUNTING

Accounting and record keeping for the series LLC MUST be clear, concise, and separate. Without careful record keeping, your series might not be protected. Separate record keeping helps ensure the courts will never allow a creditor or plaintiff to pierce the corporate veil.

TIP

Expenses are sometimes shared across the series. For example, the series might share office space. Shared costs like rent can be spread out between the child series but it must be done in a logical way that will be defensible in court.

Accounting for your series LLC should be handled by a professional Accountant or firm that is familiar with the series LLC.

Recommended action box icon

SET UP ACCOUNTING

*Recommended: Mazuma’s team of CPAs and accountants can help manage your series LLC’s finances, including bookkeeping, accounting, and tax filing services. 

REGISTER YOUR LLC FOR ALABAMA STATE TAX

We recommend consulting a tax professional for help in tax planning and filing for your series LLC.

Maintain your LLC: Avoid fines and the risk of dissolution.

ALABAMA BUSINESS PRIVILEGE LICENSE

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 the local County Probate Judge.

GET A BUSINESS PRIVILEGE LICENSE

Get an Alabama Business Privilege License

LIST OF PROBATE JUDGES


REPORT LLC INCOME

Reporting income for your series LLC is best handled by an accountant who is familiar with series LLC tax code.

File Your Alabama Tax

File by Mail with the Alabama Department of Revenue

 

Instructions: Follow the steps provided by the Alabama Department of Revenue which can be found here.

 

Download Form


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

FILE YOUR ALABAMA PRIVILEGE TAX

File by Mail with the Alabama Department of Revenue

DOWNLOAD FORM


Free

Instructions: Follow the steps provided by the Alabama Department of Revenue which can be found here.

REPORT LLC INCOME

Reporting income for your series LLC is best handled by an accountant who is familiar with series LLC tax code.

AVOID DISSOLUTION

Series LLCs may face fines and even automatic dissolution when they miss one or more state filings. When this happens, LLC owners risk loss of limited liability protection. A quality registered agent service can help prevent this outcome by notifying you of upcoming filing deadlines, and even submitting reports on your behalf for an additional fee.

Recommended action box icon

Recommended: Northwest offers a reliable registered agent service and excellent customer support.

Sign Up

Become a knowledgeable LLC owner. Learn more about these important topics.

OBTAIN A CERTIFICATE OF GOOD STANDING

A Certificate of Good Standing, known in Alabama as a Certificate of Compliance, verifies that your LLC was legally formed and has been properly maintained. 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

 

You can order an Alabama LLC Certificate of Compliance online.

ORDER A CERTIFICATE OF GOOD STANDING

Request a Certificate of Compliance Online through the Alabama Department of Revenue

ORDER ONLINE


$10 (Nonrefundable)

DISSOLVE YOUR ALABAMA LLC

If at any point in the future 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

TIP

Closing a child series will not dissolve the parent LLC. Dissolving the parent LLC will dissolve all of the child series under it.