How To Start A Series LLC In Alabama
A series LLC in Alabama is a special type of LLC that provides specific liability and tax benefits to its owners and members. The series LLC consists of a master LLC and one or more individual series that branch off from it.
If you want to learn more about the basics of series LLCs, check out our What is a Series LLC page.
Starting your own Series LLC in Alabama doesn’t have to be difficult. Our step-by-step guide makes it simple!
Step 1: Name Your Alabama 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. 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
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.
Use a DBA, also called a trade name in Alabama, for the child series if the name is too long for good business branding.
Not sure what to name your business? Check out our LLC Name Generator.
Step 2: Choose an Alabama Series LLC 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: Northwest 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.
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.
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 Secretary of State:
- One (1) signed original Certificate of Formation document and one (1) copy
- Self-addressed, stamped envelope
- $200 check payable to the Secretary of State
Step 4: Create a Series LLC 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.
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
- OR -
Option 2: Apply for an EIN by Mail or Fax
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
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 online or by mail.
FOR INTERNATIONAL APPLICANTS: You do not need an SSN to obtain an EIN. Read more about applying for an EIN as an international applicant here.
Key Steps After Forming a Series LLC
Now that you have formed your Alabama series LLC, these are the next steps you will need to take to move your business forward.
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.
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.
Register Your Series 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.
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
Report LLC Income
Reporting income for your series LLC is best handled by an accountant who is familiar with series LLC tax code.
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.
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
Fee: $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
Closing a child series will not dissolve the parent LLC. Dissolving the parent LLC will dissolve all of the child series under it.
Alabama Business Resources
Certificate of Good Standing Alabama
How to Name a Business in Alabama
How to Start a Business in Alabama