Starting an Alabama LLC, step-by-step
Starting an Alabama LLC costs $200. And it takes 1 day to get an LLC in Alabama,
Here are the 6 steps to forming an LLC in Alabama:
- Choose an LLC Name
- Select a Registered Agent
- File a Certificate of Formation
- Create an Operating Agreement
- Get an EIN
- File the Initial Business Privilege Tax
If you want to form your LLC yourself, follow our free guide below.
If you want someone to take care of it for you, we recommend hiring Northwest Registered Agent
Need to save time? Hire a company to form your LLC:
Northwest ($39 + state fee) or LegalZoom ($149 + state fee)
(We recommend Northwest. We’ve reviewed all the top companies in the industry. And Northwest is our #1 pick for prices, customer support, and address privacy. Check out Northwest vs LegalZoom to learn more.)
t costs $200 to start an LLC in Alabama.
And then it costs a minimum of $50 per year.
What are these fees for?
- The $200 is to file the Certificate of Formation – the document that creates an LLC.
- The $50 or more per year is for your Annual Report and Business Privilege Tax – a mandatory filing that keeps your LLC in good standing.
If you file your LLC by mail, it will be approved in 1-2 business days (plus mail time).
But if you file online, your LLC will be approved immediately.
Here are the steps to forming an LLC in Alabama
1. Search your Limited Liability Company (LLC) Name
Search your Alabama LLC Name to make sure it’s available in the state.
You need to do this because two businesses in the state can’t have the same name.
First, search your business name and compare it to existing businesses in Alabama. You can make sure the LLC Name you want is unique from existing businesses using the Secretary of State’s Business Entity Search tool.
Second, familiarize yourself with the naming rules in Alabama (so your Alabama LLC gets approved).
We’ll explain both in more detail here: Alabama LLC Name.
2. Choose a Registered Agent
The next step is to choose an Alabama Registered Agent.
An Alabama Registered Agent is a person or company who accepts legal mail and state notices on behalf of your Alabama Limited Liability Company.
Who can be an LLC Registered Agent?
You have 3 options for who can be the Registered Agent:
- You
- A friend or family member
- A Registered Agent Service
The Registered Agent for your LLC must have a physical street address in Alabama. PO Boxes aren’t allowed.
And the Registered Agent’s name and address will be listed on public records.
If you don’t have an address in Alabama, or you want more privacy, you can hire a Registered Agent Service for your LLC.
We recommend Northwest Registered Agent
Our favorite feature about Northwest is they’ll let you use their office address throughout your LLC filing. This way, you can keep your address off public records.
They’ll also scan any mail sent to your LLC and upload it to your online account.
Northwest has excellent customer service, and they’re who we trust to be our own Registered Agent.
Special offer: Hire Northwest to form your LLC ($39 + state fee), and you’ll get a free year of Registered Agent service.
(Why is Northwest the best? Read our Northwest Registered Agent review)
3. File an Alabama LLC Certificate of Formation
To start an LLC, you need to file the Alabama Certificate of Formation.
This gets filed with the Alabama Secretary of State.
The Alabama Certificate of Formation costs $200 if you file online.
This is a one-time fee to create your LLC.
If you want to file this yourself, see our step-by-step guide: Alabama Certificate of Formation.
Or, you can hire a company to do it for you.
Need to save time? Hire a company to form your LLC:
Northwest ($39 + state fee) or LegalZoom ($149 + state fee)
(Learn why Northwest is #1 in Northwest vs LegalZoom)
4. Create an Alabama LLC Operating Agreement
An Alabama LLC Operating Agreement serves as a “companion” document to the Certificate of Formation.
The Certificate of Formation creates your LLC, and the Operating Agreement shows who owns the LLC.
Additionally, some banks require an Operating Agreement when you open an LLC bank account.
And having an Operating Agreement will be very helpful if you ever end up in court. Reason being, it helps prove that your LLC is being run properly.
That’s why we recommend that all LLCs have an Operating Agreement – including Single-Member LLCs.
Furthermore, Operating Agreements are “internal documents“. Meaning, you don’t need to file it with any government agency like the Alabama Secretary of State or the IRS (Internal Revenue Service).
Just keep a copy with your business records.
You can download a free template below.
Then, learn how to fill it out by watching our step-by-step Alabama Operating Agreement video.
5. Get an EIN for your LLC
The next step is to get an Alabama EIN Number from the IRS for your LLC.
Note: An EIN Number is also called a Federal Tax ID Number or Federal Employer Identification Number.
An EIN Number is used to:
- identify your LLC for tax purposes
- open a business bank account
- apply for business licenses and permits
How much does an EIN cost?
How long does it take to get an EIN?
How can I get an EIN?
US Citizens/US Residents: If you have an SSN or ITIN, you can apply for an EIN online. Follow these instructions: Apply for an EIN online.
Non-US Residents: You can’t get an EIN online, but you can still get one by fax or by mail. Follow these instructions: How to get an EIN without an SSN or ITIN.
6. File your Initial Business Privilege Tax Return
All LLCs must file a Business Privilege Tax (BPT) Return (and pay the business privilege tax) every year. And the first one is due 2.5 months after forming your LLC.
This first filing is referred to as the Initial Business Privilege Tax Return.
How much does an LLC Initial BPT Report cost?
The Initial BPT is a one-time fee that costs a minimum of $50.
That said, you may owe more than that, depending on your federal income taxes and net worth.
We recommend consulting a tax professional for help.
When is the Initial BPT due?
The Initial BPT is due within 2.5 months of forming your LLC.
For example, if your Alabama LLC was approved on March 15, 2023, your Initial Business Privilege Tax is due by May 29, 2023.
You only have to pay this fee once.
How do I file my Initial BPT?
You can file your LLC’s Initial Business Privilege Tax online or by mail. We recommend the online filing because it’s easier to complete.
Learn more about the Initial BPT here: Alabama LLC Annual Report & Business Privilege Tax.
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