How to Start an LLC in Alabama
This guide will help you set up an LLC in Alabama. It includes step-by-step instructions for obtaining tax IDs and filing documents.
Because they are affordable to set up, offer flexibility for the owners and are simple to manage, LLCs are the most preferred business structure. Your LLC legalizes your business and limits your personal liability. It also allows you to have tax flexibility. As you go through this process, the following steps will guide you.
Step-by-Step Alabama LLC Instructions
Check Name Availability
Your LLC’s legal name may not be in conflict with any registered name. You can search for the name you want to check availability. You must be able to distinguish your name from all other registered business entities.
Name Search: Alabama Secretary of State – Business Services Division Suffix: The abbreviation L.L.C. stands for Limited Liability Company. Or “LLC”. These words, or their abbreviation, shall be the last words in the name.
Next, compare the availability of the name you want against trademarks registered with both the Alabama Secretary and the USPTO.
Alabama Secretary Of State trademark search
USPTO trademark search
Use your common sense to find the use of your preferred business name in public domain. Common law rights to a name are based on actual use and not registration. You can search the internet, telephone directories and trade magazines.
Request a Name Reservation
Alabama requires a name reservation.
Send your submission to: Alabama Secretary of State Filing Method You can send mail, courier or online. Email and Fax are not accepted. Fee: $10 mail standard processing. $25 Mail processing within 3 business days. $28 online processing within 24 hours Turnaround: Standard mail: In order received. Express mail: Less than three business days. Online: Less than 24 hours Notes:
- We recommend that you file online.
- A Name Reservation Certificate will be issued by the state. This Certificate will need to be submitted with your Certificate Of Formation.
- License evidence is required for names that include a professional designation (e.g. engineering).
Appoint a registered agent
Before you can file to officially create an Alabama LLC, you must decide who your Alabama registered agents will look like. Registered agents are the legal representatives of a business that receives notices about lawsuits and other legal or government notices.
Every LLC must have a registered agent as required by state law. When you file Alabama articles or organization with the Alabama Secretary-of-State – Business Services Division, the registered agent will be designated.
Alabama Articles of Organization
Alabama refers to the articles of organization as the “certificate de formation”. This document can be used to establish a limited liability company.
Agency: Alabama Secretary of State – Business Services Division Form:
Certificate of Formation
Filing Method Online and Mail Agency Fee: $100 + $50 minimum Office of the Judge of Probate Fee + $100 optional expedite Fee Turnaround: The probate’s office will take 7-10 days. Otherwise, you will need to wait 6 months at the secretary-of-state. Law:
Code of Alabama Title 10A: Alabama Business and Nonprofit Entities Code Chapter 5: Limited Liability Companies
- Send one original and two signed copies of the petition to the Office of the Judge of Probate of the county in which the corporation’s registered offices are located.
- Add $100 to the state filing fee and the applicable county filing fee (minimum $50; ask your Office of the Judge of Probate).
- Attach your Name Reservation Certificate.
Establish Company Records
Your LLC must maintain accurate and complete records. Your LLC’s first records will be your filed articles of organization. Other official records that your LLC may produce include:
- Minutes of meetings
- Operating agreement
- EIN verification letter
- Amendments to and other filings made by the LLC during its lifetime
Make the Operating Agreement
The Operating agreement is the governing document of the LLC. This document outlines the procedures for how the LLC will operate, such as holding an annual meeting. The agreement will be reviewed and approved at your organization meeting.
Organise the Organizational Meeting
The organizational meeting is the first meeting of members of an LLC. To conduct this meeting, you will need to have your operating agreement and the filed articles of organization. Keep a record of the meeting and keep it in your company records book.
Register for a Federal Employer Identification Number.
An EIN is required for any LLC that has more than one member, or intends to hire employees. A bank account opening requires an EIN.
Agency: Internal Revenue Service (IRS). Form:
IRS Form S-4
Filing Method You can send mail, fax or online by phone. IRS fee $0 Turnaround: Online or over the phone, immediately. 4 business days via fax. 4-5 weeks via mail Notes: Only certain hours are available for the IRS website. Before closing your session, print your EIN. For more information, please refer to IRS Pub 1635 Understanding Your EIN.
Get Alabama State Tax Identification Numbers/Accounts
Alabama offers a single application for tax registration.
Send your submission to: Alabama Department of Revenue Form:
Form COM-101: Alabama Department of Revenue Combined Registration/Application
Filing Method Email or online Fee: $0 Turnaround: Online ordering takes 3-5 business day
Start Business Privilege Tax Return
Alabama Code SS40-14A-29 requires that new LLCs file an initial Business Privilege tax Return and pay the business privilege taxes within two-and-a-half months of formation.
Send your submission to: Alabama Department of Revenue Form:
BPTIN: Initial Business Privilege Tax Return
Instructions to Prepare Alabama Department of Revenue Alabama Initial Privilege tax Privilege Return
Filing Method Fee: Minimum $100
Consider Electing C-Corp Taxation or S-Corp Fiscal
Your LLC will automatically be subject to pass-through taxation. However, the majority of LLCs maintain this tax classification. Some LLCs can choose to elect S-Corp and C-Corp tax treatment.
- Scorp treatment is available to owner-employees earning more than $75,000 annually. This can help them save on self-employment tax. File Form 2553: S-Corp Election.
- Double taxation is a problem for C-Corps: members pay taxes on distributions and the corporation pays taxes. C-Corps may offer low tax rates for retained earnings if profits exceed $250,000 per owner. File Form 8832: C-Corp Election.
Get Business Licenses and Permits
You must have the appropriate licenses and permits to run your business legally. It is easy to find the right licenses and permits for your state and federal business.
Alabama Business Privilege Licence
Agency: Alabama Department of Revenue – Business Licensing Section Law:
Alabama Code SS 40-12-2
Notes: The state requires licenses, but they are issued at the county level. For more information, contact the office of the county probate judge.
You must continue to file for your LLC
You are required to file both federal and state tax returns.
To maintain good standing with the secretary-of-state, many states require that business entities file an annual report. The table below shows the requirements for Alabama LLCs to file an annual report.
Alabama Corporation Annual Report Requirements: