How to Form an LLC in Alabama

Alabama reserves the name before it takes the formation filing

Alabama wants a Certificate of Name Reservation in hand before the Certificate of Formation is filed. The Secretary of State's LLCs page states, "You must obtain a Certificate of Name Reservation [10A-1-4.02(f)] prior to filing your formation documents," and item 2 of the Certificate of Formation requires a copy of that certificate to be attached. The reservation fee is $25 under Ala. Code § 10A-1-4.31(a)(1)c, and the Secretary of State's Name Reservation Request Form for Domestic Entities states that non-subscribers using the online Name Reservation Menu pay a $28 fee by credit card and print the reservation at the end of the process rather than receiving it by mail.

Once the company exists, an Alabama LLC has no recurring filing with the Secretary of State. The Business Entities Division fee schedule lists five domestic LLC filings and carries no annual report line. Ala. Code § 10A-2A-16.11, the corporate annual report section, now reads "REPEALED BY ACT 2024-213, EFFECTIVE OCTOBER 1, 2024," and the Secretary of State's Business Entities page states that corporations "are no longer required by law to file an annual report with the Secretary of State."

Half of the $200 formation fee is county money. Section 10A-1-4.31(e)(1) directs the Secretary of State to pay $100 to the county treasurer for the county in which the office of the initial registered agent is located, "which sum shall constitute the entire fee due to that county for the formation of that entity." That is why the Certificate of Formation asks for the county of the registered office.

Filing the Certificate of Formation

Ala. Code § 10A-5A-2.01(a) provides that "one or more organizers must execute a certificate of formation and deliver it for filing," and subsection (e) states that it "shall be delivered for filing to the Secretary of State." The Secretary of State publishes the document as the Domestic Limited Liability Company (LLC) Certificate of Formation. It carries no numeric form number.

What the certificate must set out

Section 10A-5A-2.01(a) requires the LLC name, which must comply with Article 5 of Chapter 1; the street address in Alabama, including the county, of the registered office; the name of the registered agent at that registered office; a statement that there is at least one member; if applicable, the series statement described in § 10A-5A-11.02(b)(3); and any other matters the members determine to include.

Under § 10A-5A-2.04 at least one organizer signs, and an agent or attorney-in-fact may sign without delivering the power of attorney to the Secretary of State. A delayed effective date is allowed no later than the 90th day after delivery, and the time may not be 12:00 a.m. or 12:00 p.m.

Fee, portal and mailing

Section 10A-1-4.31(a)(1)a reads, "Certificate of formation for all entities: Two hundred dollars ($200)," and the form asks for "a check, money order, or credit card payment for the $200.00 processing fee."

Online filing runs through the Secretary of State's services at alabamainteractive.org. The form states, "You may file the Certificate of Formation online in the time it takes to type this request." On paper, it directs the filer to "Mail 2 copies of this completed form along with a self-addressed, stamped envelope" to the Secretary of State, Business Services, P.O. Box 5616, Montgomery, Alabama 36103, and states, "This form must be typed and will not be accepted via email."

Filing service levels set by statute

Alabama sets its filing service levels in the statute. Section 10A-1-4.02(d) provides that where a delivered instrument substantially conforms and all required fees have been paid, "the filing officer shall file it immediately upon delivery." Subsection (j) requires an electronic system that accepts filings every day of the year and gives each filer "immediate confirmation." The Secretary of State's fee schedule and § 10A-1-4.31 contain no expedite, rush or priority fee for business entity filings.

Name rules

Ala. Code § 10A-1-5.06 provides that the name "must contain the words 'Limited Liability Company' or the abbreviation 'L.L.C.' or 'LLC'." The formation form adds that a filer "may use Professional before Limited Liability Company or LLC (or PLLC) if applicable."

Section 10A-1-5.03(a) bars a name that is the same as, or not distinguishable on the records of the Secretary of State from, the name of an existing filing entity, a general partnership with a statement on file under Chapter 8A, a registered foreign filing entity or a reserved name. The Secretary of State's Government Records Inquiry System carries the entity name search, and the Name Reservation Request Form notes that "If you use the Online Filing method, the search is a part of the process and it is not necessary to perform it separately."

A reservation runs until the earlier of one year from the date the application is accepted for filing or the date the applicant files a written notice of withdrawal, under § 10A-1-5.14.

A trade name in Alabama is registered as a mark. Sections 8-12-8(a) and (d) require the application to be filed "in the office of the Secretary of State" accompanied by "a filing fee of $30, payable to the Secretary of State."

Registered agent

Section 10A-1-5.31(a) requires each filing entity to "designate and continuously maintain in this state" a registered agent and a registered office. Under subsection (b)(2) the agent is an individual who is a resident of Alabama, or a domestic entity or a foreign entity registered to transact business in Alabama. Subsection (b)(3) requires the agent to maintain a business office at the same address as the registered office.

Alabama is specific about what will not serve. Subsection (b)(4) provides that a registered agent "may not perform its duties or functions solely through the use of a virtual office, the retention by the agent of a mail forwarding service, or both," and defines a virtual office as performing those duties solely through the internet or other means of remote communication. Subsection (c) requires a street address in Alabama where process may be personally served on the agent, and provides that it "may not be solely a mailbox service or a telephone answering service." Item 3 of the form asks for a "Street (no PO Boxes) address of registered office (must be located in Alabama)" and the county of that address. The Alabama registered agent page has more.

A later change is a statement of change under § 10A-1-5.32(b), which names the current and new agent and carries the new agent's written consent. The fee schedule prices a change by the entity and a change by the agent at $100.00 each, and the statement takes effect "without the necessity of amending the entity's certificate of formation." Where an entity fails to maintain an agent, § 10A-1-5.35 provides that it "may be served with process as provided by the Alabama Rules of Civil Procedure."

The limited liability company agreement

Alabama calls the operating agreement a limited liability company agreement. Section 10A-5A-1.02(l) defines it as "any agreement (whether referred to as a limited liability company agreement, operating agreement or otherwise), written, oral or implied," and provides that it "shall not be unenforceable by reason of there being only one person who is a party." Under § 10A-5A-2.01(d) it may be entered into before, after or at the time the certificate of formation is filed, and it is not filed with the Secretary of State. Section 10A-5A-1.08(b) allows fiduciary duties to be expanded, restricted or eliminated by a written agreement, but the implied contractual covenant of good faith and fair dealing may not be eliminated. Drafting points sit in the operating agreement guide.

Business privilege tax

Ala. Code § 40-14A-22(a) levies "an annual privilege tax on every corporation, limited liability entity, and disregarded entity doing business in Alabama, or organized, incorporated, qualified, or registered under the laws of Alabama." It accrues on January 1 of each taxable year, or, for a taxpayer organized or first doing business during the year, on the date it is organized, registers, qualifies or begins doing business.

Section 40-14A-22(c)(3) then removes the smallest taxpayers from the system: "For taxable years beginning after December 31, 2023, taxpayers who would otherwise be subject to the minimum tax due provided for in subdivisions (c)(1) or (c)(2) shall be exempt from the privilege tax levied by this article and the associated filing requirement." The Department of Revenue states the same rule as "a full exemption from the business privilege tax on tax due of $100 or less," and its TY 2026 quick reference repeats that taxpayers who would be subject to the $100 minimum "do not have a filing requirement."

A taxpayer that does owe the tax files Form PPT, or Form CPT if the LLC is taxed as a corporation. A first return is Form BPT-IN, due within two and one half months after the taxpayer comes into existence, qualifies or begins doing business, and required only if the tax calculates to more than $100. Under § 40-14A-25(a) later returns are due no later than the corresponding federal income tax return as required under federal law. The Alabama LLC taxes page goes further.

Other state taxes

Income that passes through to individuals meets § 40-18-5, which taxes a single filer, head of family or married person filing separately at 2% of taxable income not over $500, 4% over $500 and not over $3,000, and 5% over $3,000. Section 40-23-2 sets the general sales tax at 4% of gross proceeds on retail sales of tangible personal property, and § 40-23-6(a) makes a sales tax license from the Department of Revenue a condition precedent to engaging in a business on which that tax is imposed. Those returns run through My Alabama Taxes, which includes ONE SPOT for state and local sales, use, rental and lodgings taxes.

State and county privilege licenses

Alabama licenses the business separately from the entity. The Department of Revenue states that "A privilege license is a license requirement of every person, firm, company or corporation engaged in any business, vocation, occupation or profession described in Title 40, Chapter 12, Code of Alabama 1975." Section 40-12-2(a) requires payment "to the judge of probate of the county in which it is proposed to engage in or carry on such business" before engaging in it, plus a $1 issuance fee. Subsection (e) levies a county license equal to 50% of the state amount on top, and subsection (c) requires a state and county license for each place of business.

Amendments and dissolution

Section 10A-1-4.31(a)(1)b prices "amendment to a certificate of formation and a restated certificate of formation" at $100. The Domestic LLC Articles of Dissolution form asks for a "$100.00 processing fee" and states, "You may file the dissolution online in the time it takes to type this request." The Alabama dissolution page covers winding up.

Federal employer identification number

An EIN comes from the Internal Revenue Service rather than from any Alabama agency. The EIN guide covers the application.

Frequently asked questions

Does an Alabama LLC file an annual report?

The Secretary of State's fee schedule lists five domestic LLC filings and no annual report. Ala. Code 10A-2A-16.11, the corporate annual report section, reads "REPEALED BY ACT 2024-213, EFFECTIVE OCTOBER 1, 2024," and the Secretary of State states that corporations are no longer required by law to file an annual report with that office.

How much does it cost to form an LLC in Alabama?

Ala. Code 10A-1-4.31(a)(1)a sets the certificate of formation fee at $200 for all entities, and the Certificate of Formation asks for a check, money order or credit card payment for the $200.00 processing fee. The name reservation that must precede it costs $25 on paper or $28 online for non-subscribers.

Do I have to reserve the name before filing in Alabama?

Yes. The Secretary of State's LLCs page states that you must obtain a Certificate of Name Reservation prior to filing your formation documents, and item 2 of the Certificate of Formation requires a copy of that certificate to be attached to the filing.

Does Alabama charge an expedite fee for LLC filings?

The Secretary of State's fee schedule and Ala. Code 10A-1-4.31 contain no expedite, rush or priority line for business entity filings. The only expedite fee printed in that fee schedule is $100 per search for UCC searches.

Who can serve as a registered agent in Alabama?

Under Ala. Code 10A-1-5.31(b)(2), the agent is an individual who is a resident of Alabama, or a domestic entity or a foreign entity registered to transact business in Alabama. Subsection (b)(4) provides that an agent may not perform its duties solely through a virtual office, a retained mail forwarding service, or both.