How to Start an LLC in Alabama

Step 1: Name Your Alabama LLC

Naming your Alabama LLC is one of the first steps you’ll take in the business formation process. The name must be sufficiently different from those of other Alabama businesses, and needs to include “Limited Liability Company,” “L.L.C.,” or “LLC.”

Once you’ve chosen a name for your Alabama LLC, check its availability. Then, you must reserve it before you can submit formation documents.

Reserve your Alabama business name

Alabama requires the reservation of business names prior to entity formation. Online name reservations are processed immediately if you file online. And if you file your Certificate of Formation online, you can reserve your business name during the filing process. Mailed name reservations are also accepted.

You’ll need to provide the following information to reserve your name:

• Entity type
• Desired name
• Requester’s name and contact

It costs $25 to file your Alabama name reservation by mail. Online filings are $28.

Secure domain name, social media handles, and trademark

The perfect business name will only get you so far if someone else is already using it online or as a trademark. Establishing your business name across platforms will create a consistent branding image, making it easier for customers to find and remember you.

Once you have a name in mind for your Alabama LLC, see if it’s available as a domain name and on social media platforms. It’s also a good idea to confirm its availability as a trademark. Even if you don’t plan on getting a trademark yourself, you may face trouble down the line if someone else already has a trademark that contains your business name.

When Registered Agents Inc forms your LLC in Alabama, you can add on a year of free domain name registration and three months of free business website service. You can even hire us to prepare and file your federal trademark registration application—we offer one of the most affordable attorney-led services in the industry.

Step 2: Choose a Registered Agent

Alabama requires all LLCs operating in the state to appoint and maintain a registered agent. The agent’s role is to accept legal mail and service of process on behalf of the businesses they serve, and to then forward those documents to the businesses.

Your Alabama registered agent can be:

• An individual Alabama resident
• An entity registered in Alabama

The registered agent must maintain a registered office in Alabama where they are available to accept service of process in person. This location does not necessarily need to be a place of business, but it does need to be a physical address.

Can I be my own registered agent in Alabama?

Yes. As long as you are an Alabama resident with a physical Alabama address, you can serve as your LLC’s registered agent. Note that designating yourself as your registered agent means your name and address will become part of the public record. Hire us to form your LLC and we’ll be your registered agent, helping you keep more of your information private.

Step 3: File Alabama Certificate of Formation

Your Alabama Certificate of Formation is what establishes your LLC in the state. It is filed with the Secretary of State’s office, either by mail or online. If you file by mail, make sure to type the document and include two copies.

1. LLC name
   Don’t forget to include your “LLC,” “L.L.C.,” or “Limited Liability Company” designator.
2. Name Reservation Certificate
   If you’re filing by mail, include a copy of your Name Reservation Certificate. If you’re filing online and already have your Certificate, include the ID Number associated with it. Haven’t reserve your name yet? Online filings allow you to follow the prompts and reserve it in real time.
3. Registered agent name and address
   You’ll need to include your registered agent’s physical address. If they have a separate Alabama mailing address, include that too. Make sure to include the county.
4. LLC type
   If you’re forming a series, nonprofit, or professional LLC, indicate which one. Otherwise, skip this part.
5. Effective date
   Most business owners want their LLC to start as soon as their formation documents are processed. But if you have a specific registration date in mind, you can include that instead. The date must be no earlier than the filing date and no later than 90 days from filing.
6. Signature
   The organizer (person filing the document) needs to sign the filing and provide their name.

How much does it cost to set up an LLC in Alabama?

You’ll pay a minimum of $225 to set up an LLC in Alabama. This includes the paper filing cost of both the Certification of Formation and Name Reservation. If you file online, your minimum set-up cost will be slightly higher at $236.

How long does it take to set up an LLC in Alabama?

Your Alabama LLC will be set up right away if you file your Certificate of Formation online. Mailed filings may take several days to process once received.

Step 4: Get Business Privilege License(s)

Alabama doesn’t have a statewide business license. However, it does require most businesses (regardless of entity type) to get a Business Privilege License at the county level.

Exact licensing requirements vary by location and industry. For example, if you operate an advertising company in a county with less than 30,000 people, you’ll pay $23.50 for your license. But the same license issued in a county with more than 200,000 residents costs $226. Own a car dealership? Your license costs $46 in a county with less than 2,500 people, but $211 in a county with more than 50,000 folks.

To find out what requirements apply to your business, check in with the county probate office in every Alabama county where your business operates. Keep in mind that you may need a Business Privilege License in each of these counties.

Step 5: Set Up Business Operations

After formally setting up your Alabama LLC, take time to follow the steps below in order to keep your business compliant and functional:

• Create an operating agreement.
  Alabama does not require LLCs to establish an operating agreement. However, operating without one is ill advised. Operating agreements answer all the important questions about how your business functions. For example, it’s in the operating agreement that processes for members joining/departing are established, rules for ownership transfers are put in place, and timelines for ongoing meetings are scheduled. Without an operating agreement, your LLC will be subject to the rules set forth in Alabama statute.
• Get an EIN.
  Issued by the IRS, EINs are basically a social security number for your business. You’ll likely need one when you hire employees or open a business bank account. And in Alabama, you’ll need one to file your Business Privilege Tax return.
• Manage company funds.
  To help maintain its limited liability status, your Alabama LLC needs to keep its business funds separate from individual member funds. When you open a business bank account, it’s typical for each member to fund the account with an amount equal to their ownership percentage. So if you owe 25% of the business and the LLC needs $50,000 to start, you’ll contribute $12,500.
• File and pay Business Privilege Tax.
  Alabama’s Business Privilege Tax is a exactly what it sounds like: a tax on businesses for the privilege of doing business in Alabama. (Don’t confuse it with the Business Privilege License, which has a similar name but an entirely different meaning.) Most LLCs in Alabama will need to file their Business Privilege Tax return with the state’s Department of Revenue no more than 2.5 months after their taxable year begins.
  
  As of 2024, businesses that owe $100 or less are exempt and not required to file a Business Privilege Tax return.

Step 6: File BOI Report

Filing a Beneficial Ownership Information (BOI) Report is a new federal requirement as of 2024. Most Alabama LLCs will need to file. In the report, you’ll include identifying information about your business, as well as its owners and operators.

If you register your Alabama LLC in 2024, you’ll have 90 days to submit this report to FinCEN post-registration. If you register in 2025, you’ll have just 30 days to file after your LLC is formed.

The report is free to file but easy to forget about. When you hire Registered Agents Inc to form your Alabama LLC, add BOI Report filing to ensure you avoid racking up the steep penalties for failing to file (up to $591 per late day).