Forming an LLC in Alabama is Easy
You can start an Alabama LLC online by filing the Certificate of Formation with the Secretary of State. The cost to set up an LLC in Alabama is $200.
Follow our How to Start an LLC in Alabama guide below to get started.
For more information on how to form an LLC in any state, visit our How to Start an LLC guide.
Step 1: Create a Name For Your Alabama LLC
Before you register your LLC, you'll need to come up with a name. Your business name needs to be catchy for branding purposes and legitimate for legal purposes.
We go into depth on this topic in our LLC naming guide. We’ll go over the basics below.
Naming Your LLC
First, brainstorm some possibilities. Use our LLC name generator to get the ideas flowing.
Next, make sure your name meets Alabama guidelines:
- it contains the words limited liability company, limited company, LLC, or L.L.C.
- it doesn't contain restricted words or phrases (these often include words like bank, attorney, and university) without approval
- it's distinguishable from any other entity or trade name registered in Alabama
- full list of Alabama naming guidelines
Next, do an Alabama LLC name search with the Secretary of State to find out if your name is available in Alabama.
Reserving Your LLC Name
If you plan to mail in your LLC registration, you'll need to complete the Name Reservation Request for Domestic Entities form at least two weeks prior to registration. If you plan to register your LLC online, you'll reserve your business name when you complete the online LLC registration.
If you don't plan on registering your LLC right away, you can reserve your LLC name online for 1 year.
Is the URL available? Before you commit 100% to a name, check to see if there’s a good web domain available.
We recommend buying your domain right away because even if launching a business website isn’t on your radar right now, it will be soon.
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Once you register a domain name for your LLC, consider setting up a business phone system to establish credibility and enhance your customer service. Nextiva provides a plethora of useful features and a quick, easy setup. Try Nextiva.
Using an Alabama Trade Name (DBA)
An Alabama DBA (doing business as), also known as a trade name, is any registered name that a business operates under that isn't its legal business name. A trade name can be used by any type of business, including a sole proprietorship, partnership, or limited liability company (LLC).
Learn how to get a DBA in our Alabama DBA guide.
Step 2: Appoint an Alabama Registered Agent
When you file your Articles of Organization, you'll need to list a registered agent.
Your registered agent can be a person or a registered agent service. You can act as your own registered agent, but many business owners choose to use a registered agent service.
Here are a few things to think about before you decide to act as your own registered agent:
- You’ll need to be available during normal (9 am - 5 pm) business hours at the address you provide
- If you run your business from home, you’ll have to make your personal address public
- You could be served with a lawsuit in front of your family or coworkers
Recommended: Northwest Registered Agent offers a free year of registered agent service when you form your LLC ($39 plus state fees).
Step 3: File the Alabama LLC Certificate of Formation
It’s time to officially form your LLC by completing an LLC name reservation and filing your Certificate of Formation with the Alabama Secretary of State.
Name Reservation Step
If you're filing the Certificate of Formation online, you’ll complete the name reservation when you complete the online Certificate of Formation.
If you're filing your Certificate of Formation by mail, you’ll need to mail in the Name Reservation Request for Domestic Entities form first. You'll get a name reservation certificate from the state within a few weeks. Then, you'll mail in the approved name reservation certificate with your Certificate of Formation.
Certificate of Formation Step
Recommended: Now is a good time to decide if your LLC will be member-managed vs manager-managed.
You'll need to know the following information to complete the form:
- Entity Name
- Copy of the Name Reservation certificate from the Alabama Secretary of State (If filing by mail)
- Registered Agent Name and Registered Office Address
- Type of LLC being formed (conditional)
- Effective Date
For more detailed help with completing the form, visit our Alabama Articles of Organization guide.
Mail Your Articles of Organization:
Send the form and payment (payable to the Secretary of State) to:
Secretary of State
PO Box 5616
Montgomery, AL 36103
How long does it take to get an LLC approved? LLC processing time is 10 days online or by mail, but can be expedited for an additional fee.
Step 4: Create an Alabama LLC Operating Agreement
Creating an Alabama LLC operating agreement (also known in the state as a limited liability company agreement) is the only way to legally lock down your LLC’s management and ownership structure. Having this document in place will give you something to return to if a dispute or lawsuit arises.
Even single-member LLCs benefit from having an operating agreement.
Your operating agreement should outline the following:
- Each member’s responsibilities
- How new members will be admitted
- How existing members may transfer or terminate their membership
- How profits and dividends will be distributed
You can add as many provisions as you want, as long as they don't conflict with Alabama law. Take a look at our What is an Operating Agreement guide to learn more.
Download a template or create a custom Free Operating Agreement using our tool.
Step 5: Get an EIN
An Employer Identification Number (EIN) is like a Social Security number (SSN) for your company. The IRS and the state of Alabama will use this number to track your business activity.
Your EIN will come in handy when it’s time to:
- Open a business bank account
- File Federal and State taxes
- Hire employees
The best way to get an EIN for your LLC in Alabama is by using the free online application on the IRS website.
Read our Get an EIN guide for instructions.
Need Help Forming an LLC?
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Steps After Forming an LLC
After forming your LLC, it's important to:
- Open a business bank account. A business bank account helps separate personal expenses and company expenses, which is required to maintain your LLC's corporate veil. A corporate veil protects your personal assets from creditors in potential lawsuits against your LLC or Business.
Learn more by reading this guide to Banking for Entrepreneurs. For a multi-member LLC, you'll also want to set up capital accounts for members. We also recommend checking out our review of the best business bank accounts.
- Get a business credit card. A business credit card will help separate personal and business expenses while building your company’s credit history. A strong credit history will be useful for raising capital in the form of small business loans.
- Hire a business accountant. A business accountant will help you save on taxes and avoid penalties and fines. An accountant makes bookkeeping and payroll easier. Find out how much you could be saving with a consultation with a business accountant.
- Get business insurance. Business insurance helps manage risk. The most common forms of business insurance are general liability, professional liability, and workers’ compensation.
Keep Your Company Compliant
- Research Alabama business licenses and permits. For help, visit our How to Get a Business License in Alabama guide. There are also business license services that will help with this.
- File your Alabama LLC Business Privilege Tax Report. File by mail with the Alabama Department of Revenue.
- Understand Alabama state tax requirements. Visit our Alabama Sales Tax guide to learn more about seller’s permits and Alabama sales tax.
- Understand federal tax requirements. Most LLCs will need to report their income to the IRS each year using Form 1065 Partnership Return (multi-member LLCs) or Form 1040 Schedule C (single-member LLCs).
- How you pay yourself will affect your federal taxes. Visit our guide to learn more about how to pay yourself from your LLC.
More LLC Resources
- Alabama Foreign LLCs: Forming a foreign LLC allows your company to operate as one entity in multiple states. Download the Alabama foreign LLC form to get started.
- Alabama Certificate of Good Standing: A certificate of good standing verifies that your LLC was legally formed. To order, follow our Alabama certificate of good standing guide.
- Dissolving an Alabama LLC: If you are ready to dissolve your LLC, follow the steps in our Alabama LLC Dissolution Guide.
- LLC Legal Forms: TRUiC offers a number of free LLC legal forms including operating agreements, LLC resolutions, and hiring documents.
Need Help Forming an LLC?
Read our Best LLC Services review to learn more about pricing and packages.