How Much Is an LLC in Alabama?
Alabama LLC Filing Fee: $200
To form an LLC in Alabama, you'll need to file the Certificate of Formation with the Secretary of State, which can be done online or by mail for $200. If you file online, there is an additional $8 fee.
Registered Agent Fee
Every Alabama LLC must appoint a registered agent. Your Alabama registered agent must be a resident of Alabama and must be available to receive service of process during normal business hours at a designated street address.
You can be your own registered agent in Alabama, or you can use a registered agent service for a minimal cost.
Recommended: Get free registered agent services for one year when you form an LLC with Northwest ($29 plus state fees).
Alabama Business Privilege Tax: $100+
Every entity that is doing business in Alabama or has qualified with the Alabama Secretary of State to do business in Alabama is required to file the Alabama Business Privilege Tax Return and Annual Report. The Business Privilege Tax has a minimum amount of $100, which must be paid at the time the Business Privilege Tax Return and Annual Report is filed.
A Business Privilege Tax (BPT) Return is filed annually, except for an initial return which is filed on Form BPT-IN. The BPT is based on the LLC’s net worth.
Although Form PPT is partly titled “Annual Report,” an LLC is not required to complete and attach Schedule AL-CAR nor pay its $10 filing fee even if it elects to be treated for tax purposes as a corporation.
Cost to Form a Foreign LLC in Alabama: $150
LLCs registered in another state that want to expand into the state of Alabama must register as a foreign LLC in Alabama.
The cost of registering an Alabama foreign LLC is $150. You can register a foreign LLC in Alabama by filing a Foreign Limited Liability Company (LLC) Application for Registration.
Business Licenses and Permits
Your business might need federal, state, and local permits/licenses to legally operate in Alabama, depending on your industry and geographical location. This is true whether you form an LLC or any other type of business structure.
Learn more about state and local licensing in our Alabama business license guide.
Other Alabama Business Filing Fees
There are fees associated with other, optional business filings in Alabama.
‘Doing Business As’ (DBA) Name
When an LLC is registered with the state, the LLC’s name is also officially registered. Some business owners choose to also file for a DBA name, known as a trade name in Alabama.
In Alabama, trade names are administered at the state level by the Office of the Secretary of State. Any word, symbol, logo, slogan, or combination thereof adopted and used by the applicant to identify the business, vocation, occupation, or profession is a trade name.
You can file an Application to Register Trademark with the Alabama Secretary of State and pay the $30 filing fee to create a name other than your legal LLC business name.
Learn more in our Alabama DBA guide.
Certified Document Copies
You can get certified copies of your Alabama business documents by ordering through the Secretary of State. The copy fee is $2 per page.
The fee for certifying a document by affixing the State seal is $10 per document certified.
Certificate of Compliance
A Certificate of Good Standing indicates that an LLC exists and is authorized to transact business in the state and also that the LLC is up to date with filings and fees. In Alabama, it is known as a Certificate of Compliance. Requests for a Certificate of Compliance are administered by the Alabama Department of Revenue (ALDOR) for $14.
A Certificate of Compliance is often required by banks and lenders.
How to Start an LLC in Alabama
Forming an LLC yourself is easy; just follow the five steps below.
Five Basic Steps to Start a Domestic LLC in Alabama
Step 1: Name Your Alabama LLC
Step 2: Choose a Registered Agent
Step 3: File a Certificate of Formation
Step 4: Create an Operating Agreement
Step 5: Get an EIN
Step 1: Name Your Alabama LLC
When you name your Alabama LLC, you’ll need to choose a name that:
- Is available for use in the state of Alabama
- Meets Alabama naming requirements
- Is available as a web domain
Check web domain (URL) availability with GoDaddy:
Find a Domain Now
Not sure what to name your business? Check out our free LLC name generator.
Step 2: Choose a Registered Agent
Alabama LLCs are required to appoint a registered agent to receive service of process. Business owners can hire a registered agent service or appoint any Alabama resident that is 18 years or older and is available during normal business hours at a specified address to receive service of process.
Recommended: ZenBusiness offers one full year of registered agent services with their $29 (plus state fees) LLC formation package.
Step 3: File an Alabama Certificate of Formation
To form a domestic LLC in Alabama, you must file a Domestic Limited Liability Company Certificate of Formation with the Secretary of State. This can be done online or by filing a hard copy form by mail.
For a closer look at the filing process, check out our Alabama Certificate of Formation guide.
Step 4: Create an LLC Operating Agreement
There is no requirement in Alabama law for an LLC to have an operating agreement. However, it is good practice to have one.
An operating agreement outlines the ownership and operating procedures of an LLC, ensuring that all members are on the same page and reducing the risk of conflict down the line.
Learn more in our Alabama LLC Operating Agreement guide.
Step 5: Get an EIN
An Employer Identification Number (EIN) is a nine-digit number issued by the IRS to identify businesses for tax purposes. Think of an EIN as a Social Security number for your LLC.
To learn how to get an EIN for free, visit our How to Get an EIN Number guide.
LLC Cost in Alabama FAQ
What is the cheapest way to start an LLC in Alabama?
The cheapest way to start an LLC in Alabama is to handle the registration process individually. In order to do this, you will need to follow these steps:
- Name your LLC
- Choose a registered agent: This can be a registered agent service or an individual.
- File the Alabama Certificate of Formation: The filing fee for this is $200 and can be done online or by mail.
- Create an LLC operating agreement: This is usually not a legal requirement, but it is highly recommended.
- Get an EIN: This is basically your business’s Social Security number (SSN).
How much does an LLC cost per year in Alabama?
An LLC is required to file an Alabama Business Privilege Tax Return every year. The Return includes an Annual Report. There is no filing fee. However, there is a minimum tax of $100 payable at the time of filing the Business Privilege Tax Return and Annual Report.
For a more in-depth analysis, see our How Much Does an LLC Cost? article.
How much does an LLC license cost in Alabama?
An LLC is not a business license, but a business entity. Forming an LLC in Alabama includes a filing fee of $200. There are no annual report fees.
You may be required to pay additional fees if you choose to pay for a registered agent service, an LLC formation service, or an LLC attorney.
All business entities operating in Alabama, including LLCs, are required to pay a Business Privilege Tax.
See our How to Start an LLC in Alabama for more information on registering your business as an LLC.
Do LLCs pay taxes in Alabama?
Yes, LLCs are a “pass-through” tax entity. This means that the LLCs profits are “passed through” directly to its owner(s), who then pay income taxes independently.
This is advantageous compared to a corporation’s tax structure because it means that LLC members are not taxed twice.
Having said that, readers should keep in mind that LLCs are very flexible when it comes to how they can be taxed, and — depending on the specifics — they can choose to be taxed as a pass-through entity, a C corp, and an S corp.
For more information, see our How Is an LLC Taxed guide.
What are the tax benefits of an LLC?
The tax benefits of an LLC will depend on how you choose to be taxed, as well as on whether you are operating as a single or multi-member LLC.
Generally speaking, LLCs can choose to be taxed in several different ways, including:
- As a sole proprietorship or general partnership
- As a C corporation
- As an S corporation
See our Single-Member LLC Taxes guide for a detailed overview of the tax benefits of having an LLC as a small business.
Do I need to open a business bank account for my LLC?
Even though you do not necessarily “need” to open a bank account for your LLC, this is generally highly recommended for several reasons.
For one, having a separate bank account can allow you to maintain your LLC’s corporate veil — meaning that you will not risk losing your limited personal liability under the law. A business bank account also offers financial benefits, including the ability to build business credit more quickly and access to larger business loans.
Interested in opening a business bank account? See our review of the best banks for startups in 2022.