Alabama LLC Formation Checklist
Launching an LLC for your small business in Alabama but not sure where to begin? Just follow these five steps on our LLC checklist:
- Name Your LLC
- Choose a Registered Agent
- File Formation Documents With the State of Alabama
- Draft an LLC Operating Agreement
- Get an EIN
Download the Alabama LLC Formation Checklist.
Step 1: Name Your LLC
Your business’s name is one of the first — and arguably most important — decisions you make when forming an LLC in Alabama. When selecting the name for your LLC, there are a few things to keep in mind:
- Your state’s naming requirements
- Whether the name is available in Alabama
- The state's name reservation requirement
- Whether there is a matching domain name (URL) available
Each state has its own requirements for naming a business entity.
Alabama LLC Naming Rules:
- Your name must include the phrase “limited liability company” or one of the following abbreviations: “LLC,” “L.L.C.,” “Limited,” “Ltd.,” “Company,” or “Co.”
- Your name cannot include words that could confuse your LLC with a government agency (e.g., FBI, Treasury, State Department, etc.).
- Restricted words (e.g., Bank, Attorney, University, etc.) may require additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.
- Check out the Alabama state statute on entity names for a complete list of naming rules.
The first step in naming your LLC is to make sure it is available. In Alabama, your business name must be unique. To make sure your business name meets this requirement, use our Alabama LLC Name Search guide to confirm the availability of your chosen LLC name.
Alabama Name Reservation
Online filers can reserve their name when they file their Certificate of Formation, while those that file by mail must submit a name reservation form at least two weeks prior to registration.
Domain Name Availability
Before you decide on a business name, it is important that you check if the matching web domain name is available.
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Fortunately, choosing a business name for an LLC is easy with the help of our free business name generator. Simply include a keyword and industry to explore potential business names with available domain names at no cost to you.
For more help, visit our How to Name a Business in Alabama guide.
Step 2: Choose a Registered Agent
A registered agent is responsible for accepting legal and tax documents on behalf of your business. An Alabama registered agent can be an individual or a business entity (such as a professional service). You can also be your own registered agent.
If you’re not sure about serving as your own registered agent, you might consider hiring a registered agent service. Using a registered agent service ensures that your business never misses important mail or falls behind in legal obligations, while also maintaining your privacy.
Form an LLC and get free registered agent service for the first year with ZenBusiness.
Step 3: File Formation Documents
To officially start an Alabama LLC, you need to file the Articles of Organization, known as a Certificate of Formation in Alabama, with the state. You can form an LLC on your own or with the help of an LLC formation service.
For help with completing your LLC application, visit our Alabama Articles of Organization guide.
Recommended: Check out our Best LLC Services review to learn more about choosing the right service to form your LLC.
Step 4: Draft an LLC Operating Agreement
Now that you’ve officially formed your LLC, the next step is to draft an LLC operating agreement, also known in Alabama as a limited liability company agreement.
An LLC operating agreement outlines the ownership and membership duties of your LLC. In essence, this document allows the business owner(s) to clearly define both the financial and working relationships between each business owner or “members” as well as the members and managers.
This makes managing your business not only easier but also more streamlined, thanks to a solidified set of rules that inform voting rights, ownership stakes, and more.
How to Draft an LLC Operating Agreement
Here’s the good news: drafting an LLC operating agreement is easy and free using our free operating agreement tool or by downloading this free operating agreement template. If you’d prefer to create your own, here are the six articles you can generally expect to cover:
- Management and voting
- Capital contributions
- Changes to the membership structure
Visit our full How to Create an Alabama LLC Operating Agreement guide to learn more.
Step 5: Get an EIN
An Employer Identification Number (EIN) is like a Social Security number for your LLC. Besides allowing the IRS to identify your business for tax reporting, an EIN allows you to get a bank account for your LLC. If you’re not sure if you need an EIN for your business, here are some circumstances that require LLCs to obtain an EIN.
Your LLC is required to get an EIN if:
- Your LLC has employees
- Your LLC files excise tax
- Your LLC withholds taxes for nonwage income paid to a nonresident alien
The benefits of having an EIN outweigh the disadvantages and most banks require LLCs to have an EIN to open a checking account. Not to mention, it is free and easy to file for an EIN using the IRS website.
After You've Formed Your LLC
There are some important tasks you need to complete after forming your LLC, from obtaining the right permits to developing a strong web presence.
These are some of the most important things you need to do after forming your LLC:
- Open a business bank account
- Establish business credit
- Hire an accountant
- Register for business licenses and permits
- Get business insurance
- Establish your web presence
Open a Business Bank Account and Credit Card
Opening a business bank account and getting a business credit card before you start operating is one of the most important things to do to maintain your LLC’s liability protection — also known as its corporate veil.
Limited liability protection means that the personal assets of the owner are not in danger if the business is sued or goes into debt. This is one of the biggest benefits of forming an LLC.
The easiest way to lose personal liability protection is to mix your personal financial accounts with the business.
Hire an Accountant
You might be thinking about doing your own accounting and avoiding hiring a professional to save some money. While this might be possible (especially with the help of accounting software), the advantages of hiring an accountant are likely to save you money in the long run — not to mention help you avoid potential legal troubles.
Hiring an accountant for your LLC can:
- Prevent the business from overpaying on taxes and helps it avoid penalties and fines
- Give you more time to focus on your growing business instead of doing accounting and bookkeeping
- Help you discover areas of unforeseen loss or extra profit
Take advantage of a free tax consultation with our trusted partners.
Research and Register for Business Licenses
Getting the right Alabama business licenses and permits is one of the most important things to do after forming an LLC.
This can sometimes be an intimidating step, as the business license and permit requirements vary considerably from state to state and even between counties and cities. Different types of businesses may also have different licensing requirements, like seller's permits.
There are three main licensing jurisdictions: federal, state, and local.
To find out which business licenses you might need and how to get them, check out our How to Get a Business License guide.
Get Business Insurance
Every LLC should have some type (or types) of business insurance.
At a minimum, your LLC should have general liability insurance, which is a broad insurance policy that protects your business from lawsuits.
Before you decide on which business insurance to get for your LLC, check out our review of the 7 Best Small Business Insurance Companies.
Establish Your Web Presence
All businesses should have an internet presence. This includes having:
- A website
- Social media accounts
- A YouTube channel
The style of your website could vary greatly depending on the type of business you have as well as your own personal preferences.
If you don’t feel comfortable making your own website, there are a lot of tools and website builders that can help you create your own business website.
Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Alabama LLC Checklist FAQ
How long does it take to get an LLC in Alabama?
The average time it takes to process LLC formation documents in Alabama is seven to ten days.
What are the requirements for an LLC in Alabama?
To form an LLC, you need to file the Certificate of Formation with the Alabama Secretary of State online or by mail, along with a $200 filing fee.
Learn more by visiting our full How to Start an LLC in Alabama guide.
How much does an LLC cost per year in Alabama?
The State of Alabama requires LLCs to get a business privilege license each year. The fee to complete this requirement varies by county.
How much does it cost to start an LLC in Alabama?
If you are filing Alabama LLC formation documents yourself, you will only need to pay the $200 filing fee.
If you choose to hire one of these Best LLC Services to complete your filing, you’ll be charged a small additional fee.
What do you need to start a business?
To start a business, you’ll need a few things, such as:
- A business idea
- A business name
- A business plan
- A business structure
- Licensing and permits
- Business insurance
In addition to this, you need to satisfy any state or federal requirements as well as any requirements unique to your business. For a more in-depth guide to starting a business, visit our How to Start a Business in Alabama guide.
Can I be my own registered agent in Alabama?
Yes, Alabama does allow you to be your own registered agent. However, before you decide to act as your own registered agent, there are a few things you need to consider:
- You’ll have to maintain normal (i.e., 9 a.m. - 5 p.m.) business hours at the address you provide.
- If you run your business from home, you’ll be required to make your personal address public.
- You must keep up on important notices, dates, and deadlines.
- You could be served in front of your family or coworkers.
Check our Alabama registered agent guide for more details.
What is better: a DBA or LLC?
Unlike an LLC, a “doing business as” (DBA) name is not a business structure. Therefore, it is difficult to compare DBA vs. LLC. Generally, however, we recommend forming an LLC for your business. If you choose to form as a sole proprietorship or would like to operate under a different business name than the one you have registered, filing a DBA is a great option.