LLCs in Alabama are affordable and easy to form. As with other states, the State of Alabama has some unique LLC requirements.
Interested parties must register with the Secretary of State by filing the necessary forms, paying the necessary fees and meeting all naming and formation requirements.
Starting an LLC in Alabama
Before you begin the registration process for an Alabama LLC, it’s important to know what an LLC is and whether or not it is a viable business structure for your company, so be certain to read up on the definition and benefits of an LLC.
Here are some tips for helping you put together what you need to begin the registration process with the judge of probate in your LLC’s county and the Alabama Secretary of State:
Decide on a Name for Your Business
You can choose any name as long as it ends with “Limited Liability Company,” “Ltd. Liability Co.,” or any variation of its abbreviation—e.g., LLC or L.L.C.
A name may be reserved for a minimal fee of $10. All requests must be made to the Secretary of State or online. For expedited processing services, a $25 fee ensures that your request will be processed in less than 24 hours.
A preferred name may be checked for availability by accessing the Secretary of State’s website.
Assign an Agent for Service of Process
This is also referred to as the resident agent.
Get an Employer Identification Number (EIN) From the IRS
If there are two or more members in your LLC, your company will need to obtain an EIN from the IRS, for tax purposes.
Create an Operating Agreement
Although LLCs in Alabama are not required to have a limited liability company operating agreement, it is wise to have one in place with other members should your LLC have more than one member. The State of Alabama recognizes limited liability company operating agreements as governing documents. If your LLC has one, you may include it when you submit your LLC’s Certificate of Formation to the judge of probate.
Familiarize Yourself With the LLC’s Continuing Legal Obligations
These may include, but are not limited to, state taxes, annual reports and so on.
Specifically, you should read up on Alabama’s requirements for annual renewals and Alabama Business Privilege Tax returns.
Annual renewals are required every year and must be accompanied by the Alabama Business Privilege Tax return. All LLCs should file these with the Alabama Department of Revenue on or before 3.5 months after the commencement of the taxpayer’s tax year. The minimum annual tax is $100. LLCs with one or multiple members must file the Alabama Form PPT and must include the Annual Report Form AL-CAR, as well as the appointment schedule Form 65.
LLCs that opt to be taxed as corporations must submit Alabama Form CPT and include the Annual Report Form AL-CAR.
All Business Privilege Tax returns must include the following documents, aside from the necessary forms required of the LLC:
- One copy of pages 1 to 4 of the federal tax return
- A copy of Alabama apportionment schedule Form 65
- Documentation to support exclusions and/or deductions claimed
- A copy of the balance sheet used to compute the taxpayer’s net worth.
For initial reports, LLCs must submit the Alabama Form BPT-IN upon commencement of business in Alabama. It must be filed within 2.5 months of organization.
All tax filing and annual reports may be done online via MAT.
In Alabama, certain LLC records must be kept on file at the registered office for members. These files include, but are not limited to:
- The most current list of names and recently updated addresses of all the LLC members
- A copy of the filed Certificate of Formation with all its amendments and executed powers of attorney for action/s already taken
- A copy of the effective operating agreement and any or all of its amendments
- Copies of the most recent financial statements filed with the Department of RevenueLLCs in Alabama may be formed to offer one specific kind of professional service. However, all members must be licensed and/or registered to perform the service the LLC was originally organized for.
Filing an LLC and Fees
Following are the forms and fees that are required when starting an Alabama LLC:
- Forms. First, you need to complete and submit a Certificate of Formation to a judge of probate in the county where the LLC’s registered office exists. You must include the required forms and fees for both the judge of probate and the Secretary of State. This can only be done online or by mail. As for the Secretary of State’s filing fees, you must include a $100 filing fee in addition to the judge of probate’s fees.
- Fees. The minimum fee for a judge of probate is usually $50 but will vary by county. The filing fee for the Secretary of State is $100 and the expediting fee for processing documents with the Secretary of State is $100.
- Limited liability company operating agreement. Although the LLC operating agreement is not submitted to the judge of probate and the Secretary of State, it is a good idea to have one in place for LLCs with more than one member. This should be kept on file at the registered office of the LLC.
- Taxes. LLCs in Alabama are treated as corporations, limited liability partnerships or single-member LLCs and are subject to federal income tax classifications. Depending on the type of taxation you opt to have for your LLC, you will have different federal tax responsibilities.
The specifications required of an LLC in Alabama are:
- Registration. File a Certificate of Formation with the judge of probate in the county where the LLC’s registered office exists. After 10 working days, the judge of probate will send the certificate to the Alabama Secretary of State. The necessary fees, as dictated by the judge of probate and on top of the fee required by the Secretary of State, must accompany your submission. All submissions must include one original form and two copies of the completed original form. This may be done via mail.
- Forms and fees. LLC registrants are required to file a Certificate of Formation with the judge of probate in the county where the LLC’s registered office exists. The certificate must be accompanied by the required filing fee of the Secretary of State in addition to the fees required by the county judge of probate, which varies by county.
- Timeline. The usual processing time for business forms and documents is between three to five business days after receipt of filing request. However, when taking into consideration the filing requirements with the judge of probate, turnaround times for LLC forms may take up to two weeks or 14 business days. Expedited processing services are available for an additional fee of $100 paid to the Secretary of State.
- Naming requirements. LLC naming requirements can be confusing. However, the easiest way to make sure that your LLC name will be approved is to make sure that it is distinguishable from other LLCs and includes specific required words. You may opt to have a preferred name checked for availability before filing your LLC formation documents with the judge of probate and the Secretary of State.
- Formation requirements. To form an LLC, a registrant must first file a Certificate of Formation with the judge of probate in the county where the LLC’s registered office exists. The certificate will then be stamped and sent to the Secretary of State for filing and indexing. All submissions must be accompanied by separate filing fees for both the judge of probate and the Secretary of State.
An LLC with more than one member is also strongly advised to have a limited liability operating agreement among its members.