How To Get An LLC In Alabama In 6 Easy Steps 

Overview

Getting an LLC in Alabama involves a straightforward process. Below, we’ll guide you through the essential steps and provide factual answers to common questions.

How To Get An LLC In Alabama: Step-By-Step

1. Choose a Name for Your LLC:
   • Choose a unique and available name for your LLC.
   • Perform an Alabama LLC name search through the Alabama Secretary of State website.
   • Reserve your chosen name if needed.
2. Registered Agent:
   • Appoint a registered agent with a physical address in Alabama.
3. File Certificate of Formation:
   • Complete the Alabama LLC Certificate of Formation form.
   • File online through the Alabama Secretary of State website or submit a paper application.
4. Operating Agreement:
   • Draft an operating agreement outlining the structure and operation of your LLC. Although not required by the state, it is highly recommended.
5. Employer Identification Number (EIN):
   • Obtain an EIN from the IRS for tax purposes.
6. Filing the Initial Business Privilege Tax Return (BPT):
   • File an Alabama Business Privilege Tax return with the Alabama Department of Revenue within 2.5 months after organization. 

1. Choose a Name for Your LLC

Check if the name you desire for your Alabama LLC is available in the state. This is important because no two businesses in Alabama can share the same name.

To do this, use the Secretary of State’s Business Entity Search tool to compare your business name with existing ones in Alabama. 

Make sure your LLC name is unique by following Alabama’s naming rules to increase the chances of your LLC name being approved.

If you need, you can reserve the name for your LLC for up to one year.

Filing a  Name Reservation Request Form for Domestic Entities costs $25 ($28 if filed online).

2. Appoint Registered Agent 

In Alabama, you need to choose a registered agent for your LLC. This is the person or company allowed to get legal papers and important notices on behalf of your LLC.

Your registered agent can be a person, like yourself or one of your employees, or a company that offers this service.

The registered agent has to meet some requirements:

• If it is a company, it must offer registered agent services.
• The agent must have an address in Alabama.
• The agent must be there in person and ready to get documents during regular business hours.

3. File Certificate Of Formation 

To officially establish your Alabama LLC, you need to file the Alabama Certificate of Formation, which is equivalent to articles of organization in other states. 

This document provides essential details about your LLC and serves as the official registration.

To prepare the certificate, gather the following information: your LLC name, the name and address of the registered agent, specify the type of LLC (series, professional, or nonprofit), and provide the effective date if different from the filing date. 

The form is a straightforward online submission or can be sent by mail.

The Alabama Certificate of Formation filing fee is $200 ($208 if filed online). 

Once filed, the Alabama Secretary of State will review the document, and upon approval, your LLC attains legal business entity status. 

You can undertake this process independently using our step-by-step guide or opt for the convenience of hiring a company for assistance.

4. Create An Operating Agreement 

An operating agreement is a document that shows how your LLC will do business. 

While Alabama doesn’t make it a must, having one is crucial. It helps in different ways, like resolving money disputes or potential legal issues. Without it, the courts decide based on state laws, not necessarily what’s best for the LLC.

The agreement can include things like the LLC’s name, address, how long it will last, the registered agent’s details, info from the articles of organization, the business’s purpose, member contributions, how profits and losses are shared, rules for new and leaving members, how the LLC is managed, and clauses about protection and responsibility.

5. Obtain Employer Identification Number (EIN)

The Internal Revenue Service (IRS) gives your LLC a nine-digit number called an Employer Identification Number (EIN) to identify it for taxes. You can get your EIN by mail or online through the IRS.

This number helps you:

• File and handle taxes at both the state and federal levels.
• Open a bank account for your business.
• Hire employees.

Obtaining an EIN is FREE.

6. Filing The Initial Business Privilege Tax Return (BPT)

The initial business privilege tax return is the first tax return you must file when your business starts in Alabama. 

It’s due two and a half months after your business incorporates or organizes in Alabama or two and a half months after it qualifies with the Alabama Secretary of State to operate in Alabama if it was incorporated or organized elsewhere.

Use Form BPT-IN to file this return. 

The minimum cost for filing BPT is $50.

Review: What Is Needed To Form An LLC In Alabama?

To form an LLC in Alabama, you need:

• A unique LLC name.
• Certificate of Formation.
• Registered Agent information.
• Operating Agreement (recommended).
• Employer Identification Number (EIN).

What Forms Do You Need To Get An LLC In Alabama?

• Alabama Domestic LLC Filing Form, or
  • Alabama Foreign LLC Filing Form
• Name Reservation Request Form For Domestic Entities
• Form BPT-IN
• EIN Application Form

How Much Does It Cost To Start An LLC In Alabama?

The cost to start an LLC in Alabama involves several steps, each with its own associated fees:

• Name Reservation Fee: $25 ($28 if filed online)
• Certificate Of Formation Filing Fee: $200 ($208 if filed online)
• Filing The Initial Business Privilege Tax Return (BPT): Minimum Cost: $50

How Long Does It Take For An LLC To Get Approved In Alabama?

If you send your LLC application by mail, it will be approved in 1-2 business days, plus the time it takes for the mail.

However, if you file online, your LLC will be approved right away.

What Are The Benefits Of Getting An LLC In Alabama?

• Limited liability protection for members
• Pass-through taxation
• Flexible management structure
• Credibility for business transactions

Is Alabama A Good State To Get An LLC?

Whether Alabama is the right state for your LLC depends on where you live and do business. If you live or operate in Alabama, it makes sense to start your LLC there. 

While some states may have tax advantages, those benefits don’t apply if you’re not living and working in that state.

Getting An LLC In Alabama: Next Steps

Once your LLC is registered, you can:

• Get the permits and licenses you need for your business, like health or zoning permits.
• Register your business with the state’s tax agency.
• Open a business bank account.
• Apply for a business credit card.
• Buy insurance for your business.
• Safeguard your name and logo with a trademark.

To maintain your LLC in Alabama, you must:

• File annual reports by the due date to keep the LLC in good standing.
• Update any changes to the registered agent or business address promptly.
• Pay Taxes (owners file their individual tax returns)

Conclusion

Forming an LLC in Alabama involves a few key steps, from name reservation to obtaining an EIN. 

Carefully following the process ensures a smooth establishment of your LLC. 

For more detailed information and to access the necessary forms, visit the Alabama Secretary of State website.