Quick answer

Quick Answer

To start an Alabama LLC, you must file a Certificate of Formation with the Alabama Secretary of State and pay a $200 filing fee. You are legally required to appoint a registered agent with a physical Alabama address. While there is no standard annual report, you must file an Annual Business Privilege Tax (BPT) Return with the Department of Revenue, which carries a minimum $100 tax.

Alabama LLC filing fee

The fee to file your Certificate of Formation in Alabama is $200 when filed online through the Secretary of State's portal. If you choose to file by mail, the fee remains $200, but paper filings are generally processed much slower than online submissions.

Step 1: Choose a name

Your LLC's name must be distinguishable from all other registered businesses in Alabama. Additionally, the name must include the phrase "Limited Liability Company" or an abbreviation like "LLC" or "L.L.C." You can perform a free business entity search on the Secretary of State's website to ensure your desired name is available.

Step 2: Appoint a registered agent

Alabama law requires every LLC to maintain a registered agent within the state. The registered agent must have a physical street address in Alabama (P.O. Boxes are not allowed) and must be available during standard business hours to accept legal documents (service of process). You can act as your own registered agent if you live in Alabama, or you can hire a commercial registered agent service.

Step 3: File formation documents

To officially create your LLC, you must file the Certificate of Formation with the Alabama Secretary of State. You will need to provide your LLC's name, the registered agent's name and address, and the names of the LLC organizers. This can be completed entirely online via the state's official portal.

Step 4: Create an operating agreement

While Alabama does not legally require you to file an operating agreement with the state, it is highly recommended. An operating agreement is an internal document that outlines how the LLC is managed, how profits are distributed, and how ownership changes are handled. Most banks will require you to provide a copy of this agreement to open a business bank account.

Step 5: Get an EIN

An Employer Identification Number (EIN) is a 9-digit federal tax ID issued by the IRS. You need an EIN to open a business bank account, hire employees, and file federal taxes. Obtaining an EIN is completely free and can be done online in minutes through the official IRS website.

Step 6: Register for state taxes if needed

Depending on your business activities, you may need to register with the Alabama Department of Revenue. If you sell physical goods, you must obtain a Sales Tax Certificate. If you hire employees, you must register for employer withholding taxes. Furthermore, virtually all Alabama cities and counties require local Business Privilege Licenses to operate within their jurisdiction.

Step 7: File annual reports and stay compliant

Alabama LLCs do not file a standard "Annual Report" with the Secretary of State. Instead, they must file a Business Privilege Tax (BPT) Return with the Alabama Department of Revenue every year. The BPT is calculated based on the LLC's net worth apportioned to Alabama, but there is a strict $100 minimum tax. Additionally, newly formed LLCs must file an Initial BPT Return within two and a half months (75 days) of organizing.

Alabama LLC Cost

Fee Type Amount
Formation fee $200
Registered agent estimate $39 - $150 / year
Annual report fee $0 (None)
Franchise tax (BPT) $100 minimum / year
Publication fee if applicable $0 (None)
Other recurring fees Local county/city licenses (variable)
WHEN THIS MAY NOT APPLY

If you do not live in Alabama, do not operate from Alabama, and do not have a specific Alabama-related reason for forming there, a Alabama LLC may not be the best default choice. You may still need to register the LLC as a foreign LLC in the state where you actually operate, which can create duplicate filing fees, registered agent costs, and annual compliance requirements.

Alabama currently charges $200 to form a domestic LLC. Annual reports are currently $50+ BPT. For many purely online businesses, it is usually worth comparing your home state with commonly used business-friendly states such as Wyoming, which charges $100 to form an LLC and has a $60 minimum annual license tax, before choosing Alabama.

Should you form your LLC in Alabama?

A Alabama LLC usually makes sense if you live in Alabama, operate your business from Alabama, or have a clear legal or tax reason to use Alabama. If you live and operate somewhere else, forming in Alabama may create extra registered agent costs, foreign qualification requirements, and duplicate compliance obligations. Alabama may appeal to some owners, but compare it with Wyoming, Delaware, Nevada, and your home state in our guide to the best state for an online business LLC. For a comprehensive overview of starting a business, visit our LLC formation hub.

Situation Is a Alabama LLC usually a good fit?
You live in Alabama Usually yes
Your business operates in Alabama Usually yes
You want privacy Depends on state rules
You live in another state Usually only if you have a specific reason
You are a non-US resident Depends on banking, taxes, and compliance needs

Alabama LLC vs Wyoming LLC

Compared to a Wyoming LLC, an Alabama LLC is more expensive to maintain and less private. Wyoming does not have a state income tax, charges a flat $60 minimum annual report fee, and offers strong privacy protections for owners. Alabama requires a $100 minimum BPT, subjects pass-through income to state income tax up to 5%, and places owner/organizer names on the public record.