How to Set Up an LLC in Alabama 

We’ve put together a free step-by-step guide on how to set up an LLC in Alabama. We want you to have a clear idea of how to set up and manage an LLC for your state. We’ve tried to make sure you have the information you need right at your fingertips. Each step has instructions and links to the sites for you to fill out the forms in the correct order. So, let’s set up your Alabama LLC right now! 

A few points to remember before setting up your LLC in Alabama 

When you set up an LLC in Alabama you’ll need a few things before you get started.  This section will help you get your checklist in order.

A Unique Business Name 

Every business in the state must be unique. You’ll need to search for an Alabama LLC name. Go to the Alabama Business Entity Search by Entity Name to make sure yours is not taken. 

An LLC Designator 

Once you’ve chosen a unique business name you’ll need to decide on your LLC designator when you set up your LLC in Alabama.  You can chose one of the ones below.  

• LLC (most common) 
• L.L.C. 
• Limited Liability Company 

A Registered Agent 

In most states, a registered agent is a person or a company that accepts “Service of Process” for your Alabama LLC. A registered agent will receive any subpoenas, notices, and other legal, and tax documents sent to your business by the Alabama Department of Revenue. 

If you’re opening a business in Alabama but you aren’t a resident, you’ll need to get a registered agent in that state.  The requirements for a registered agent are as follows: 

An Individual: 

• Must be 18 and be a resident of the state 
• Must be authorized to do business in the state. 
• Must have a physical street address located in Alabama

A Company 

• Must be authorized to do business in the state 

If you meet the above criteria, you can be your own registered agent. Or you can set up a friend or family member to be your registered agent. 

You can also hire a commercial Registered Agent. A company that provides their name and address to receive legal documents from the state. 

Step 1: Register Your Business Name 

To Set up an LLC in Alabama you need to reserve your business name.  This way during the process no one can steal the name of your company. 

You’ll need to reserve your name at the  Alabama Secretary of State: Business Entities or by mail.  

Step 2: File Your Certificate of Formation in Alabama 

Setting up an LLC in Alabama is easy, especially for single-member LLCs. Just go directly to the Alabama Secretary of State: Domestic Filing.   

You can do the name reservation and the certificate of formation at the same time.  Easy peasy.  

If you don’t want to file online, you can fill out the Certificate of Formation at the Alabama Secretary of State Domestic Filing.    Download the Domestic Business Corporation Formation and follow the instructions.  It takes 5 to 7 days to get the approval back. 

Fees: In Alabama, the cost of setting up your LLC and filing the certificate of formation is $200.00.  If you file online the cost increases to $208.00 for credit processing fees. 

Step 3: Complete Your Alabama LLC Operating Agreement 

An operating agreement is a key document used by LLCs, and partnerships. It outlines the business’ financial and functional decisions including rules, regulations, and provisions. This describes how your LLC will operate internally. For more information on operating agreements, you can check out the Small Business Administration’s article on basic operating agreements. 

Step 4: Get Your Federal Tax ID Number (EIN) 

Once your Alabama LLC has been approved it’s time to get your Federal Tax ID Number from the IRS.   

Your EIN is the social security number of your business.  Keep it well protected.  You’ll use this number to open bank accounts, file tax documents, apply for loans and many other uses.  It also protects your social security number when doing business with other businesses like merchant accounts, 1099s received etc. 

To apply for your EIN you can go to IRS EIN/Tax ID Application.  Make sure you pick the correct Business Entity Type.   

Taxes, Permits, and Licensing in Alabama 

Once you’ve completed setting up your operating agreement, certificate of formation, and EIN you’ll need to file your Annual report and Business Privilege tax return.  You must file this each year or you’ll forfeit your right to do business in Alabama.

To make payments, go to Alabama Business Privilege Tax.   

Fees: The minimum fee is $100; it may go up depending on your LLC’s value, income, and members. 

Your Alabama LLC must apply for necessary business licenses and or permits.  Either a Business Privilege License or a Store License must be applied for compliance. This depends a lot on the type of business and the location of your business. 

Not only does the State have a business privilege return but most counties in Alabama do as well.  If you have a brick-and-mortar store you will also need a license for businesses that buy and sell physical goods and merchandise. 

Aside from business licenses and permits, all LLCs must also pay appropriate taxes and meet obligations with the Alabama Department of Revenue. 

Putting it All Together

Now that you can set up an LLC in Alabama online it shouldn’t take more than a day or two to get up and running.  The Alabama Secretary of State’s website is very easy to navigate and following the five steps above will help you get your talents and ideas to market faster.