How to Start an LLC in Alabama in 6 Simple Steps

As a new business owner, learning how to start an LLC is vital to your business growth.

Advertising

This is because a limited liability company helps to structure a business legally.

This effort combines the limited liability of a corporation with the flexibility and informalities provided by a partnership or sole proprietorship.

If you seek to limit your personal business liability for debts and lawsuits, you should consider forming an LLC.

Advertising

This guide will show you in simple steps how to form an LLC in Alabama.

How to Start An LLC in Alabama

Forming an LLC in Alabama requires simple steps.

For a start, you’ll need to file a Certificate of Formation with the Alabama Secretary of State.

You can apply online for this certificate or get it by mail for $200.

Advertising

This Certificate of Formation is the legal document that officially establishes your Alabama limited liability company.

Steps on How To Start An LLC in Alabama

To start your Alabama LLC, here are the steps to follow.

To start an LLC in Alabama, you have to:

Choose Your LLC Business Name
Appoint a registered agent
File a Certificate of Formation
Prepare an Operating Agreement
File a state tax return / annual report
Acknowledge other requirements

Choose Your LLC Business Name

Before you choose a name for your business, it must be reserved with the Secretary of State prior to filing your LLC formation documents.

Advertising

Your proposed name must be automatically checked for availability.

This can also be done online with a fee of $25 when you mail a name reservation request form for a domestic entity firm to the Alabama Secretary of State’s office.

As your business name must differ from other business names, you must search for proposed name availability at the Alabama Secretary of State.

However, an LLC’s name must contain the the the word line: Limited Liability Company, LLC; or

L.L.C.

In addition, when choosing a business name, you must consider the following:

Follow the LLC Business naming guidelines:
Your business name must include ability company” or its abbreviations (LLC or L.L.C.).
Ensure that your name is distinguishable from any other Alabama limited liability company, corporation, limited partnership, or registered limited liability partnership business name. Ensure the name you desire isn’t already taken by doing a Business Entity Search on the Alabama Secretary of State’s website.
Ensure to Reserve the name once you find the availability: You must complete the Name Reservation Request for Domestic Entities form at least two weeks prior to registration or reserve your business name when completing the online LLC registration.
Consider if the URL is available: Check online to see if your business name is available as a web domain. If it is, you may want to buy the URL to prevent others from acquiring it.

Appoint a Registered Agent

All LLC businesses in Alabama must have a registered agent for service of process in the state.

A registered agent is an individual or corporation that concedes to accept legal papers on the LLC’s behalf if someone sues the company.

The agent agrees to accept service of process on behalf of the limited liability company prior to designation.

The registered agent can be anyone as long as they are:

Individuals residing in Alabama
Alabama business entity,
An out-of-state business entity with an office in Alabama.

File Certificate of Formation with Your County Probate Court

Filing a Certificate of Formation with the Office of the Judge of Probate in the county where the LLC’s initial registered office is located is required to create your LLC.

The Probate Court must file the form and gives you a stamped copy.

The court then sends the certificate of formation to the secretary of state and your fee.

You can find the list of the names and addresses of the probate judges for every Alabama county on the Alabama Secretary of State website.

The following information must be included in the certificate of formation:

Your LLC’s name

The registered agent’s name and address
Indication if the LLC is a series LLC, professional LLC, or non-profit LLC
The active date the LLC will begin
Signature of the organizer or attorney-in-fact.
You must attach a copy of the Name Reservation certificate from the Secretary of State.

Note: The filing fee is $200 to the Secretary of State plus a separate Probate Court filing fee of at least $50.

Prepare an Operating Agreement

It is highly recommended to get an LLC operating agreement in Alabama.

The operating agreement is an internal document that ascertains how you will run your LLC.

It also sets out the treaties and duties of the members and managers, including how the LLC will be managed.

Also, it can help protect your limited liability by showing that your LLC is a separate business entity.

However, the state law will govern your LLC’s operations without the operating agreement.

File State Tax Return/Annual Report

LLCs in Alabama must file a combined Business Privilege Tax Return and Annual Report with the Department of Revenue annually.

Yearly, all LLCs must pay a minimum $100 tax.

You need to register when the Alabama Department of Revenue if you will be selling goods and collecting sales tax or if you have a plan to have employees.

See the Alabama Department of Revenue website for details.

Acknowledge Other Requirements

You must get an EIN & comply with other tax and regulatory requirements to form your LLC in Alabama.

Listed below are other requirements for LLC.

Employer’s Identification Number: This is required if your LLC has more than one member.

As such, it must obtain its own IRS Employer Identification Number (EIN).

If your LLC is required to file a separate tax return, you must obtain an EIN.

You can do this by completing an online EIN application on the IRS website.

Business Licenses: The business licenses depend on the type of business and its location. You may also need to obtain other local and state business licenses.

However, you can check with the county probate office or county licensing commission for the county where your LLC is located.

LLC Records: LLC in Alabama must keep some records in its principal office and make them handy for inspection by LLC members.

The records include:

Current list of the full name and address of each member and manager of the LLC.
A copy of the articles of organization and all amendments.
Copies of any powers of attorney
Copies of the LLC’s federal, state, and local income tax returns for the recent three years.
Copies of the operating agreements and any amendments.
Copies of financial statements of the LLC for the recent three years.