Here are the steps you need to take to form an LLC in Alabama. For more information on how to form an LLC in any state, see Nolo's article on How to Form an LLC.
1. Choose a Name for Your LLC
Under Alabama law, an LLC’s name must contain the words “Limited Liability Company” or the abbreviations “LLC” or “L.L.C.” Your LLC’s name may not contain a word or phrase which indicates or implies that it is organized for a purpose not contained in its articles of organization.
Your LLC’s name must be distinguishable from the names of other business entities already on file with the Alabama Secretary of State. Names may be checked for availability by searching the Alabama Secretary of State’s business name database. You must reserve your LLC's name before filing your LLC formation documents. This may be done online or by postal mail by filing a Name Reservation Request Form for Domestic Entities form with the Alabama Secretary of State’s office. A $28 fee must be paid to reserve a name online, $10 for postal mail reservations ($25 for expedited processing).
Although not required, you might want to register your LLC’s name as a federal or state trademark. For details, see Trademark Law at www.nolo.com/legal-encyclopedia/trademark-law.
2. File Certificate of Formation with County Probate Court
An Alabama LLC is created by filing a Certificate of Formation. Unlike most states, the certificate is not filed with the Secretary of State. Instead, you must file it by postal mail with the Office of the Judge of Probate in the county where the LLC’s initial registered office is located. The Probate Court files the form and provides you with a stamped copy. The court then transmits the certificate to the secretary of state along with your fee. A list of the names and addresses of the probate judges for every Alabama county can be found at the Alabama Secretary of State website.
The certificate of formation must include the following information: the LLC's name, purpose, address, the names and addresses of organizers (and managers, if any), the name and address of its registered agent. You must also attach the following information, if applicable: (1) if members have the right to admit additional members, an explanation of the terms and conditions, and (2) the circumstances, if any, under which the cessation of membership of one or more members will result in the LLC’s dissolution.
A copy of the Name Reservation certificate from the Secretary of State must be attached.
The filing fee is $100 to the Secretary of State plus a separate Probate Court filing fee.
3. Appoint a Registered Agent
Every Alabama LLC must have an agent for service of process in the state. This is an individual or corporation that agrees to accept legal papers on the LLC’s behalf if it is sued. The agent should agree to accept service of process on behalf of the limited liability company prior to designation. The registered agent may be (1) an individual residing in Alabama, (2) an Alabama business entity or (3) an out-of-state business entity with an office in Alabama. The Secretary of State has a link to a list of Alabama registered agents here.
4. Prepare an Operating Agreement
An LLC operating agreement is not required in Alabama, but is highly advisable. For help creating an LLC operating agreement, see Form Your Own Limited Liability Company, by Anthony Mancuso (Nolo) or use Nolo’s Online LLC. If an operating agreement is created, it must be filed with the LLC’s Certificate of Formation.
5. Publication Requirements
There are no publication requirements in Alabama.
6. Pay Your State Tax Obligations
Alabama requires LLCs to file a Business Privilege Tax Return and Annual Report with the Department of Revenue on or before three and one-half months after the beginning of the LLC’s taxable year. A minimum $100 tax must be paid each year. For details and tax forms, see the Alabama Department of Revenue website.
In some cases, for example if you will be selling goods and collecting sales tax or if you have employees, you’ll need to register with the Alabama Department of Revenue (DOR). You can register online (via the My Alabama Taxes (MAT) website) or on paper (using DOR Form COM:101, Combined Registration/Application). For more information on state LLC tax registration, see Nolo's article LLC Annual Report and Tax Filing Requirements: A 50-State Guide.
7. Comply With Other Tax and Regulatory Requirements
Additional tax and regulatory requirements may apply to your LLC. These may include:
EIN: If your LLC has more than one member, it must obtain its own IRS Employer Identification Number (EIN). This is so even if it has no employees. If you form a one-member LLC, you must obtain an EIN for it only if you elect to have it taxed as a corporation instead of a sole proprietorship (disregarded entity). You may obtain an EIN by completing an online EIN application on the IRS website. There is no filing fee.
Business Licenses: Depending on its type of business and where it is located, your LLC may need to obtain other local and state business licenses.
LLC Records: An Alabama LLC must keep the following records in its principal office and make them available for inspection by LLC members:
- a current list of the full name and last known business or residence street address of each member, and each manager, if any
- a copy of the filed articles of organization and all amendments, and executed copies of any powers of attorney pursuant to which any documents have been executed
- copies of the LLC’s federal, state, and local income tax returns and reports, if any, for the three most recent years
- copies of any then effective operating agreements including any amendments, and
- copies of any financial statements of the LLC for the three most recent years.
8. Special Alabama Rules on Professional Services
Under Alabama law, LLCs can be formed to provide professional services. However, only one specific type of service may be provided and all the owners of the LLC must be licensed or registered to perform the professional service for which the LLC was organized.
9. Foreign LLCs Doing Business in Alabama
All LLCs organized outside of Alabama must register with the Alabama Secretary of State to do business in Alabama. Foreign LLCs must appoint a registered agent for service of process physically located in Alabama. You may register online for a $260 fee. You may also register by postal mail for a $150 fee by filing two original copies of the Foreign Limited Liability Company Application for Registration with the Business Entities Division of the Secretary of State. Mail the fee and Application to:Alabama Secretary of StateAttention: Business Entities DivisionP.O. Box 5616Montgomery, Alabama 36103