A limited liability company (LLC) is a way to legally structure a business. It combines the limited liability of a corporation with the flexibility and lack of formalities provided by a partnership or sole proprietorship. Any business owner who wants to limit their personal liability for business debts and lawsuits should consider forming an LLC.
Here are the steps you need to take to start an LLC in Alabama. For more information on how to form an LLC in any state, check out our article on how to start an LLC. You can also use our online LLC formation service to register your LLC.
You must reserve your LLC's name with the Alabama Secretary of State (SOS) before filing your LLC formation documents. You can mail in a completed Name Reservation Request Form for Domestic Entities to the SOS or complete the filing online using the SOS Online Services.
As of 2024, the fee to reserve a name is $25. You'll incur additional processing fees if you file online or with a credit card.
Keep a copy of the Name Reservation Certificate. You'll need to attach a copy to your certificate of formation if you file the document by mail.
LLC name must be distinguishable. Your LLC's name must be distinguishable (different) from the names of other business entities already on file with the SOS. Before submitting the form, you should search the SOS's business entity records to be sure your proposed name is available. (Ala. Code § 10A-1-5.03 (2024).)
LLC name must include an entity designator. Under Alabama law, an LLC's name must contain the words "Limited Liability Company" or the abbreviations "LLC" or "L.L.C." (Ala. Code § 10A-1-5.06 (2024).)
Using a trade name. Out in the real world, you don't have to use your LLC's official legal name registered in your certificate of formation. Instead, you can use a trade name, sometimes called an "assumed name," "fictitious business name," or "DBA" (short for doing business as). Registering a trade name in Alabama isn't mandatory. However, you can choose to file an Application to Register Trade Name In Alabama with the SOS by mail and pay a $30 fee (as of 2024). Registration doesn't provide any legal rights in the name but does alert others the name is in use in Alabama. You can renew the trade name registration every five years. (Ala. Code §§ 8-12-6 and following (2024).)
Every Alabama LLC must have an agent for service of process in the state (called a "registered agent"). A "registered agent" agrees to accept legal papers on the LLC's behalf—for example, if the LLC is sued. The agent should agree to accept service of process on behalf of the LLC before designation. The registered agent can be:
(Ala. Code § 10A-1-5.31 (2024).)
The SOS provides a list of Alabama registered agents on its website.
You create an Alabama LLC by filing a Certificate of Formation with the SOS. You can file the certificate online through the SOS's Online Services or by mail. The certificate of formation must include the following information:
If you file your certificate online, you can complete the name reservation as part of the online filing process or enter your name reservation ID if you've already obtained a name reservation. If you file the certificate by mail, you must attach a copy of the name reservation certificate from the SOS.
As of 2024, the filing fee for a certificate of formation is $200.
An operating agreement is an internal agreement between the LLC members that lays out the rules and procedures for how the members (or managers) will run the LLC. Alabama doesn't require LLCs to have an operating agreement but it's still a good idea to create one. The agreement can help preserve your limited liability by showing that your LLC is truly a separate business entity from the owners.
Once an LLC creates an operating agreement, the LLC itself and its members are bound to the terms of the agreement. Without an operating agreement, Alabama's default LLC laws will govern how your LLC operates.
The operating agreement should cover:
For help creating an LLC operating agreement, you can use our online LLC formation service.
Your LLC will likely need to comply with other tax and regulatory requirements, including applying for business licenses and permits and registering for other business taxes.
For more information on Alabama LLC taxes, check out our article on Alabama LLC annual report and tax filing requirements.
EIN. You might need to get a federal employer identification number (EIN) for your LLC if your LLC has more than one member or plans to have employees. Even if your LLC isn't required to have an EIN, it's still a good idea to get one. Having an EIN can make it easier to open a bank account, apply for business loans, and do business with other companies. The process to apply for an EIN is quick, easy, and free. You can get an EIN by completing an online EIN application on the IRS website.
Business licenses. In general, you'll need to obtain a business privilege license for every county in Alabama you do business in. You should check with your county about this requirement. In addition, depending on your business activities and location, your LLC could need to obtain other local and state business licenses. Make sure that you and your business have all necessary operational, tax, and professional licenses and all required zoning and building permits. See our article on Alabama business licenses for more details.
Tax registration and filings. If you have employees or will be selling goods and collecting sales tax, you'll need to register with the Alabama Department of Revenue (DOR). You can register your business for various tax accounts through My Alabama Taxes (MAT). For more information on Alabama LLC tax registration, check out our article on Alabama annual tax and LLC filing requirements.
LLC Records: An Alabama LLC must keep the following records in its principal office and make them available for inspection by LLC members:
(Ala. Code § 10A-5A-4.09 (2024).)
Here are some other questions you might have about your Alabama LLC.
If you're just starting your business or have already been operating as a sole proprietor, you should consider forming an LLC. LLCs limit an owner's personal liability for business debts and lawsuits and offer a lot of flexibility when it comes to ownership, management, and taxation of the business.
To learn more about LLCs and decide if it's the right business structure for you, see our article on LLC basics.
Below are the fees (as of 2024) you might need to pay to form your LLC in Alabama:
Filing on your own is often the cheapest option, but completing all of the forms and filing them yourself can be complicated. Hiring a lawyer is another option, but it will often cost you hundreds, if not thousands, of dollars in the process. If you'd like help completing all the filings, try our online LLC formation service.
To learn more about the costs associated with forming and running an LLC, see our article on how much it costs to form an LLC.
Yes. Alabama requires LLCs to file a combined Business Privilege Tax Return and Annual Report with the DOR each year. Unless exempt, your LLC must pay a business privilege tax (BPT) to the DOR. The BPT is calculated based on the LLC's taxable net worth. If your LLC owes $100 or less for the BPT, then you don't have to file a BPT return.
You can file your return and pay the BPT online through MAT.
Apart from annual reports, your LLC will need to file and pay applicable taxes to the local, state, and federal governments. In addition, your LLC might need to obtain and periodically renew any required general or special business licenses or permits. You'll be responsible for keeping track of these maintenance requirements to keep your LLC in good standing and legally compliant.
Starting in 2024, all LLCs were previously required to submit a beneficial ownership information (BOI) report to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of Treasury. However, in March 2025, after some constitutional challenges, FinCEN revised the BOI reporting rule so that the requirement only applies to companies created outside the U.S. So, if you form your LLC within the U.S., then you no longer need to worry about the BOI reporting requirement.
You're not required to have an operating agreement for your LLC in Alabama. Though, it's highly advisable to have one. An operating agreement can help protect your limited liability status, prevent financial and managerial misunderstandings among members, and ensure that you choose the rules that govern your business instead of your state's default rules.
Alabama requires every business, including LLCs, to obtain a business privilege license to operate in the state. You'll need to apply for this license with the probate judge or license commissioner in the county where your business is located. In general, need a license from every other county where you conduct business.
In addition to the business privilege license, you could need professional licenses, tax licenses or registrations, safety certifications, environmental permits, and building permits.
You can find extensive details about state and local regulatory requirements in our Alabama business license article.
Your LLC will likely be responsible for paying some type of business tax. LLCs are considered "pass-through entities" (PTEs) by default, meaning the responsibility for paying taxes on the LLC's income passes through to the members. So, in this case, you'll report and pay taxes on your share of the LLC's income on your personal tax return. However, some LLCs elect to be taxed as a corporation rather than as a partnership (a type of PTE).
Alabama also requires LLCs to the BPT, a kind of franchise tax. The BPT is calculated based on the business's taxable net worth. If your LLC does $100 or less, then you don't have to file a BPT return. There's no minimum tax for the BPT. You can file your return and pay the BPT online through MAT. For more information about the BPT, see the DOR's frequently asked questions webpage.
In addition to income tax, your LLC might be responsible for reporting and paying sales tax, withholding employee wages, and paying unemployment insurance (UI) tax. You'll register to withhold and pay wages and to report and pay sales tax through the DOR. You'll need to register to pay the UI tax to the Alabama Department of Labor.
See our article on Alabama tax filing requirements for more details.
Yes. To do business in Alabama, all LLCs organized outside of the state (called "foreign LLCs") must register with the SOS. Your foreign LLC must appoint a registered agent for service of process that's physically located in Alabama. (Ala. Code §§ 10A-1-7.01 and following (2024).)
To register your out-of-state LLC, you must file an Application for Registration with the SOS. You can register your out-of-state LLC online through the SOS's Online Services or by filing two original copies of the Foreign Limited Liability Company Application for Registration with the SOS.
As of 2024, the filing fee is $150 if filed by mail and $156 if filed online.
Like a domestic LLC, your foreign LLC must also obtain a Certificate of Name Reservation. If your LLC name isn't available in Alabama, you'll need to file for a fictitious name. If you register your foreign LLC online, you can obtain the Certificate of Name Reservation at the same time you file your Application for Registration. (Ala. Code § 10A-1-5.11 (2024).)
See our guide to qualifying to do business outside your state for more information.
Yes. For most formation purposes, an Alabama single-member LLC is considered the same as a multi-member LLC. The steps to form a single-member LLC in Alabama are generally the same as those listed above.
Single-member LLCs do have additional flexibility when it comes to filing a tax return. To learn more, see our article on how single-member LLCs pay federal income tax.
Yes. If you provide a licensed professional service in Alabama and want to start an LLC, you can form a professional LLC (PLLC). Examples of professional services include architects, attorneys, dentists, certified public accountants, and more. Generally, if you provide a service that requires you to have an Alabama state license to practice, then you provide a professional service. (Ala. Code § 10A-5A-8.01 (2024).)
You can form a PLLC by filing a Certificate of Formation with the SOS. The certificates for regular LLCs and PLLCs are the same in Alabama. You'll need to indicate on your certificate that your LLC plans to provide professional services.
If you reach the point where it's time to close your business and cease all operations, then you'll want to properly dissolve your LLC to limit your liability for lawsuits and government fees. To dissolve an LLC in Alabama, you should:
(Ala. Code §§ 10A-5A-7.01 and following (2024).)
You'll also need to close your tax accounts and take any other steps necessary to close out your business. See our article on what you need to do when closing your business for more in-depth information and guidance.
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