How to Start an LLC in Alabama
Here are the 6 steps to start a limited liability company (LLC) in Alabama
For more information on how to form an LLC in any state, see the article How to Form an LLC.
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Learn about Alabama LLC formation, including information on Registered Agents, naming rules, business licenses, and more.
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Creating an LLC in Alabama
A limited liability company (LLC) offers many benefits to small businesses, including liability protection and tax advantages.
A Limited Liability Company LLC must be formed in Alabama by filing a Certificate of Formation with the Alabama Secretary. You can apply online or by mail for $200.
However, you’ll first need to choose a name and registered agent for your Alabama LLC .
Mail filings: Approval of mail filings for Alabama LLCs takes about a week in total. This includes the processing time of 1-2 business days as well as the time your documents are in the mail.
Online filings: Alabama limited liability companies (LLCs) can file online and get an approval immediately.
An LLC can be easily formed in Alabama. Our step-by-step guide on How to Start an LLC in Alabama will help you get started today Find out more about LLCs and their benefits in our What is an LLC guide.
Step 1. Choose a Name for Your LLC Alabama
Creating an LLC in Alabama requires you to choose a business name before you can file a Certificate of Formation. Be sure that your business name complies with the Alabama naming requirements and can be searched by potential customers.
- Alabama law requires an LLC name to contain the words “Limited Liability Company” or “Limited Company,” or the abbreviations “Ltd.,” “LLC,” or “LC.” “Limited” may be abbreviated as “Ltd.” or “LTD,” and “Company” as “Co.”
- It is not acceptable for your Alabama LLC to have words associated with a government agency (FBI, Treasury, State Department, etc.).
- You should avoid using words or abbreviations that may make your LLC Alabama appear to be a different type of entity, such as “LP” or “corporation”.
- There may be additional documentation and licensure paperwork required for certain restricted words (bank, lawyer, attorney, credit union, etc.).
- Check the state’s business name database to ensure the name you want is not already taken(including businesses no longer in operation)
See a complete list of Alabama’ naming rules.
Check URL availability: You are likely to need a web page even if you don’t think you do. Buying your domain name now will at least give you the option of having one in the future. It’s a good idea to check the URL availability before finalizing your Alabama LLC name.
The state of Alabama does not require you to register a fictitious name if you are a sole proprietor operating under it. However, a corporation or LLC with a name that is different from the parent company must use the standard Name Reservation Request Form to reserve the DBA.
Yes, Before filing your LLC formation documents, you must reserve the name of your LLC with the Secretary of State. For a fee of $28, you can do so online. You can also mail a Name Reservation Request Form for Domestic Entities, along with a $25 fee, to the Alabama Secretary of State's office.
An LLC stands for a Limited Liability Company. A simple business structure that is more flexible and offers many of the same benefits as a traditional corporation. For more information, see "What is a Limited Liability Company?".
LLCs do not usually require a DBA. Your LLC's name can serve as your company's brand name, and you can accept checks and other payment methods under that name. You may however choose to register a DBA if you wish to conduct business under a different name. To learn more about DBAs, read our What is a DBA Guide.
Step 2: Appoint Your Registered Agent in Alabama
Your next step in forming an LLC in Alabama is to appoint a Registered Agent, an individual or company authorized to receive legal and state mail on your behalf.
All Alabama LLCs must have a registered agent. Please include your registered agent’s name and address on your Certificate of Formation.
Registered Agent Requirements in Alabama
To comply with Alabama law, your LLC’s registered agent must be a resident or business entity that maintains a physical address in Alabama. The “registered address” cannot be a P.O. box. It must be a real physical address that can be visited in person.
Although you do not have to submit this form to the Secretary of State, your business must record it. Learn more about Alabama Registered Agents by reading our full guide.
A registered agent must be an Alabama resident or a corporation authorised to do business in Alabama, such as a registered agent service. You have the option of electing someone from your company, including yourself.
The Secretary of State can change an Alabama registered agent by filing the Change of Registered Agent or Registered Office by Entity form.
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Wise Business Plans offers a free year of registered agent service when forming an LLC in Alabama.
Step 3.Prepare and File Certificate of Formation
To create a Alabama LLC, you will need to file Certificate of Formation with the Office of the Judge of Probate in the county where the LLC’s initial registered office is located
A copy of the Secretary of State’s Name Reservation certificate must be attached.
You will receive a duplicate form back from the state once it receives your documents.
It may take up to 1-2 business days to process a mailed submission.
If you choose one of our business formation plans, we can handle this step for you.
The following information is typically required to create a Certificate of Formation:
- Your LLC name and principal place of business.
- Name, address, and signature of the LLC’s registered agent
- Decide whether your Alabama LLC will be member-managed or manager-managed. Indicate the names and addresses of each member and manager.
- The reason for forming the LLC in Alabama.
- Name and address of the LLC’s organizer.
- The effective date of the certificate,
- The person forming the LLC must sign the Certificate.
Foreign LLCs: LLCs that are based in another state but intend to conduct business in Alabama must complete a form called the Qualification of Foreign LLC.
The $150 filing fee and two original copies of the “Foreign Limited Liability Company Application for Registration” should be mailed to the Alabama Secretary of State.
Two Ways to File the Certificate of Formation
The 1st option is:
Online filing through the Alabama Interactive
The 2nd option is:
Filing the Certificate of Formation by Mail
There is a state filing fee of $200 payable to the Alabama Department of State. (nonrefundable)
Mailing Address:
Secretary of State Business Services
P.O. Box 5616 M
Montgomery, Alabama 36103-5616.
Online filing:To fill out the online form, choose “non-subscriber.” After you select your primary county, the website will notify you if your county does not support online filing.
In a member-managed LLC, the members (owners) take on the business's daily responsibilities. Manager-managed LLCs are managed by managers who are elected by the members. Those who manage your LLC will have the authority to do a wide range of tasks-from hiring staff to opening bank accounts.
When an LLC conducts business in the state where it was formed, it is referred to as a "domestic LLC." Normally, when we talk about an LLC, we're talking about a domestic one. When an existing LLC wants to expand its operations to another state, it must form a foreign LLC.
Step 4. Get a Certificate From the State
Upon filing your Certificate of Formation, the secretary of state will review it. As soon as the Certificate of Formation is approved, the LLC becomes a legal entity.
By obtaining this certificate, LLCs will be able to obtain an Employer Identification Number (EIN), licenses, and business accounts.
Step 5. Write an Alabama LLC Operating Agreement
An operating agreement is a legally-binding document that sets out how your LLC will operate, from the voting process to mergers.
Operating agreements are not required in Alabama, but they are an essential part of your business.
Written operating agreements are helpful for different reasons, including resolving disputes over financial agreements and other potential litigation.
The LLC declaration can prove that your LLC is a separate entity, which can help preserve your limited liability.
An operating agreement ensures that all business owners are on the same page and reduces the possibility of future conflict.
How should an operating agreement be drafted?
The operating agreement should detail the LLC’s overall business purpose and other important matters, such as how the company will be taxed and how new members will be accepted. Legal agreements can clarify several important concerns, such as:
- Who makes decisions for the company, especially those who decide if partners disagree.
- Who is responsible for different aspects of the business as well as for strategic decisions.
- If a partner leaves the company, what will happen to their ownership interests in the corporation.
- The members and their contributions
- How profits and losses will be divided
- Procedures for admitting new members and removing outgoing members
In Alabama, you can include just about anything in your operating agreement, as long as it doesn’t violate the state law or the Certificate of Formation.
An Alabama single-member LLC operating agreement is used by someone who owns a business outright and wants to put their business's daily operations, ownership, officer positions, and any other important information in writing. Although the form is not required by state law (Title 10A, Chapter 5A – Limited Liability Companies), it is highly recommended to write and have notarized to help an owner prove that their entity is distinct from their personal belongings.
Although operating agreements are not required in Alabama, but it is highly advisable to have one. An operating agreement can help secure your limited liability status, eliminate financial and management misunderstandings, and ensure that you set the rules that govern your company rather than state law by default.
Step 6. Get an EIN for Your Alabama LLC
Basically, an employer identification number (EIN) is a social security number for your LLC in Alabama.
To identify your LLC for tax purposes, the Internal Revenue Service assigns a nine-digit Employer Identification Number (EIN). You can apply for your EIN either by mail or online.
An EIN is used for the following purposes:
- Manage state and federal taxes
- Create a business bank account
- Hire employees
Get an EIN Number in Alabama
Getting an EIN number is easy and free, There are two ways to get an EIN number in Alabama.
The 1st option is:
Apply online for an EIN from the IRS
The 2nd option is:
Get an EIN by Mail or Fax
Address to Mail
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
When transitioning a sole proprietorship to an LLC, the IRS demands a new EIN.
An EIN does not require a Social Security number. Simply complete IRS Form SS-4 and leave section 7b blank.
Then, to finish your application, call the IRS at (267) 941-1099.
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What to do After Forming Your Alabama LLC
Keep Your Personal and Business Assets Separate
Your personal assets (such as your home, car, and other valuables) may be at risk when your Alabama LLC is sued if they are mixed with your business accounts.
Here are some steps you can take to protect your LLC in Alabama:
1. Open a Bank Account
As soon as your LLC is officially formed, you should open a business bank account. Why? Keeping separate bank accounts will help you maintain the legal distinction between the LLC and you (the owner).
Because LLCs are limited liability companies, creditors and litigants can’t take your assets.
Recommended: Check out our business bank account page to learn which banks offer the best business check accounts, ATM access, interest-bearing accounts, and online and mobile banking options for businesses.
2. Obtaining a business credit card:
- Allows you to separate personal and business expenses.
- Develops your company’s credit history, which can be helpful to raise capital (e.g., small business loans) later.
3. Hiring a business accountant:
- It prevents your business from overpaying taxes while preventing penalties, fines, and other costly tax mistakes.
- Gives you more time to focus on your growing business by simplifying bookkeeping and payroll.
- Manage your business’s funding more effectively. Find out where extra profit or loss can be made
Getting Business Insurance for Your LLC
You can manage risks and grow your LLC with business insurance. Here are the most common types:
- General liability insurance protects your business from lawsuits. Most small businesses purchase general liability coverage.
- Professional liability insurance protects professionals and businesses from claims of negligence from their clients or customers. Liability insurance typically covers negligence, copyright infringement, personal injury, and more.
- Workers’ compensation insurance: Covers illnesses, injuries, and deaths resulting from a worker’s work.
Ready to Protect Your Business
Let us help you with your business insurance needs.
- General business liability insurance
- Medical insurance
- Term life insurance
- Workers’ Comp
- Surety bonds
- Commercial auto
Create Your Business Website
A website is an important step in legitimizing your business. It is essential for all businesses. You are missing out on a large percentage of potential customers and revenue if you don’t have a website, even if your business is too small or in an offline industry.
More than 90% of consumers begin their search for products and services online. If you don’t have a website that is ready to welcome your customers, then they will simply find your competitors.
Here are the main reasons why you shouldn’t delay building your website:
- Every respectable firm has a website. When it comes to getting your firm online, size or sector isn’t a concern.
- Creating a basic website has never been easier, thanks to website builder tools like the GoDaddy Website Builder. To design a website, you don’t need to hire a web designer or developer.
Recommended: If you want to enhance your conversion rates and maximize revenue in order to help expand your business and meet objectives, you should always hire a professional business website design company to build your business website.
Wise Business Plans is a leading web design company, We have created over 2000 + websites across 20 countries for our clients but we are physically based in 7 major cities in the United States including Alabama web design, Pennsylvania, Las Vegas, Colorado Springs, Iowa, Michigan and San Diego.
Alabama LLC FAQs
The Certificate of Formation costs $200 to file with the Alabama Secretary of State. A separate Probate Court filing fee of at least $50 is also required. You must file an LLC name reservation to reserve your business name.
Tax filing is simple, and there are potential tax benefits. Filing, management, compliance, regulation, and administration can all be done quickly and easily. Protect your personal assets from the liabilities and debts of your business.
Mail filings: Approval of mail filings for Alabama LLCs takes about a week in total. This includes the processing time of 1-2 business days as well as the time your documents are in the mail.
Online filings: Alabama limited liability companies (LLCs) can file online and get an approval immediately.
You must mail or in person the completed original and two copies of the Domestic LLC Articles of Dissolution form to the Judge of Probate in the county where the original Certificate of Formation was recorded to dissolve your limited liability company in Alabama.
An LLC must submit an original and two copies of the completed Domestic LLC Amendment to Formation/Organization form to amend its Articles of Organization in Alabama. They should have the filer's original signature. The form can be downloaded from the Secretary of State's official website.
