FAQ · Straight answers to the questions Alabama LLC owners ask most.
Alabama LLC Questions, Answered
The questions we hear most often from people forming an Alabama LLC, covering the state's unusual name-reservation-first rule, the registered agent requirement, taxes, timelines, and what happens after you're formed. If your question isn't here, the answer is usually a short filing away.
One price: $199.00/yr covers your formation and your registered agent, plus the $236.00 state filing fee, at cost.
State agency: Alabama Secretary of State, Business Entities Division
Processing: Varies
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State facts
Alabama LLC
Forming Your Alabama LLC
What are the basic steps to form an Alabama LLC?
In order: reserve your name with the Secretary of State (Alabama requires this before formation), choose a registered agent with an Alabama street address, file the Certificate of Formation through the Secretary of State's Online Services portal with a copy of the name reservation attached, adopt an operating agreement, and get an EIN from the IRS. After that you can open a business bank account and start operating.
Why does Alabama make me reserve a name before filing?
It's written into Alabama's business entity code: you must obtain a Certificate of Name Reservation before you file formation documents. Unlike most states, Alabama treats the reservation as a required first step rather than an optional hold. It costs $28 online or $25 by mail, it holds the name for one year, and a copy is attached to your Certificate of Formation.
Can I form an Alabama LLC myself?
Yes. Everything can be done directly through the Secretary of State. Many owners still use a filing service to handle the ordered steps (reservation then formation) correctly, to keep a home address off the public record via included registered agent service, and to avoid mistakes on the Certificate of Formation that cause rejections and delays.
Do I have to live in Alabama to form an LLC there?
No. Alabama imposes no residency requirement on members, managers, or the organizer. The lone thing that has to sit inside the state is the registered agent, whose address must be an actual Alabama street location.
Registered Agents and Addresses
Does my Alabama LLC need a registered agent?
Yes, always. Alabama law requires every LLC to appoint a registered agent at formation and maintain one for the life of the company. The agent's registered office must be a street address in Alabama where legal papers can be personally served, and the agent has to keep a business office there rather than relying on a virtual office or mail forwarding alone.
Can I be my own registered agent?
Yes, if you're an Alabama resident with a street address in the state. The trade-offs are that your address becomes public and you have to be reachable there when papers are served. Many owners use a commercial service to keep their home address private.
Can I use a P.O. box as my registered agent address?
No. Alabama requires a physical street address where legal papers can be delivered in person. A P.O. box does not qualify. If you don't have a suitable Alabama street address, a commercial registered agent provides one.
Is my address going to be public?
The registered agent's name and registered office address are part of the public business record, searchable through the Secretary of State's free entity search. Using a commercial registered agent puts the service's address in the public record instead of yours.
Costs, Taxes, and Timelines
How long does it take to form an Alabama LLC?
The Secretary of State doesn't publish a processing time for LLC formations, and its fee schedule has no expedite option for entity filings. Online filing avoids mail in both directions; just download your documents promptly, because the portal keeps them for only 15 days and sends nothing by mail.
What does it cost to form an Alabama LLC?
Online, the state fees are $28 for the name reservation and $208 for the Certificate of Formation, $236 in all. By mail, the same two filings cost $25 and $200. Beyond state fees, you might pay for registered agent service and any professional help.
Does Alabama charge an annual report fee?
No. Alabama LLCs don't file an annual report with the Secretary of State, so there is no report fee; the report there is a corporate filing. The recurring item is the Business Privilege Tax with the Department of Revenue, and an LLC whose tax is $100 or less owes nothing and files nothing.
How is an Alabama LLC taxed?
By default, a single-member LLC is a disregarded entity (reported on Schedule C) and a multi-member LLC is taxed as a partnership: income passes through to the owners. Alabama has a state income tax, so LLC profits are reported on your Alabama return too. The state's Business Privilege Tax is based on net worth, and since 2024 it is fully waived when the amount due would be $100 or less.
After You're Formed
Do I need an operating agreement?
Alabama doesn't legally require one, but you should have it. For single-member LLCs it reinforces the liability shield; for multi-member LLCs it's essential to prevent disputes and override Alabama's statutory defaults. Banks often ask for it. It's never filed with the state and stays private.
Do I need an EIN?
You need one if your LLC has more than one member, hires employees, or elects corporate tax treatment. Even single-member LLCs with no employees usually get one because most banks require it and it keeps your Social Security number off business paperwork. It's free from the IRS.
What ongoing compliance does an Alabama LLC have?
Keep your registered agent current, file the Business Privilege Tax return with the Department of Revenue if your tax is over $100 (it's due with your federal return), handle your federal and Alabama income tax filings, and keep the state and county business licenses issued by the probate judge or license commissioner in each county where you work. There's no Secretary of State annual report.
How do I close my Alabama LLC?
You wind up the business by settling debts, distributing remaining assets, and closing accounts. Then you file Articles of Dissolution with the Secretary of State, and wrap up final tax obligations with the Department of Revenue and the IRS. Dissolving properly ends future obligations and closes the entity cleanly.
Frequently asked questions
Is an Alabama LLC worth it for a small side business?
For many people, yes. The main benefit is separating your personal assets from the business's liabilities, which a sole proprietorship doesn't do. Alabama also makes ongoing compliance light (there's no annual report), so the maintenance burden is low. Whether it's worth the setup cost depends on your risk exposure and revenue; it's most valuable when the business has real liability or you're commingling risk with personal assets.
Can I change my Alabama LLC from member-managed to manager-managed later?
Yes. Management structure can change as your business evolves. You'd update your operating agreement to reflect the new structure. Alabama's Certificate of Formation doesn't ask whether the LLC is member-managed or manager-managed, so the operating agreement is where the management terms live.
Does Alabama require a business license in addition to forming the LLC?
Often, yes. Forming the LLC with the Secretary of State is separate from licensing. According to the Department of Revenue, state and county licenses are issued by the probate judge or license commissioner in the county where the business is located, and you need one in every county where you do business. Certain professions have their own state licensing boards. These run on their own cycles apart from your LLC formation.
What's the difference between the Secretary of State and the Department of Revenue for my LLC?
The Secretary of State handles formation: name reservation, the Certificate of Formation, registered agent changes, and dissolution. The Alabama Department of Revenue handles taxes, including the Business Privilege Tax and income tax. Alabama's LLC compliance is split across these two agencies, which is why there's no annual report with the Secretary of State but there is a tax obligation with the Department of Revenue.
Can a single person own an Alabama LLC?
Yes. Alabama allows single-member LLCs. A one-owner LLC is taxed by default as a disregarded entity, meaning you report the business on your personal tax return, while still giving you the liability separation an LLC provides. An operating agreement is still worthwhile for a single-member LLC to reinforce that separation.
Ready to form your Alabama LLC?
Formation and your registered agent. One price, $199.00/yr, with the state fee passed through at cost.
Form Your Alabama LLC ($199.00/yr All-In)