How to Form an LLC in Alabama
This guide on starting an LLC Alabama provides step by step instructions for filing formation documents and obtaining tax IDs.
Because LLCs can be set up quickly, are inexpensive, and allow owners to have flexibility, they are the most popular business structure . Legally forming your LLC will establish your business, limit personal liability, give you tax flexibility, and create a legal entity. This step-by-step guide will assist you in this process.
Step-by, Alabama LLC Instructions
Check Name Availability
The legal name for your LLC should not conflict with any registered names. A name search can help you find out if your name is available. Your name must be distinguishable from all other entities registered in the business.
Name Search Alabama Secretary of state – Business Services Division Suffix: The abbreviation L.L.C. (Limited Liability Company) is used to indicate the words “Limited Liability Company”. or “LLC” These words or their abbreviation are the last words of the name.
Next, you should verify the availability and validity of your chosen name with trademarks registered with Alabama Secretary of State or the USPTO.
Alabama State trademark search
USPTO trademark look
You can then use your common sense in order to find your desired business names in the public domain. Common law rights in a name result from actual usage, not registration. Search the internet, telephone directories. Trade magazines. Professional license records.
Make a Reservation for Your Name
Alabama has a mandatory name reservation.
Send it to: Alabama Secretary-of-State Filing Method Mail, courier, online. Email and Fax cannot be accepted. Fee: $10 mail standard processing. $25 mail less that 3 business days processing. $28 Online 24hr Processing Turnaround: Standard mail: Order received. Expedited mail is less than three business days. Online: Within 24 hours. Notes:
- We recommend filing online.
- The state will issue a name reservation certificate that you must submit together with your Certificates of Formation.
- The evidence of licensure is required for any name that includes a professional title (i.e. engineering).
Register an Agent
Before you can actually file to create an Alabama LLC, we need to identify the Alabama registered agent. Registered agents are the business’s legal appointee for receiving notices of lawsuits and other legal/government notices.
The state law requires that every LLC has a registered representative. The registered agent is identified when you file Alabama articles to organization with Alabama Secretary of State – Business Services Division.
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Alabama Articles of Organization
Alabama refers the articles to organization as the “certificate for formation”. To form your limited liability company, file this document.
Agency: Alabama Secretary of state – Business Services Division Form:
Domestic LLC Certificate – Formation
Filing Method online, mail and offline Agency Fee $100 + $100 expedite fee Turnaround: 7-10 businessdays at the probate’s office. Otherwise, it takes 6 months to file with the secretary or state. Law:
Code of Alabama. Title 10A. Alabama Business and Nonprofit Entities Code. Chapter 5, Limited Liability Companies.
- Mail one original along with two signed copies to the Office of the Judge of Probate of the area where the corporation has its registered office.
- Include $100 in state filing fees and the applicable filing fee in your locality (minimum $50. Ask your Office of the Judge of Probate).
- Attach your Name Reservation Certificate.
Establish Company Records
Your LLC must have accurate and complete books and records. Your LLC’s original articles of organization will be the first document you keep. Your LLC will create many other official documents such as:
- Minutes of the meeting
- Operating agreement
- EIN verification letter
- The LLC may be amended or filed with other entities throughout its lifetime.
Security and central management tools are crucial for any organization that wants to protect sensitive records. Our Data Manager software provides an easy and efficient way to store records and track managers. You can also customize meeting notifications.
You must create the Operating Agreement
A Operating Arrangement can be created (potentially by using a template). This is the governing documentation for the LLC. It describes the basic details of how LLC will operate such as holding an anual meeting. The agreement will be discussed and adopted at the organizational meeting.
Hold the Organizational Meeting
The Organizational Meeting is where the LLC’s members first meet. In order to hold this meeting, you’ll need your operating agreements and your articles of incorporation. Keep the minutes of this meeting.
Register for an Federal Employer Identification Number.
A EIN will be required if an LLC has more then one member or plans on hiring employees. EINs are often needed to open bank accounts.
Agency: Internal Revenue Service Form:
IRS form SS-4
Filing Method Mail, phone and fax. online. IRS fee $0 Turnaround: You can get your order immediately online or by calling. By fax, it takes 4 business working days. 4-5 Weeks by mail Notes: The IRS website cannot be accessed outside of certain hours. Before you close your session, print your IRS EIN. IRS Publi 1635: Understanding the EIN.
Get Alabama State Tax Identification Numbers/Accounts
Alabama offers an application for a consolidated tax registration.
Submit to Alabama Department of Revenue Form:
Form COM-101: Alabama Department of Revenue Combined Registration/Application
Filing Method Mail or Fee: $0 Turnaround: Online: Usually takes between 3-5 and 5.5 business days
Submit your initial business privilege tax return
Alabama Code SS40-14A-229 requires that all LLCs file an initial Business Privilege Report and pay the business privilege tax within a period of two and one-half month.
Send to: Alabama Department of Revenue Form:
BPTIN: Initial Tax Privilege Tax Return
Instructions regarding the Preparation of Alabama Department of Revenue Alabama First Privilege Privilege Revenue
Filing Method Fee: Minimum $100
Consider Electing C-Corp and C-Corptaxation
Your LLC receives passthrough taxation by default. However, most LLCs continue to keep this tax classification. Some LLCs are eligible to elect S-Corp or C-Corp Tax Treatment.
- S–Corp treatment helps owner-employees earn more than $75,000 each year and save on self–employment taxes. File Form 2553: S-Corp Election.
- C-Corps face double taxation. First, the corporation pays income taxes and then the members pay distribution taxes. C-Corps offer tax relief for those who have profits exceeding $250,000 per owner. If you provide employee benefits or re-invest your earnings in the business, the C-Corps treatment can be beneficial. File Form 8832: C-Corp Election.
Get Business Permits & Licenses
It is necessary to obtain the required licenses and permits in order for your business to be legally operated. The Small Business Administration Business License & Permit lookup tool makes it easy to navigate the large number of state, federal, and local requirements.
Alabama Business Privileges License
Agency: Alabama Department of Revenue — Business Licensing Section Law:
Alabama Code SS 40-12-2
Notes: Licenses are required to be issued by the state. However, they must also be issued at the county-level. For more information, contact your county probate judge.
To Maintain Your LLC, You Need to File Ongoing Filings
You must file your federal and state taxes returns.
A lot of states require businesses to file an annual return to maintain good standing before the secretary. You can see the table below to see if Alabama LLCs must file an annual return.
Alabama Corporation Annual Report Requirements: