How to Start an LLC in Alabama: Step-by-Step Guide

Step 1: Name Your Alabama LLC

Choosing a company name is the first and most important step of forming an LLC in Alabama. Be sure to choose a name that complies with Alabama naming requirements and is easily searchable by potential clients.

1. Follow the naming guidelines:

• Your name must include the phrase “limited liability company” or one of its abbreviations (LLC or L.L.C.).
• Your name cannot include words that could confuse your LLC with a government agency (e.g., FBI, Treasury, State Department, etc.).
• Restricted words (e.g., Bank, Attorney, University) may require additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.
• Your name must be distinguishable from any other Alabama limited liability company, corporation, limited partnership, or registered limited liability partnership.

2. Is the name available in Alabama?Make sure the name you want isn't already taken by doing aBusiness Entity Searchon the Alabama Secretary of State's website.

To learn more aboutsearching for an Alabama LLC name, read our full guide. Find name ideas using ourfree LLC name generator.

3. Reserve the name.If you plan to mail in your LLC registration, you will need to complete theName Reservation Request for Domestic Entitiesform at least two weeks prior to registration. If you plan to register your LLC online, you will reserve your business name when you complete the online LLC registration.

If you don't plan on registering your LLC right away, you canreserve your LLC nameonlinefor 1 year.

4. Is the URL available?We recommend that you check online to see if your business name is available as a网络域. Even if you don't plan to make a business website today, you may want to buy the URL in order to prevent others from acquiring it.

Once you have verified your name is available, you may now select a professional service to complete the LLC formation process for you.

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足总Q: Naming an Alabama LLC

Step 2: Choose a Registered Agent in Alabama

You arerequiredto nominate anAlabama registered agentfor your Alabama LLC.

What is a registered agent?A registered agent is an individual or business entity responsible for receiving important tax forms, legal documents, notice of lawsuits, and official government correspondence on behalf of your business. Think of your registered agent as your business's point of contact with the state.

Who can be a registered agent?A registered agent must be a resident of Alabama or a corporation, such as aregistered agent service, authorized to transact business in Alabama. You may elect an individual within the company including yourself.

足总Q: Nominating a Registered Agent

Step 3: File the Alabama LLC Certificate of Formation

在阿拉巴马州注册你的公司,你需要重新serve your LLC name and file theCertificate of Formationwith the Secretary of State.

If you're filing the Certificate of Formation online, you’ll complete the name reservation when you complete the online Certificate of Formation.

If you're filing your Certificate of Formation by mail, you’ll need to mail in theName Reservation Request for Domestic Entitiesform first. You'll get a name reservation certificate from the state within a few weeks. Then, you'll mail in the approved name reservation certificate with your Certificate of Formation.

Now is a good time to determine whether your LLC will bemember-managed vs. manager-managed.

For help with completing the form, visit ourAlabama Certificate of Formationguide.

If you’re expanding your existing LLC to the State of Alabama, you will need to form aforeign LLC.

足总Q: Filing Alabama LLC Documents

Step 4: Create Your Alabama LLC Operating Agreement

An operating agreement, known in Alabama as alimited liability companyagreement, isn’t required for Alabama LLCs, but it’s a good practice to have one.

What is an operating agreement?An operating agreement is a legal document outlining the ownership and operating procedures of an LLC.

Why are operating agreements important?A comprehensive operating agreement ensures that all business owners are on the same page and reduces the risk of future conflict.

For more information on operating agreements, read ourAlabama LLC operating agreementguide.

足总Q: Creating an Alabama LLC Operating Agreement

Step 5: Get an Alabama LLC EIN

You can get an Employer Identification Number (EIN) from the IRS for free. It is used to identify a business entity and keep track of a business’s tax reporting. It is essentially a Social Security number (SSN) for the company.

Why do I need an EIN?An EIN number is required for the following:

• To open abusiness bank accountfor the company
• For federal and state tax purposes
• 为公司雇佣员工

Where do I get an EIN?An EIN is obtained from the IRS (free of charge) by the business owner after forming the company. This can be done online or by mail.

FOR INTERNATIONAL APPLICANTS:Youdo not need an SSNto get an EIN.Learn more here.

足总Q: Getting an EIN

How to Maintain Your LLC

Get a Business Privilege License

In Alabama, all businesses are required to purchase a business privilege license. You must purchase a license in every county where you do business. Licenses can be purchased from the local county probate judge.

Sign Up for Business Privilege Tax

Every LLC that conducts business in Alabama is required to submit an annual PPT form, or Privilege Tax Form for Pass-Through Entities, before the third week of April. This tax is between 0.00025% - 0.00175% of the net worth of your LLC.

The exact tax rate depends on your business's income during the previous taxable year. The minimum Business Privilege Tax amount is $100.

Keep Your Company Compliant

Alabama LLC Business Permits and Licenses

To operate your LLC, you must comply with federal, state, and local government regulations. Fees and requirements for licenses and permits will vary depending on what sort of business license you need.

Find out how to get the necessary Alabama business licenses and permits for your LLC with ourAlabama Business Licenseguide.

Alabama LLC Tax Filing Requirements

It's important to stay up to date onAlabama LLC taxes.

Depending on the nature of your business, you may be required to register for one or more forms of tax:

Sales Tax

If you are selling a physical product, you’ll typically need to register for aseller's permitthrough theAlabama Department of Revenuewebsite.

Alabama’s base state sales tax is 4%. Depending on your location in the state, you may be required to pay an additional local sales tax of up to 7%.

Employer Taxes

如果你雇佣员工,你需要register for both theUnemployment Insurance Taxwith the Department of Labor and Employee Withholding Tax with theDepartment of Revenue.

Income Tax

State
Alabama has a graduated individual income tax structure. Depending on your LLC’s income, your tax rate could range from 2% to 5%.

State tax returns are due each year at the same time as your federal tax return. To calculate your tax or determine your tax bracket, visit theAlabama Department of Revenue.

Federal
You’ll also need to report your federal income tax using eitherForm 1065(multi-member LLC) orForm 1040 Schedule C(single-member LLC).

Hiring Employees in Alabama

If you plan to hire employees for your Alabama LLC, stay compliant with the law by following these steps:

• Verify that new employees areable to work in the US
• Report employeesas "new hires" to the state
• Provideworkers' compensationinsurance for employees
• Withhold employee taxes
• Printworkplace compliance postersand place them in visible areas of your workspace

Find more information at theAlabama Department of Labor.

Alabama Business Resources

• Alabama Secretary of State Business Services
• Contact Alabama Business Services Division
• Alabama LLC Statutes
• Alabama Small Business Resources
• Understanding Alabama LLC Laws
• Alabama LLC
• Alabama LLC Dissolution