Who should form an LLC in Alabama?
Anyone who lives in Alabama or runs their business from there. If you form in another state but operate in Alabama, you will usually have to register there as a foreign LLC anyway, paying both states' fees. See home state or another state.
How do you form an LLC in Alabama, step by step?
Choose and check the name
Search the state's business records and include "LLC", "L.L.C." or "Limited Liability Company" in the name.
Appoint a registered agent
A person or company with a physical street address in Alabama. See what a registered agent is.
File the Certificate of Formation
Online through the Alabama Secretary of State's business portal, or by mail, with the $200 fee. A name reservation certificate must be obtained first; online, it is reserved as part of the process.
Get an EIN and sign an operating agreement
The EIN is free from the IRS. See LLC operating agreement.
Register for state taxes
Sales tax and payroll as needed. Then note the first yearly filing date.
What does Alabama require every year?
Alabama LLCs do not file an annual report with the Secretary of State. Instead they fall under the business privilege tax, administered by the Alabama Department of Revenue. New LLCs historically filed an initial return within two and a half months of formation, and annual returns after that, with a minimum tax.
That changed for tax years beginning in 2024: an LLC whose business privilege tax works out to $100 or less is fully exempt and is not required to file a return at all. Because the tax is based on net worth, most small LLCs fall under the $100 line. Larger LLCs still calculate the tax and file, by the federal return due date.
For deadlines, fees and late penalties in detail, see Alabama LLC yearly filings.
What does the first year cost?
| Item | Cost |
|---|---|
| Name reservation | $28 online, $25 by mail |
| Certificate of Formation | $200 |
| Business privilege tax, small LLC | $0 if the tax is $100 or less |
| County and city business licenses | Varies by location and activity |
Alabama counties and many cities require their own business licenses, so check where you operate.
Should you file it yourself or use a formation service?
Filing yourself costs only the state fee, and the Alabama filing is short enough for most owners to complete. A formation service saves time, can act as your registered agent and may send reminders for yearly filings, but compare total yearly costs: low headline prices are often paired with paid add-ons such as expedited filing, operating agreements or EIN applications, which you can do yourself free. Whichever you choose, keep the approved filing, the EIN letter and your operating agreement together. See how much an LLC costs.
Can a non-resident form an LLC in Alabama?
Yes. Alabama has no residency or citizenship requirement for an LLC's members or managers. You need a registered agent with a Alabama street address and an EIN; a foreign owner without a Social Security number applies for the EIN on Form SS-4. A single-member LLC owned by a foreign person files Form 5472 with a pro forma Form 1120 every year, even with no US income. See can a non-resident own a US LLC and annual filings for foreign-owned LLCs.
What happens if you miss a required report?
The state usually charges a late fee and marks the LLC as not in good standing, which can block a certificate of good standing, a bank account or a loan. If the filing stays overdue, the state can administratively dissolve the LLC, ending its liability protection and its claim to the name. Reinstatement means filing every missing report and paying the fees owed, so put the dates in your calendar. See reinstating a dissolved LLC.
Which Alabama taxes apply to an LLC?
Owners pay Alabama income tax on their share of profit. Alabama has a 4% state sales tax plus local sales taxes, so register with the Alabama Department of Revenue if you sell taxable goods. Businesses with larger net worth may still owe business privilege tax.
If you sell online, see Alabama sales tax for online sellers.
Federally, a Alabama LLC is taxed like any other LLC. See how LLCs are taxed. For a side-by-side view of state costs, see how much an LLC costs.
Want your Alabama LLC formed?
We file your Certificate of Formation, arrange the registered agent and EIN, and keep track of every Alabama deadline for you.
Questions people ask
How much does it cost to form an LLC in Alabama?
About $228 online: $28 to reserve the name and $200 for the Certificate of Formation.
Does an Alabama LLC file an annual report?
No. Alabama LLCs do not file an annual report with the Secretary of State.
Do Alabama LLCs pay business privilege tax?
Only if the tax is more than $100. From 2024, LLCs owing $100 or less are exempt and do not file.
Do I need a name reservation in Alabama?
Yes. Alabama requires a name reservation before the Certificate of Formation is filed.
Sources
Every fee, date and rule on this page was taken from these official and primary sources.
- Alabama Secretary of State: Business entities
- Alabama Department of Revenue: Business privilege tax
- Alabama Act 2022-252 (H.B. 391): business privilege tax exemption for $100 or less
- IRS: Get an employer identification number
- IRS: Employer identification number, including international applicants
Rules and fees change. If you are reading this long after October 1, 2026, confirm the figures with the source before you rely on them.
Related guides
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This guide is general information. It is not tax or legal advice for your situation.