How Much Does an LLC Cost in Alabama (All You Need to Know)

If you're starting a business in Alabama, forming an LLC is the way to go – it's simple and efficient.

But we get it – the costs and paperwork can be confusing, especially if you're new to this.

That's why we teamed up with legal experts to create a straightforward guide. We'll show you how much it costs to set up an LLC in Alabama, what documents you need, and how much they'll cost.

Our guide aims to simplify the process of starting your LLC in Alabama, drawing from our personal experiences so you can begin your business journey without any stress.

Quick Summary

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Cost to Start an LLC in Alabama

An LLC in Alabama costs $200. This amount is paid to the Secretary of State and covers your Alabama Certificate of formation.

For name reservation, expect to invest $25, as well as $10 for annual report, and $100 on yearly basis for the Business Privilege Tax.

Note that this is the cost breakdown of a domestic LLC [1].

If you're forming a foreign Alabama LLC, you’ll pay $150 to the Alabama Secretary of State by mail.

This covers your Certificate of formation, but keep in mind you might also have to pay the fee for name reservation, registered agent, and business tax.

This amount may vary depending on other certifications and services you incur during the process and if you’ll hire an LLC formation service to help you out.

1. Alabama LLC Formation Filing Fee ($200 - Mandatory)

When opening an LLC in Alabama, you are required to pay a mandatory LLC Formation Filing Fee of $200.

This fee is necessary for the state's official registration process, and it's an essential cost.

The Alabama LLC filing fee costs $225 if the process is done online (including the name reservation).

After your name reservation has been approved by the state, you can file the Alabama Certificate of Incorporation, which costs $200. Your LLC is officially legal when you file this certificate.

Your Certificate of Formation may be submitted online or by mail. When filing by mail, you must include your Name Reservation Certificate and attach your paperwork in duplicate.

According to the Alabama Secretary of State, around 70% of LLC formations are completed online, highlighting the preference for the convenience and efficiency of digital submissions.

"In Alabama, the form used to create your LLC is known as the Certificate of Formation, though it may be referred to as the Articles of Organization in other states, serving the same function under different names."

- Delina Yasmeh, J.D./Tax LL.M, Distinguished Expert in Mergers & Acquisitions

2. Statement of Information Fee ($20 - Mandatory)

The Statement of Information Fee is a mandatory $20 charge incurred when submitting a Statement of Information to update essential business details, ensuring accurate government records and compliance.

3. Name Reservation Certificate ($25 - Mandatory)

A Name Reservation Certificate is a required first step in the LLC establishment procedure in Alabama.

Hence, when you launch your company, the first step will be registering your name with the Alabama Secretary of State.

This ensures that your selected business name will be accessible when you file your Certificate of Formation and that it will not be used by anyone else.

A name reservation costs $25, and your business name is held for a maximum of 12 months.

Before reserving your name, you should check to see if it is already in use. See our guide on how to look up an LLC in Alabama.

4. Annual Reports ($10 - Mandatory)

You must file the Annual Report with the Alabama Department of Revenue to maintain the information about your firm and LLC members up to date in Alabama.

To continue functioning, your Alabama LLC must maintain good standing and be in compliance with all applicable laws.

Verify the data on the Annual Report, submit it to the Alabama Department of Revenue, and settle the balance owed on the Business Privilege Tax Return for your LLC.

The annual fee for the LLC Annual Report is at least $10, but bear in mind that next to this expense,you need to pay a minimum $100 for the Business Privilege Tax.

Throughout the duration of your LLC, you must pay this yearly business privilege tax.

5. Certificate of Existence ($25 - Mandatory)

A Certificate of Existence in Alabama costs $25 ($27.50 online). A Certificate of Existence is a document provided by the Alabama Secretary of State that verifies the presence of your enterprise in the state.

You usually require a current Certificate of Existence when establishing your firm in another state.

6. Reservation of A Foreign LLC Name ($25 - $28 Mandatory)

Fill out the Name Reservation Request Form for Foreign Entities to secure your trademark for a maximum of one year before creating your limited liability company. The filing cost is $28 for online and $25 for mail-in filings.

Now that you've learned what are the costs of establishing an LLC in Alabama, let's take a look over the costs that apply to a Foreign LLC.

7. Alabama Registered Agent Fee ($100 - $300 Optional)

Registered Agents for an Alabama LLC cost you a nominal yearly fee ranging from $100 to $300, depending on the company you choose.

In Alabama, you have two options when it comes to a registered agent service for your business structure:

• You can be your own Registered Agent
• You can hire a professional service to be your registered agent

As a business owner, if you decide to act as your Registered Agent, you'll not incur any costs.

However, keep in mind that you must be present during regular office hours to collect and handle all legal notices sent to you by the SOS or court.

As a result, it would be best to engage a registered agent as they protect your privacy and handle all compliance professionally.

This is something that worked for us the best, as we stayed on top of every demand and compliance.

According to the Alabama Small Business Development Center, about 60% of LLCs in Alabama choose professional registered agent services for their operational efficiency and compliance expertise.

It is also critical to choose an Alabama Registered Agent who complies with all legal standards according to Alabama Code §10A-1-5.31 [2].

This code stipulates the following:

• You must be at least 18 years old
• You must have an Alabama physical address
• You must be available during regular office hours

8. Employer Identification Number (EIN) (Free - $50, Optional)

You can get an EIN for free ($0) from the Internal Revenue Service. If you hire a professional to apply for it, the cost may range between $10 to $50, depending on the company.

9. Alabama Annual Business Privilege Tax ($100 - $1,000 Optional)

The Alabama Business Privilege Tax is an annual payment that Alabama LLCs must make to the Alabama Department of Revenue [3].

According to state laws, all LLCs in Alabama must pay a minimum tax of $100, and the tax rates for $1,000 of income range from $0.25 to $1.75.

For most firms, the Alabama business privilege tax return is due 2.5 months into your financial year, or March 15.

Expenses Following the Approval of Your LLC

Apart from filing the essential paperwork to get your Alabama LLC started, there are other filing costs that you may incur during or after the formation process.

We wish we had a clear list of mandatory and extra expenses when we first started; it would have saved us a lot of time and kept our budget as planned. Extra expenses might include:

1. Extra Business Licenses

Extra Business Licenses or Permits are necessary to do business in Alabama.

You must submit an application for your business license to your County Probate Office.

For instance, if your LLC is based in Huntsville, you require a Huntsville City Business Permit to run your business there or within its police jurisdiction.

Also, if your company operates in many counties, you must apply for a privileged license in each of them.

Depending on the locality and industry, these additional business licenses or permits may cost more or less, although they are often not particularly expensive.

2. Doing Business As (DBA) ($30 - Recommended)

DBA or a Trade Name is any name your company uses that is not its official title. DBAs are an excellent tool to differentiate and advertise separate branches of your business.

Each DBA requires an Application to Register Trademark, Service Mark, or Trade Name, which costs $30 if you submit it online. If you make a mail-in order, you'll be required to pay a $31.20 fee.

3. Certificate of Good Standing ($14 - Optional)

A Certificate of Good Standing indicates to the Secretary of State's office that your business has submitted all required reports and payments.

It also confirms that the organization is legitimate and has permission to conduct business in the state.

If you wish to obtain this document, place an order with the Department of Revenue and pay the $14 cost.

4. Professional Licensing Fee ($300 - Optional)

Professions requiring specific training, such as law, medicine, and hospitality, need additional licensure.

Professional licensing application fees vary greatly.

The Registered Forester Application, for example, costs $60, but the Registered Interior Designer Application costs $300.

You must register for a professional license in Alabama through the board that oversees your business field.

5. Copies of Certified Documents ($2 - $10 Optional)

A verified photocopy of your business documentation, such as your Certificate of formation LLC operating agreement, costs $10 per certified file plus $2 for each page.

When registering a new business bank account or registering your company in another state, you may be required to provide a certified copy of your Articles of Organization.

Related Articles:

• LLC Alabama Dissolution Guide
• How Long Does It Take To Form an LLC in Alabama
• How To Change an LLC Name in Alabama

FAQs

References:

1. https://www.sos.alabama.gov/business-entities/llcs#:
2. https://law.justia.com/codes/alabama/2013/title-10a/chapter-1/section-10a-1-5.31/
3. https://www.revenue.alabama.gov/tax-incentives/business-privilege-tax-incentives/