If you're an entrepreneur in Alabama, the easiest and quickest way to launch a company is to establish an LLC.
But if you're new to the process, the LLC costs and fees might be confusing because there are different documents that you'll have to file with the Secretary of State.
We teamed up with our legal advisors and curated this detailed guide on the cost of LLC formation in Alabama, the documents you'll need for the process, and the prices for each.
Read on.
Quick Summary
- It costs $200 to form an LLC in Alabama. The amount is paid to the Secretary of State and it covers the Articles of Organization.
- The filing fee for a name reservation in Alabama costs $25.
- Before doing business in Alabama, you need to obtain the necessary business licenses to operate in a specific city.
How Much Does an LLC Cost in Alabama?
An LLC in Alabama costs $200. This amount is paid to the Secretary of State and covers your Alabama Certificate of formation.
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.
Alabama LLC Filing Fee
The Alabama LLC filing fee costs $225 if the process is done online.
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.
Alabama Registered Agent Fee
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. But 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.
Registered Agents for an Alabama LLC cost you a nominal yearly fee ranging from $100 to $300, depending on the company you choose.
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
Alabama Annual Business Privilege Tax
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.
Other LLC Filing Costs
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. These include:
1. Annual Reports
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 Alabama LLC Annual Report is at least $100. Throughout the duration of your LLC, you must pay this yearly business privilege tax.
2. Doing Business As (DBA)
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. Name Reservation Certificate
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 $28 online and $25 by mail-in filings, 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. Certificate of Good Standing
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.
5. 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.
6. Certificate of Existence
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.
7. Professional Licensing Fee
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.
8. Copies of Certified Documents
A verified photocopy of your business documentation, such as your Certificate of formation and Alabama 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.
9. Employer Identification Number
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.
10. Reservation of A Foreign LLC Name
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.
The Cost of Establishing a Foreign LLC in Alabama
If you currently have an LLC established in another state and want to venture into Alabama, you must register your company as a foreign LLC in Alabama.
An Alabama foreign LLC registration costs $150 if you file by mail and $156 if you do it online.
A foreign LLC can be registered in Alabama by submitting a Foreign Limited Liability Application for Registration to the Alabama Secretary of State.
FAQs
What Documents Do I Need To Register an LLC in Alabama?
You need the articles of incorporation and operating agreement documents to register an LLC in Alabama.
How Much Does It Cost To Form A Foreign LLC in Alabama?
It costs $175 to form a foreign LLC in Alabama. This amount includes a $150 filing fee and $25 for a business name reservation.
To Whom Do I Pay My Alabama Filing Costs?
You pay your Alabama filing costs to the Secretary of State. You can pay the fees via credit card, cheque, or money order.
What Happens If I Don't Pay the Alabama State Filing Fees?
If you don't pay the Alabama state filing fees, the Secretary of State is obligated to decline your formation request and revoke other LLC documents.
Do You Want to Start an LLC in Alabama?
Before starting an LLC in Alabama, you must take into account all the costs and fees associated with the process so that you can plan your budget funds well.
If you're looking for a reputable service to process important business documents and tackle confusing legal matters, check out our list of the best LLC services in Alabama.
We've tried these services firsthand and can attest to their affordability, quality service features, top-notch customer care, and shorter turnarounds.
References:
- https://www.sos.alabama.gov/business-entities/llcs#:
- https://law.justia.com/codes/alabama/2013/title-10a/chapter-1/section-10a-1-5.31/
- https://www.revenue.alabama.gov/tax-incentives/business-privilege-tax-incentives/
