Alabama LLC overview
Alabama is a solid choice for owners who plan to operate within the state. With a $200 filing fee and a modernized online filing system, forming an LLC is straightforward. The Heart of Dixie offers a low cost of living and a growing economy anchored by aerospace, automotive manufacturing, and technology in Huntsville, Birmingham, and Mobile, with major employers including Airbus, Mercedes-Benz, and Honda.
Alabama's main considerations are the Business Privilege Tax (minimum $100/year) and a 5% income tax rate. For non-residents with no Alabama operations, states like Wyoming or New Mexico may offer lower ongoing costs.
Alabama LLC costs & fees
All fees below are sourced from the Alabama Secretary of State fee schedule.
| Fee | Amount | When due |
|---|
| Certificate of Formation (online) | $200 | One-time (at formation) |
| Business Privilege Tax Return | $100 minimum/year | April 15 each year |
| Registered agent | $100–150/year (third party) | Ongoing |
| State income tax | 5% (pass-through) | On Alabama-sourced income |
| Sales tax | 4% state + local (up to 11%) | On taxable goods/services |
| Amendment | $100 | When needed |
| Certificate of Good Standing | $28 | When needed |
Business Privilege Tax planning. The $100 minimum BPT applies even with no revenue. For holding LLCs with no Alabama operations, consider Wyoming (no income tax) or New Mexico ($0/year).
Step-by-step: how to form an Alabama LLC
Step 1: Choose your LLC name
Search availability on the Alabama Business Entity Search. Your name must include "Limited Liability Company," "LLC," or "L.L.C." and be distinguishable from existing entities on file.
Step 2: Appoint a registered agent
Every Alabama LLC must have a registered agent with a physical street address in Alabama, available during normal business hours to accept legal documents.
Step 3: File the Certificate of Formation
File online through the Alabama Secretary of State. The filing requires:
- LLC name with designator (LLC or Limited Liability Company)
- Registered agent name and Alabama street address
- Principal office address
- Name and address of each organizer
- Duration (perpetual or specific term)
- $200 filing fee
Step 4: Create an Operating Agreement
While not always legally required in Alabama, an Operating Agreement is essential for banking, tax compliance, and internal governance — it establishes member rights, profit distribution, and management structure. We include a custom Operating Agreement in every formation package.
Step 5: Obtain an EIN
Apply for an Employer Identification Number from the IRS — your LLC's tax ID, required for banking, hiring, and tax filings. Online application is available for those with an SSN; international applicants without an SSN apply by fax or mail.
Step 6: Register for Alabama taxes (if applicable)
If you will sell taxable goods or services in Alabama, register with the Alabama Department of Revenue for applicable accounts, including sales tax and income tax withholding if you have employees.
Annual compliance requirements
- Business Privilege Tax: Due April 15 each year. Minimum $100. Filed with the Alabama Department of Revenue.
- Federal tax filing: Form 5472 with pro forma 1120 for foreign-owned LLCs. Due April 15.
- State income tax: 5% on Alabama-sourced pass-through income.
- Sales tax: Register with the Alabama Department of Revenue if selling taxable goods/services.
- Registered agent: Maintain an agent with a physical Alabama address.
- FinCEN BOI Report: Required under the Corporate Transparency Act.
Alabama taxes for LLCs
| Tax type | Rate | Notes |
|---|
| State income tax | 5% | Pass-through to members |
| Business Privilege Tax | $100 minimum | $0.25 per $1,000 net worth; min $100/year |
| Sales tax | 4% + local | Combined rates can reach 11% |
| Annual report | Included in BPT | No separate filing |
For non-residents with no Alabama-sourced income, the annual cost is the $100 minimum Business Privilege Tax. Alabama does not have a separate annual report.
Processing times
| Processing option | Time | Additional fee |
|---|
| Online filing | 5–10 business days | $0 |
| Paper filing | 15–20 business days | $0 |
Alabama processes online filings in 5–10 business days. Online filing is recommended for faster turnaround.
ID-verified purchase · Money-back guarantee · Secure Stripe checkout
