đź’° How Much Does an LLC Cost in Alabama? (2025 Details)
Considering an LLC in Alabama? While the journey of forming your business is exciting, understanding the financial aspect is key. You might be asking, “How much does an LLC cost in Alabama?” Starting an LLC in Alabama comes with various fees beyond just the initial paperwork. However, with a clear understanding, these Alabama LLC costs don’t have to be as expensive as you might anticipate!
This comprehensive guide will explain all of the initial and ongoing Alabama LLC cost details for 2025, and provide you with valuable tips on how to save money throughout the process.
So, How Much Does an LLC Cost in Alabama?
The primary initial cost to form an LLC in Alabama is $200. This is the state filing fee for a crucial document called the Certificate of Formation. You’ll submit this form to the Alabama Secretary of State, and once approved, your LLC officially comes into existence.
Beyond this initial LLC filing fee, there are other important costs to forming an Alabama LLC (Limited Liability Company) and maintaining it annually.
- There is a $200 one-time state filing fee to form an Alabama LLC.Â
- There are also ongoing fees, such as a $50 minimum Business Privilege Tax fee (which acts as an annual report), detailed further below.
Alabama LLC Costs: A Detailed Breakdown
Let’s look at the specific expenses you might encounter when dealing with LLC costs in Alabama:
| Requirement | Cost | Frequency | Notes |
|---|---|---|---|
|
LLC Name Reservation |
$28 (online) / $25 (mail) |
One-time (optional, or included with online filing) |
Recommended for online filing. Mail filing requires separate submission.
|
|
Registered Agent |
$0 or $125 – $300 per year |
Annual |
Free if you act as your own agent; professional services charge.
|
|
Certificate of Formation |
$200 |
One-time |
The core fee to establish your LLC with the state.
|
|
Operating Agreement |
$0 |
One-time |
Free templates available on our site; essential internal document.
|
|
EIN Number |
$0 |
One-time |
Free through the IRS; required for taxes and banking.
|
|
Annual Report & Business Privilege Tax Return |
$50 or more |
Annually |
Minimum $50; amount varies based on LLC’s federal tax return.
|
|
Taxes |
Varies |
Annually |
Federal, state, local, and specialized business taxes.
|
|
DBA (Optional) |
$30 |
One-time |
Optional filing for “doing business as” a different name.
|
|
Business Licenses & Permits |
Varies |
Varies |
Depending on location and industry. |
Detailed Explanation of Alabama LLC Fees
Alabama LLC Certificate of Formation Filing Fee ($200)
Starting an LLC costs $200 in Alabama. This is the official state filing fee for the document called the Alabama Certificate of Formation.
This Certificate of Formation is submitted to the Alabama Secretary of State. Once approved, this is the legal document that officially creates your LLC, bringing it into existence.
The $200 fee is a one-time fee. You do not have to pay any monthly or recurring annual fees to the Secretary of State just to maintain your Alabama Limited Liability Company once formed.
Note: LLCs are the most common business structure used in Alabama. They are highly popular because they offer crucial liability protection for the LLC owners, separating personal assets from business debts.
Terminology Tip: Depending on the state, the Certificate of Formation form is sometimes called a Certificate of Organization or Articles of Organization. While Articles of Organization is the most common name nationally, Alabama specifically uses “Certificate of Formation.” Don’t worry, all these terms essentially refer to the same essential document used to legally create your LLC.
Alabama Business Name Reservation Cost ($28)
In Alabama, you must reserve your LLC name.
- Online Filing: If you file your LLC online, it’s remarkably straightforward. Your Alabama LLC Name Reservation is filed and approved immediately as part of the initial LLC formation filing process. The filing fee for an online Name Reservation is $28. This is a one-time fee that is conveniently included in your overall online filing submission.
- Mail Filing: If you choose to file your LLC by mail, you will need to file the Name Reservation separately first. The fee for Alabama Business Name Reservations filed by mail is slightly lower at $25. However, you must wait for this Name Reservation to be officially approved before you can proceed with filing your LLC Certificate of Formation. While it’s a few dollars cheaper, it significantly prolongs the overall time it takes to get your LLC approved.
How Much Does a DBA Cost in Alabama? ($30)
A DBA, which stands for “Doing Business As,” allows your LLC to operate under a name different from its legal registered name. In Alabama, a DBA is filed online with the Alabama Secretary of State and costs $30.
Note: A DBA is sometimes referred to as a Trade Name, Fictitious Name, Assumed Name, or Fictitious Business Name. All these terms refer to the same concept.
Tip: You are not required to get a DBA for your LLC; it’s entirely optional. For more information on whether a DBA is right for your business, read our article: Do I Need a DBA?Â
Alabama Registered Agent Fee ($0 or $125+/year)
Alabama law mandates that you designate a Registered Agent when forming your LLC. An Alabama Registered Agent is a person or company responsible for receiving legal documents, important government correspondence, and state notices on behalf of your LLC. A Registered Agent must have a physical street address in Alabama and should generally be available during normal business hours to accept these critical deliveries.
Cost Breakdown for Registered Agent:
- $0 Cost Option: There is no additional cost if you choose to be your own Registered Agent, or if you have someone you know personally (like a business partner, friend, or family member) act as your LLC’s Registered Agent.
- $125 to $300+ per year Option: Alternatively, you have the option of hiring a professional Registered Agent service. These services typically charge between $100 to $300 per year. While there’s a fee, professional Registered Agent service companies often offer other helpful business services (like mail scanning and privacy protection) and can help protect your privacy by allowing you to use their address on public records.Â
Hiring a Registered Agent service is a smart idea if:
- You don’t have a physical address in Alabama (Alabama law strictly requires Registered Agents to have a physical address in the state).
- You want to keep your personal address off public record (depending on the company you hire, you may be able to use their business address to maintain your privacy).
LLC Operating Agreement Fee ($0)
An Alabama LLC Operating Agreement is a pivotal written contract among the LLC Members (owners). This vital internal document includes detailed information about the LLC’s ownership structure, how the LLC is managed, and how profits and losses are distributed.
Both Single-Member LLCs and Multi-Member LLCs should draft an Operating Agreement, keep it securely with their business records, and ensure each Member receives a copy.
While many websites charge anywhere from $50 to $200 for LLC Operating Agreements, we believe in providing accessible resources. That’s why we offer free LLC Operating Agreement templates for all types of LLCs, which you can download it below.
LLC EIN Number Fee ($0)
An EIN Number is also widely known as an Employer Identification Number (EIN) or a Federal Employer Identification Number (FEIN). This unique nine-digit number is issued by the IRS and functions like a Social Security Number for your business.
This EIN Number is used for several critical business functions:
- Filing Income Taxes: Required for federal tax identification.Â
- Opening an LLC Bank Account: Most banks will require an EIN to open a dedicated business bank account.Â
- Hiring Employees: If your LLC plans to hire staff, an EIN is mandatory for payroll and tax purposes.
While many third-party websites might charge a service fee to obtain an EIN for your LLC, it’s important to know that you can actually secure it for free directly from the IRS.
You can obtain an EIN for your LLC from the Internal Revenue Service (IRS)Â at no cost. The online application is straightforward and can typically be completed in just a few minutes.
Alabama LLC Annual Report & Business Privilege Tax Return ($50+/year)
Alabama requires your LLC to remain in good standing and in compliance with state law by filing the Alabama Business Privilege Tax Return and Annual Report with the Alabama Department of Revenue. This crucial annual filing ensures your Alabama LLC can continue operating legally within the state.
During this process, you simply confirm the information on your Annual Report, submit it to the Alabama Department of Revenue, and pay the amount due on your LLC’s Business Privilege Tax Return.
The Alabama LLC Annual Report costs at least $50 per year. The minimum amount of tax due for the Business Privilege Tax is $50, but the actual amount you pay depends on the overall “capital” reported on your LLC’s federal tax return. This Annual Business Privilege Tax is a recurring expense, paid every year for the life of your LLC.
Alabama Business License and Permit Fees (Varies)
Depending on where your LLC conducts business within Alabama and the specific industry you operate in, you may need to obtain additional Business Licenses or Permits. For instance, you might be required to get a City Business Permit for the specific town or city where your LLC operates.
The costs for these other business licenses or permits will vary widely based on the location and industry. Generally, these fees are not excessively high. Some licenses and permits are issued at the state level by various Alabama departments, while others are issued by a municipality (e.g., a specific town, city, or county).
LLC Taxes (Varies)
Beyond the state filing fees and the Alabama Business Privilege Tax, there are many different types of Alabama LLC taxes that owners must pay. Consequently, this annual cost component varies significantly from one LLC to another.
Some of the taxes LLC owners might encounter include:
- Federal taxes: Income tax, self-employment tax.
- State income tax: (Alabama does have a state income tax for individuals, which would apply to LLC owners as income passes through).Â
- Local income tax: Depending on your municipality.
- Business taxes: Specific industry taxes.
- Sales and use tax: For sales of goods or services.Â
- Payroll tax: If your LLC has employees.
- Property tax: If the LLC owns real estate or certain personal property.
Your specific Alabama LLC taxes depend heavily on your industry, your business’s revenue, expenses, and overall business activity. Therefore, we are unable to provide a precise estimate without knowing your unique circumstances. Every business is different, and your specific situation determines which taxes apply to your LLC.
Note: By default, a Single-Member LLC is typically taxed like a Sole Proprietorship by the IRS. A Multi-Member LLC is typically taxed like a Partnership. Alternatively, you can elect to have your LLC taxed as a C-Corporation or S-Corporation.
Hiring an Accountant
To accurately determine how much your small business will pay in taxes and to ensure compliance with all federal, state, and local tax obligations, working with a qualified accountant in Alabama is highly recommended.
The amount you’ll pay your accountant will vary based on the complexity of your filings. However, most accountants might charge around $300 per year for a simple tax return, or up to $900 for more detailed filings.
Tip: We recommend speaking with a few accountants in Alabama to ensure they can help you meet all of your federal, state, and local tax obligations. We offer detailed tips on How to Find an Accountant.
âť“ FAQs - How much does an LLC cost in Alabama
1. How much does it cost to form an LLC in Alabama?
It costs $200 to form an LLC in Alabama. This is the one-time filing fee for the Certificate of Formation with the Alabama Secretary of State.
2. What is the annual cost for an LLC in Alabama?
The primary ongoing annual cost for an LLC in Alabama is the Alabama Business Privilege Tax Return and Annual Report, which costs a minimum of $50 per year. Other annual costs can vary depending on taxes, business licenses, and professional services like a Registered Agent.
3. Is an EIN free for an Alabama LLC?
Yes, obtaining an EIN Number (Employer Identification Number) for your Alabama LLC from the IRS is completely free. You can apply online in minutes.
4. What is the Alabama Business Privilege Tax?
The Alabama Business Privilege Tax is an annual tax paid to the Alabama Department of Revenue that also functions as your LLC’s annual report. The minimum tax due is $50, but the actual amount depends on your LLC’s federal tax return.
5. Do I have to pay for an LLC Operating Agreement in Alabama?
No, you do not have to pay for an LLC Operating Agreement. While some services charge for them, you can find free Alabama LLC Operating Agreement templates online, including on our site.