Alabama LLC Business Privilege Tax & “Annual Report”
(2025 Guide)
- By
Ahmad Adil - updatedJune 18, 2025
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📊 Alabama LLC Annual Report & Business Privilege Tax: 2025 Guide
Operating an LLC in Alabama comes with certain annual responsibilities beyond just running your business. Unlike many other states, Alabama combines its annual reporting requirement with a specific tax: the Business Privilege Tax. This guide will clarify your obligations for 2025, ensuring your Alabama LLC remains in good standing.
We’ll break down what the Alabama LLC Annual Report & Business Privilege Tax are, why they’re essential, how the rates are determined, and provide key details on both the initial and ongoing filing requirements. Navigate your Alabama LLC’s annual compliance with confidence!
What Are the Alabama Annual Report and Alabama Business Privilege Tax?
Every Alabama LLC that conducts business within the state must fulfill its annual reporting obligations, which are integrated into what’s formally known as the Business Privilege Tax Return and Annual Report.
Key Distinction: Unlike most states where the Annual Report is filed with the Secretary of State, in Alabama, this combined Annual Report and tax return is filed directly with the Alabama Department of Revenue. There is no separate annual filing fee paid to the Secretary of State in Alabama for your LLC.
You’ll encounter two distinct returns related to this obligation:
- Initial Business Privilege Tax: A one-time filing for new LLCs.
- Business Privilege Tax Return and Annual Report: An ongoing, annual filing.
Both of these annual requirements involve paying taxes to the Alabama Department of Revenue.
Before you proceed: It is crucial that you have already obtained an EIN Number for your Alabama LLC from the IRS. This Federal Tax ID Number is required to file any returns with the Alabama Department of Revenue. (Internal Link – Verify/insert your actual URL)
Why Do I Need to Pay the Alabama Business Privilege Tax?
The Business Privilege Tax and Annual Report is a mandatory legal requirement for the privilege of operating your business within the state of Alabama. Simply put, there is no way around this obligation. To maintain your LLC’s good standing in Alabama, you must file and pay this tax every year.
🧩 How is the Rate for the Business Privilege Tax Determined?
The Alabama Business Privilege Tax amount is based on your business’s federal taxable income and your net worth. You’ll use these figures to reference the Alabama Department of Revenue’s rate schedule to accurately determine the total taxes due.
💵 Alabama Business Privilege Tax Filings: Initial vs. Ongoing
Your Alabama LLC will have two main types of Business Privilege Tax filings: a one-time initial return and a recurring annual return.
1. Initial Business Privilege Tax Return (Form BPT-IN)
This is a one-time filing for all newly formed Alabama LLCs.
| Detail | Informationv |
|---|---|
| Amount Due | Minimum $50 (may be more based on federal taxable income and net worth) |
| Due By | 2.5 months after your LLC formation date |
| Form Name | Form BPT-IN (Alabama Business Privilege Tax Initial Privilege Tax Return) |
| Ongoing Filing? | No, filed only once |
All new LLCs must file this Initial Business Privilege Tax Return and pay the associated tax within 2.5 months of their formation date. Your LLC’s formation date is typically the date listed next to the signature on your Certificate of Formation.
Recommendation: While the minimum tax is $50, your actual liability may be higher. We strongly recommend consulting with a tax professional for personalized assistance. (Internal Link – Verify/insert your actual URL)
Note for Northwest Registered Agent Clients: If Northwest Registered Agent is your LLC’s Registered Agent, the Initial Business Privilege Tax Return requires your Registered Agent’s Federal Tax ID Number. Please call Northwest to confirm, but their Federal Tax ID Number is generally listed as 26-4375596.
2. Annual Business Privilege Tax Return (Form PPT)
This is the ongoing, yearly filing for all Alabama LLCs.
| Detail | Information |
|---|---|
| Amount Due | Minimum $50 (may be more based on federal taxable income and net worth) |
| Due By | April 15th each year |
| First Filing Due | The year after your LLC is formed |
| Form Name | Form PPT (Alabama Business Privilege Tax Return and Annual Report for Pass Through Entities Only) |
| Ongoing Filing? | Yes, due by April 15th every year |
| Required Attachments | Federal Tax Return, Schedule BPT-NWI, Form BPT-V Export to Sheets |
Every Alabama LLC must file the Business Privilege Tax Return (Form PPT) and pay the associated tax annually by April 15th.
Example: If your LLC was formed (approved) on July 20th, 2025, your first Business Privilege Tax Return (Form PPT) will be due by April 15th, 2026.
Recommendation: As with the initial filing, a minimum tax of $50 is due, but your liability could be higher. Consulting with a tax professional is highly advised to ensure accurate calculation. (Internal Link – Verify/insert your actual URL)
Important: You Might Owe Nothing At All! (House Bill 391)
Thanks to House Bill 391, which was signed into law in 2022, many Alabama businesses can save money!
Key Provision: If your calculated Business Privilege Tax liability is $100 or less, you are not required to pay it. You get to keep that money!
Simple Example: Imagine your small LLC calculates its Business Privilege Tax at $99 for the year. Prior to House Bill 391, you would have paid that $99 to the state. With this new bill, because your tax due is $100 or less, you keep the $99. This change significantly benefits smaller Alabama LLCs.
Downloading Alabama Business Privilege Tax Forms
To download the necessary forms for your Alabama Business Privilege Tax filings, visit the official Alabama Department of Revenue: Forms page. (External Link)
Once on the page, locate the “Search” box in the upper right side of the forms table. Enter the exact bold terms below and ensure you select the proper tax year in the far-right column:
- Form BPT-IN (Print Only)
- This is the Alabama Business Privilege Tax Initial Privilege Tax Return.
- Form PPT
- This is the Alabama Business Privilege Tax Return and Annual Report for Pass Through Entities Only.
- Form BPT-V
- This is the Business Privilege Payment Voucher.
Crucial Note: Ensure the Form PPT you download specifically states “for Pass Through Entities” on it. This form is tailored for limited liability entities like LLCs, and is different from forms designed for other business entities (like corporations).
Alabama Department of Revenue Tax Classifications: Explained
The Alabama Department of Revenue uses specific “tax classifications” that might sound confusing but are simply internal terms for how your LLC is treated for state tax purposes. Legally, your entity remains a Limited Liability Company.
Here’s a quick breakdown:
| Alabama Tax Term | Meaning for LLCs |
|---|---|
| “Disregarded Entity” | Your Single-Member LLC for tax purposes. |
| “Limited Liability Entity” | Your Multi-Member LLC for tax purposes. Export to Sheets |
What Other Alabama Taxes Are Due?
Beyond the Business Privilege Tax, your Alabama LLC may be subject to additional taxes depending on your specific business activities, such as:
- Income Tax
- Franchise Tax
- Corporate Tax (if your LLC elected to be taxed as a corporation)
- Sales and Use Tax
- And more, including specific industry taxes.
You may also have additional tax obligations if your business has employees (e.g., payroll taxes). For detailed information on all applicable taxes, please visit the Alabama Department of Revenue website. (External Link)
Warning: Calculating your Alabama LLC’s taxes can be complex. Incorrect filing can lead to penalties and negatively impact your business.
Our Recommendation for Filing Your Alabama Taxes
Given the complexities of both Alabama taxes and Federal taxes, we highly recommend hiring an LLC accountant or a qualified tax professional. (Internal Link – Verify/insert your actual URL)
Benefits of a Tax Professional:
- Ensures your LLC remains in compliance with Alabama and federal tax laws.
- Provides valuable advice for other business financial questions.
Finding the Right Professional: A referral from a trusted friend or colleague is often the best starting point. When choosing a tax professional, look for someone who:
- Is a good fit for your company’s specific needs.
- Makes you feel comfortable asking questions.
- Is willing to clearly answer all your inquiries.
- You genuinely like on both a personal and professional level.
It may take time to find the perfect fit, so we suggest interviewing at least 2-5 candidates before making your final decision. We wish you the best in finding a great tax professional for your Alabama LLC!
Alabama Department of Revenue Contact Information
If you have specific questions about the Business Privilege Tax or other tax matters for your Alabama LLC, contact the Alabama Department of Revenue directly:
- Phone: 334-242-1170 (Press option 8 for Business Privilege Tax inquiries)
- Website: Alabama Department of Revenue: Contact Us (External Link)
Note: Since the Annual Report in Alabama is a tax collected by the Department of Revenue, the Alabama Secretary of State will not be able to answer questions regarding the Business Privilege Tax.
❓ FAQs - Alabama LLC Annual Report & Business Privilege Tax
1. What is the Alabama Business Privilege Tax?
The Alabama Business Privilege Tax is an annual tax required for all LLCs operating in Alabama, representing the “privilege” of doing business in the state. It also serves as the Alabama LLC Annual Report.
2. Is an Annual Report filed with the Secretary of State in Alabama?
No. Unlike most states, the Alabama LLC Annual Report (which is combined with the Business Privilege Tax Return) is filed with the Alabama Department of Revenue, not the Secretary of State.
3. How is the Business Privilege Tax rate determined for an Alabama LLC?
The Business Privilege Tax rate for an Alabama LLC is primarily determined by your business’s federal taxable income and net worth, which are then referenced against the Alabama Department of Revenue’s rate schedule.
4. When is the Initial Business Privilege Tax (Form BPT-IN) due?
The Initial Business Privilege Tax (Form BPT-IN) for a new Alabama LLC is a one-time filing due 2.5 months after your LLC’s formation date.
5. When is the annual Business Privilege Tax Return (Form PPT) due?
The annual Business Privilege Tax Return (Form PPT) for your Alabama LLC is due by April 15th each year. Your first filing is due the year after your LLC was formed.
6. What is House Bill 391, and how does it affect the Alabama Business Privilege Tax?
House Bill 391 (signed in 2022) exempts Alabama LLCs from paying the Business Privilege Tax if the calculated amount due is $100 or less, allowing businesses to keep that money.
