How to Start an LLC in Alabama
(2025 Guide)
- By
Ahmad Adil - updatedJuly 7, 2025
Deal alert! forms your LLC with Northwest for $39 (60% off). Details inside.
Thinking of launching your business in Alabama? Starting an LLC is one of the smartest first steps you can take to protect yourself and your business.
In this guide, weโll walk you through how to start an LLC in Alabama, one simple step at a time โ plus what it costs, how long it takes, and what you need to do after you’re approved. โ
Letโs break it all down ๐
๐ฐ How Much to Start an LLC in Alabama?
Starting an LLC in Alabama will cost you:
$200 to file your Certificate of Formation
At least $50 per year for your Alabama Business Privilege Tax and Annual Report
So, how much does an LLC cost in Alabama altogether?
Initial filing = $200
Annual maintenance = $50 minimum
[Link to related article: Alabama LLC Costs Explained]
โฑ๏ธ How Long Does It Take to Get an LLC in Alabama?
Online filing = Immediate approval ๐ป
Mail filing = 1โ2 business days + mailing time ๐ฌ
Want to check for any processing delays? [Link to related article: Alabama LLC Approval Time]
| Benefit | Description |
|---|---|
| ๐ก๏ธ Asset Protection | Protects your personal assets from business debts |
| ๐ผ Business Credibility | Enhances professional trust and legitimacy |
| ๐ Tax Flexibility | Choose between sole proprietorship, partnership, S or C corp |
| ๐งพ Fewer Formalities | Less red tape than corporations |
| ๐ก Ideal for Startups | Quick, low-cost setup |
๐ Step-by-Step: How to Start Your Alabama LLC
Ready to get started? Here are the 6 steps to forming your LLC in Alabama:
1. Search Your Alabama LLC Name
Before you file anything, you need to make sure your business name is available.
Use the Alabama Business Entity Search to check for existing businesses with the same name.
โ Tip: This is also referred to as an Alabama business name search or LLC search Alabama.
Once youโve found a name thatโs unique, make sure it follows state naming rules. You can even reserve it in advance through the Secretary of State Alabama name reservation process.
[External link: Alabama Secretary of State Business Name Reservation]
2. Choose an Alabama Registered Agent
Your LLC needs to designate a Registered Agent โ someone who can accept legal documents and state mail on your behalf.
Who can be the Registered Agent of an LLC?
You (the business owner)
A friend or family member
A professional Alabama Registered Agent service
Requirements:
Must have a physical street address in Alabama
Must be available during business hours
Cannot be a P.O. Box
Want privacy? Hire a service like Northwest Registered Agent, which lets you use their office address to keep yours off public records.
Special offer: Start an LLC in Alabama with Northwest for $39 + state fee and get a free year of Registered Agent service.
(Read our Northwest Registered Agent review.)
3. File Your Alabama Certificate of Formation
To officially form your LLC, youโll need to file a Certificate of Formation with the Alabama Secretary of State.
This is the document that legally creates your business.
๐ก Wondering what is a Certificate of Formation? Itโs just the legal paperwork that registers your LLC with the state.
Filing fee: $200 (one-time)
You can file online for instant approval, or by mail if preferred.
[Link to related article: How to File Your Alabama Certificate of Formation]
Need to save time? Form your LLC with Northwest ($39 + state fee) or LegalZoom ($149 + state fee).
(See why Northwest is #1: Northwest vs LegalZoom.)
4. Create an Alabama LLC Operating Agreement
An LLC Operating Agreement lays out how your business is run โ including ownership, roles, and rules.
Even though the state doesnโt require it, we highly recommend having one.
Why?
It helps prevent disputes
Itโs often required by banks to open an account
It protects your limited liability status
๐ This is an internal document โ you donโt have to file it with the state or IRS. Just keep a signed copy with your records.
[Link to download: Free Alabama LLC Operating Agreement Template]
Download a free LLC Operating Agreement:
Member-managed: Google Doc | Word | PDF
Manager-managed: Google Doc | Word
(What's better? See Member-managed vs Manager-managed LLC)
5. Get an EIN from the IRS
Next up: apply for your Employer Identification Number (EIN) โ a federal tax ID used to identify your LLC for tax purposes.
Youโll need an EIN to:
Open a business bank account
Hire employees
File taxes
Apply for business licenses
How much does an EIN cost? Itโs completely free from the IRS.
How long does it take to get an EIN?
Online: ~15 minutes
By fax/mail: 1โ8 weeks
[External link: How to Apply for an EIN Online]
Even if you’re running a free LLC in Alabama, youโll still need this IRS-issued number.
6. File Your Initial Business Privilege Tax (BPT)
Every new Alabama LLC must file an Initial Business Privilege Tax Return within 2.5 months of formation.
Minimum cost: $50
You may owe more depending on your income and net worth, so itโs a good idea to consult with a tax professional.
๐ Example: If your LLC is approved on March 15, 2025, your Initial BPT is due by May 29, 2025.
[Link to related article: Alabama Annual Report & Business Privilege Tax]
๐ What To Do After Your LLC Is Approved
Once your LLC is official, hereโs what comes next:
Open a Business Bank Account
Do I need a business bank account for my LLC?
Yes โ keeping your business and personal finances separate is key to protecting your liability status.
Most banks will ask for:
Your EIN
Certificate of Formation
Operating Agreement
Apply for Business Licenses & Permits
Alabama doesnโt have a general state license, but you may need:
Local city/county licenses
Industry-specific permits (e.g., daycare, food service)
Start by checking with your local government.
[External link: Alabama Business License Info]
File Your Annual Business Privilege Tax & Report
After your Initial BPT, youโll need to file a Business Privilege Tax (BPT) and Annual Report every year.
Due: April 15 every year
Cost: $50 minimum (may vary based on revenue)
๐ Example: If your LLC was formed in March 2025, your first BPT & Annual Report is due April 15, 2026.
You can file online or by mail โ we recommend filing online for ease.
[Link to related article: Alabama LLC Annual Report]
๐ Get Business Licenses and Permits
Good news for your Alabama LLC: Alabama does not have a statewide general business license requirement!
However, depending on your Alabama LLC’s specific location (county, city) and its business activities, you may still need a local business license or permit.
Example: If you plan to start a daycare in Alabama, you might need a specific business license from the city or county where you operate.
You can learn more about these requirements on our comprehensive Alabama Business License page.
๐ File Your Alabama Business Privilege Tax & Annual Report (Ongoing)
All Alabama LLCs in the state are required to file a Business Privilege Tax (BPT) and an Annual Report every single year. This annual filing is vital for keeping your LLC in good standing with the state.
Cost of the Annual BPT & Annual Report
The BPT and Annual Report costs a minimum of $50 per year. Like the initial filing, you may owe more depending on your federal income taxes and net worth. Again, consulting a tax professional for accurate figures is highly advisable.
When is the Business Privilege Tax & Annual Report Due?
The BPT Return and Annual Report filing is due every year by April 15.
When is Your First Annual BPT & Annual Report Due?
Your first annual Business Privilege Tax Return & Annual Report will be due by April 15, the year after your LLC is approved.
Example: If your LLC was approved on March 15, 2025, your first annual Business Privilege Tax Return & Annual Report will be due by April 15, 2026.
Important Distinction: Remember, you must file the Initial Business Privilege Tax 2.5 months after forming your LLC. After that, you’ll file the regular Business Privilege Tax & Annual Report every year, starting the year after your LLC is approved.
How to File Your BPT & Annual Report
You can file your LLCโs Business Privilege Taxes and Annual Report either online or by mail. We highly recommend the online filing for its ease and speed.
Learn more about filing your BPT and Annual Report here: Alabama LLC Annual Report & Business Privilege Tax.
๐ธ Pay Taxes (LLC Members)
It’s a common misconception that LLCs pay federal taxes themselves. In reality, LLCs do not pay federal taxes directly. Instead, the LLC Members (owners) pay the taxes for the LLC as part of their personal tax returns. This is known as “pass-through taxation.”
How Will My Alabama LLC Be Taxed?
By default, an LLC is taxed by the IRS based on the number of owners it has:
- A Single-Member LLC is typically taxed like a Sole Proprietorship.
- A Multi-Member LLC is typically taxed like a Partnership.
Alternative Tax Election: Alternatively, you have the option to ask the IRS to tax your LLC like a C-Corporation or an S-Corporation. The Alabama Department of Revenue will honor the tax treatment you elect with the IRS.
Beyond federal and state income taxes, be aware that there may be additional state and local taxes to consider, including sales tax (if applicable to your business activities).
Learn more about your tax obligations in our detailed guide: Alabama LLC Taxes.
๐ฐ Alabama LLC Costs (2025)
| Item | Cost |
|---|---|
| Name Reservation (optional) | $28 |
| Certificate of Formation | $208 |
| Registered Agent (if hired) | $50โ$300/year |
| Annual Business Privilege Tax | Varies (min $100) |
| EIN (from IRS) | Free |
Ready to launch your Alabama LLC? Bookmark this guide or share it with fellow entrepreneurs! For personalized help, contact a local business advisor.
๐๏ธ Alabama Secretary of State โ LLC Contact Info
Website: sos.alabama.gov
Business Services Division: (334) 242-5324
Mailing Address:
Secretary of State โ Business Services
P.O. Box 5616
Montgomery, AL 36103-5616
โ FAQs - How to Start an LLC in Alabama
1. How much does it cost to start an LLC in Alabama?
The initial cost to start an LLC in Alabama is $200 for filing the Certificate of Formation. There’s also a minimum $50 Initial Business Privilege Tax due shortly after formation. Other costs may include Registered Agent service fees if you hire one.
2. How long does it take to form an LLC in Alabama?
Once you file your Certificate of Formation Alabama online, it typically takes the Alabama Secretary of State only 1 business day for approval. The overall process of gathering information and completing all steps may take a few days to a week.
3. Do I need an EIN for my Alabama LLC?
Yes, you will need an Alabama EIN Number (Federal Employer Identification Number) for your LLC. It’s required for tax purposes, opening a business bank account, and applying for certain licenses and permits. Getting an EIN online is free and takes about 15 minutes.
4. What is a Registered Agent and why do I need one for my Alabama LLC?
An Alabama Registered Agent is an individual or company designated to receive legal documents and state notices on behalf of your LLC. You need one to ensure your LLC receives important official correspondence and to maintain compliance with state regulations.
5. Is an LLC Operating Agreement required in Alabama?
While an LLC Operating Agreement Alabama is an internal document and not filed with the state, it is highly recommended for all Alabama LLCs, including single-member LLCs. It outlines ownership, management, and operational procedures, which is crucial for smooth operation, opening bank accounts, and legal clarity.