A Guide On Starting An LLC In Alabama (AL LLC 2023).
If you want to start an LLC in Alabama, it's simple and affordable. Just follow these steps: name your LLC, hire a registered agent, file your formation documents, create an operating agreement, and get an EIN. Setting up an LLC in Alabama is inexpensive, but you'll need to pay the state filing fee. However, these fees can be tax deductible, so the overall cost is minimal.
This page provides a comprehensive guide on the necessary steps for correctly forming your Alabama LLC. It is recommended that you carefully read the entire article to ensure you don't miss any important information.
On this page, you will find information about the following topics.
To start an LLC in Alabama, follow these steps:
- Choose a name for your Alabama LLC
- Designate a registered agent in Alabama
- Submit the Certificate of Formation in Alabama
- Establish your Alabama LLC Operating Agreement
- Apply for an Alabama LLC EIN.
- After the formation of your Alabama LLC.
- Alabama Foreign LLC
- Alabama LLC Formation Review
A guide on how to start an LLC in Alabama.
An LLC is a hybrid business entity that combines the characteristics of a corporation with a partnership or sole proprietorship. It provides personal asset protection by separating personal assets from business assets. In an LLC, members' personal assets are not impacted by business debts. However, in certain situations, if the LLC is sued for business debts, courts may use the owner's personal assets for corporate liabilities by piercing the corporate veil.
To start a Multi-Member LLC or Single-Member LLC in Alabama, you need to file a Certificate of Formation and pay a $200 filing fee. However, there are 4 other important steps to follow. Here are all 5 steps to start an Alabama LLC in 2023. You can also hire a professional LLC formation service to ensure everything is done correctly.
Choose a name for your Alabama LLC.
The first step in forming a limited liability company in Alabama is to choose an appropriate name for your LLC. Before naming your business, it is important to consider factors such as ease of remembrance, availability within the state, and adherence to all LLC naming guidelines, including conducting a business entity search to ensure the name is available for use. Seeking legal advice before finalizing the name can also be beneficial to ensure compliance with all legal requirements and avoid potential conflicts with existing entities. Understanding and meeting the legal requirements for naming your LLC is essential to establish your business identity correctly. As a pass-through entity, the chosen name should reflect the nature and identity of your LLC while adhering to the legal requirements.
Alabama LLC Naming Guidelines
LLCs in Alabama must adhere to specific naming requirements, including the following important criteria.
- ZenBusiness offers unlimited business name searches to ensure that your desired business name is available and not already in use by another business in Alabama.
- Any of the following suffixes - "Limited Liability Company", "LLC", or "L.L.C." - must be used in your business name.
- When choosing a name for your business, it is important to avoid any terms that may cause confusion or be misleading, such as "Treasury", "State Department", "FBI", "CIA", etc.
- Terms such as "Bank," "University," "Attorney," "Doctor," etc. can only be added after meeting the additional requirements set by the Alabama State Government.
- In Alabama, the name reservation must be completed at least 15 days (2 weeks) prior to the LLC registration process.
- It is advisable to choose a business name that has an available domain.
The business name has been reserved for future use.
If you wish to delay filing your LLC but want to secure your chosen name, you have the option to reserve your LLC name for 1 year. To retain the name, you must complete a name reservation application and pay a $25 fee to reserve your name with the Alabama Secretary of State.
The term "Doing Business As (DBA)" or "Trade Name" is commonly used in business.
You can register your LLC once you have a legal name. However, it is not required. Instead, you have the option to use DBA, Fictitious Name, or Trade Name. If you choose this route, you must register your name with the Alabama Secretary of State. This requires submitting an Application to Register or Renew Trademark, Service Mark, or Trade Name in Alabama. Additionally, you need to include the filing fee of $30.
A professional service can assist with name searches, business domains, websites, emails, and more in one place. It is advisable to consider using -
ZenBusiness provides a range of services for businesses, including LLC formation, customized website templates, and business emails, all at a competitive price. When establishing a website for your business, it is advisable to have a domain with a ".com" extension, although there are other options available such as ".io", ".company", ".xyz", and more. With ZenBusiness, you can access all the necessary resources for your business in a single dashboard.
Is it necessary to include LLC in my company email/domain?
Using the word LLC in your domain name or email is not required by law. You have the option to include it if you choose. However, it is advisable to avoid using LLC in the domain name. A domain name should be concise and memorable.
To complete the process, please designate a Registered Agent in Alabama.
Choosing a Registered Agent is the subsequent step in establishing an LLC in Alabama. The Registered Agent serves as the representative for your LLC and is responsible for receiving crucial documents and correspondences, such as tax forms, legal papers, notices of lawsuits, and government letters. Securing a dependable Alabama Registered Agent is crucial for the proper functioning of your LLC.
To ensure compliance, your registered agent must either be an Alabama resident or have a physical street address within the state. This designated address will function as your LLC's primary point for receiving legal documents, serving its filing purposes, and fulfilling filing requirements. Numerous LLC formation companies provide registered agent services, including the following two reputable options. Even with their most basic plan (often offered for free), registered agent services and additional features can be accessed at a reasonable cost.
We recommend two competent registered agent services that are duly authorized to conduct business in Alabama. Some LLC formation services also specialize in standalone Alabama registered agent services, catering specifically to the state's filing method, filing requirements, and filing purposes. Opting solely for Registered Agent services, without purchasing any other LLC formation services, can be beneficial if you're handling the process independently and wish to maintain the privacy of your home address or safeguard against piercing the corporate veil.
Who is eligible to be a registered agent?
A Registered Agent is required for LLCs in Alabama and can be an individual or a business entity over the age of 18 with a physical address in the state. The Registered Agent is responsible for managing all legal documents, including business licenses and business privilege tax returns, on behalf of the LLC.
Is it possible to act as my own registered agent?
Individuals who are residents of the state of Alabama and are over 18 years of age are eligible to serve as their own registered agents. To qualify, they must possess the necessary authority to conduct any form of business in Alabama.
What are the reasons for not being my own registered agent?
There are reasons why you shouldn't be your own registered agent. The registered agent's address is used for communication with the SOS and legal activities, including receiving business licenses and business privilege tax returns. If you are your own registered agent, you may have to share your personal address publicly. Additionally, the registered agent must be available during business hours. It can be difficult to fulfill this requirement while managing other aspects of your LLC. Therefore, it is advisable to appoint a separate entity as your registered agent.
What does "Piercing the Corporate Veil" mean in relation to LLCs?
In Alabama, if an LLC is sued, courts may decide to lift the corporate veil. This means that the owners of the LLC will be personally liable for their business debts. They may need to use their personal assets to repay these debts. This is known as piercing the corporate veil, where personal assets are no longer separate from business assets. To protect your personal assets, make sure you have enough capital, as well as properly filed LLC documents.
Registered Agent Consent Application
There is no separate Consent Letter required in Alabama for the Secretary of State. When changing the Registered Agent, the new Registered Agent must sign the consent letter, which is included in the Application form. A filing fee of $25 is required. For more information on changing a registered agent in Alabama, particularly involving the Federal Government, please read further.
The next step is to file the Certificate of Formation in Alabama.
Filing a Certificate of Formation stands as the pivotal step in understanding the initiation of an LLC in Alabama. This document conveys crucial information about your business to the government, including:
- The LLC's name with the explicit identification as an LLC entity.
- Address and name of the registered agent.
- Confirmation of at least one LLC member's presence.
- Specific statement concerning enforceability of obligations and expenses if the LLC is a "series LLC."
- Any additional matters deemed essential by the members.
The form must be typed and can be submitted via mail or online. To mail the form, the following items are required, enclosed in an envelope addressed to the Secretary of State, Business Services, P.O. Box 5616, Montgomery AL 36103:
- Two completed copies of the Certificate of Formation with the attached Name Reservation Certificate.
- A self-addressed, stamped envelope.
- Payment of $200.00 via check, money order, or credit card payment form (available in the online form).
For online filing, instructions provided on the Secretary of State’s website must be followed. The filing fee amounts to $208, payable through a credit card or business bank account.
When contemplating how to commence an LLC in Alabama, various options exist. One alternative involves converting another business type into an LLC using the same form.
Here's an insider tip: The Certificate of Formation in Alabama offers three LLC types to choose from:
- Series LLC functioning as part of a larger entity.
- Professional LLC providing services by licensed professionals like doctors, lawyers, or accountants.
- Non-Profit LLC engaging in charitable activities.
If your LLC falls under any of these categories, seeking advice from a legal or tax professional is recommended. This consultation can provide insights into potential tax advantages or obligations based on the chosen LLC type.
The mailing address for the Secretary of State Business Services in Montgomery, Alabama is P.O. Box 5616 M, Montgomery, Alabama 36103-5616.
The LLC formation process in Alabama usually takes about 10 business days. Online filing may be faster than offline filing. Expedited filing is available for an extra fee. However, the processing time can vary due to different factors.
An online LLC formation service can provide all necessary documents more quickly than usual, with lifetime customer support and 100% accuracy. We suggest using -
ZenBusiness offers online LLC setup services for $0 plus state fees.
LLC owners in Alabama must pay filing fees to register their business. This fee is mandatory but can be deducted from taxes. If you file on your own, there are no additional service fees. However, doing it yourself can be time-consuming, complicated, and messy, especially if you're new to entrepreneurship. It is advisable to seek professional guidance to form your LLC in Alabama.
Create an operating agreement for your Alabama LLC
The fourth step involves filing your operating agreement, which is a legal document that outlines the ownership and operating procedures of your LLC. This document is important to ensure that all business owners are in agreement and to minimize potential conflicts in the future.
When filing an Alabama LLC Operating Agreement, it is not required by the state but it is recommended. Having a comprehensive operating agreement that includes all business details can assist in making future business decisions, particularly if the decision is made later on down the line for dissolving the Alabama LLC. Therefore, while not necessary, having an operating agreement is definitely considered ideal.
You can obtain a professionally crafted operating agreement at a low cost through ZenBusiness. They will handle the drafting process for you, eliminating any concerns. We suggest utilizing their services.
You can create a free operating agreement draft without hiring a professional. But there is an advantage to hiring a proficient person/service. They can provide you with a high-quality operating agreement at a low cost, which will benefit you in the future. Hiring a professional service will give you peace of mind.
The process of filing an Alabama LLC EIN
The Employer Identification Number (EIN) is a nine-digit number assigned by the Internal Revenue Service (IRS) to help identify the type of business for tax purposes and other tax-related matters. The EIN is required for all active businesses and any form of business.
An EIN is required when an LLC hires employees. Following specific rules and regulations is necessary when hiring employees for an Alabama LLC. Similarly, an EIN should be obtained for an Alabama foreign LLC if it is based in other states.
To obtain an EIN (also known as FEIN), individuals are required fill out a form either online or by mail and submit it directly the IRS. The form must be completed with accurate details of the LLC and sent it the provided address. Alternatively, individuals can seek assistance from an EIN Assistant during the process.
Please send the mail to the Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999.
The fax number is (855) 641-6935 and there is no fee.
The hassle of obtaining an EIN and other necessary tasks for your LLC can be reduced by hiring an LLC formation service. It is recommended to use -
When getting an EIN, you don't need a Social Security number. Fill out the I.R.S. Form SS-4 and leave section 7b blank. To complete your application, call the IRS at (267) 941-1099. Agents or employees will assist you.
Forming a Limited Liability Company in Alabama is now complete. Doing it yourself can be time-consuming and complex. However, using ZenBusiness makes the process faster. They provide live chat and phone support with experts to assist you. Their worry-free service simplifies everything for you, including acquiring a Federal Tax Identification number (EIN) for your LLC.
Advantages and Disadvantages of Establishing an LLC in Alabama
- Alabama imposes a filing fee of just $150 for LLC formation, which is comparatively lower than numerous other states.
- Members possess flexibility in organizing the management and operational aspects of an Alabama-based LLC.
- Alabama LLCs are not subject to entity-level taxation; instead, only individual members are taxed.
- LLCs are required to submit an annual report in Alabama, incurring a $10 fee to ensure active status.
- The liability protections provided to LLC members might not be as robust as those available in certain other states.