If forming your limited liability company (LLC) fills you with an uncontrollable urge to drink Pepto and hide under the covers, you’re not alone. It’s a frightening prospect for any would-be business owner, whether you’re looking for a side hustle or an out-and-out biz.
Either way, you’ve probably got questions. Such as: What’s it gonna take to get the job done? How much does an LLC in Alabama cost? And is there anyone who can help me?
These are all reasonable questions, and it’s true that setting up an LLC can be somewhat difficult. The good news is that the LLC Alabama cost is lower than you might think, and there are experts standing by to help you.
In today’s post, we’ll tackle subjects such as the initial filing fee, annual fees, and whether you should use a registered agent service. We’ll also discuss the basic steps of LLC formation and provide a handy chart of costs for you to reference whenever you need.
Ready to stop waiting and start starting? Read on.
Forming an LLC in Alabama is a multi-stage process that requires you to take several steps in succession if you want to get it right and stay in compliance. Rather than feeling overwhelmed, just follow the outlined tasks below and you’ll be fine!
First and foremost, you’re going to need a business name. Before you go off half-cocked, you’ll need to keep a few things in mind:
Before committing to a name and getting those business cards printed, make sure you do a search of other businesses operating in the state of Alabama. You can do a business entity search on the Alabama Secretary of State website.
If you want to use a separate LLC and business name, you might want to file for a DBA (doing business as). You can even file multiple DBAs operating under the same LLC. This allows you to keep your business all in one place but have different activities in different arenas.
Your LLC might just be your name, or it might be something more basic, like Redstone, LLC. The DBA names can play off that or can even be totally unrelated.
For instance, if you want your public-facing name to be more fun, you might choose Red Apple Realty. If you want it to be more business-oriented, you could name it Redstone Events & Marketing.
Filing for a DBA costs $30 for each DBA.
If you want to register an LLC business name ahead of time (because you like the name but aren’t ready to file your articles of organization), you can pay a name reservation fee and nab it. It costs $28 online and $10 by mail.
Your articles of organization are what make your LLC official. These are a set of documents that you submit to the Alabama Secretary of State. Filing articles of organization in Alabama costs $200, payable to the Secretary of State.
You also have the option to pay for expedited processing when filing articles of organization. Typically, it takes 5-10 business days for filings to be processed once they are received. However, Maine offers two expedited processing options: for a $50 fee, you can ensure that your filing is processed the next business day, and for a $100 fee it will be filed the same business day.
The state of Alabama does require a statement of information, aka a business privilege license. This document explains your business activities over the previous year and is required when first starting as well. If you do not have one, then you are not legally allowed to conduct business in the state.
You must file it within 2.5 months of starting your business and can purchase the license from your county probate judge. The cost is $1 minimum, with each county adding its own cost.
The beneficial ownership information or BOI report is required by federal law for some corporations, but it is not applicable to all business entities. You should ask an expert or a registered agent if you need one, which is free to file with FinCEN.
Speaking of registered agents …
If you have been considering starting an LLC for a while, then you’ve likely come across the recommendation to get a registered agent. Now, it’s totally fine to take the self-serve approach if you are a competent paperwork doer and tax document collator. Some people even enjoy this aspect of running a business (yes, really, some do).
If that’s not you, though, you might want to consider hiring a registered agent. They help you submit filing documents and annual reports, prepare for expenses, stay in compliance, and more.
With a registered agent, you have absolute privacy and can count on someone else to keep track of everything important. Many people find it well worth the annual cost, which ranges from $50 to $400 a year or so. Be aware, however, that rock-bottom prices may indicate a surface-level job, so try to find a provider who’s somewhere in the middle of the cost range.
You need a federal employer identification number (FEIN) to practice business in the state of Alabama.
If that’s not you, though, you might want to consider hiring a registered agent. They help you submit filing documents and annual reports, prepare for expenses, stay in compliance, and more.
With a registered agent, you have absolute privacy and can count on someone else to keep track of everything important. Many people find it well worth the annual cost, which ranges from $50 to $400 a year or so. Be aware, however, that rock-bottom prices may indicate a surface-level job, so try to find a provider who’s somewhere in the middle of the cost range.
Alabama does not officially require an operating agreement. However, the document describes what happens in case of dispute, so it can be useful to get one ahead of time and save yourself heartache later.
Drafting an operating agreement is something you can do yourself or hire a lawyer for. If you go the DIY route, you don’t have to pay anything, since you keep the document internally rather than filing it with an official body.
If you choose to use a lawyer, the cost can be up to $1,000, which is a lot. That’s why many people choose to use a registered agent service, which usually only costs a few hundred dollars (like the one through Tailor Brands).
There are a few other costs associated with running a business:
This depends entirely on what type of business you have, but can include:
The cost of these varies according to county, profession, and business activity.
An annual report is a document that explains the business activities over the past year. It costs $10 to file in Alabama and lists the primary people who make the LLC tick.
LLCs in Alabama are taxed at the standard corporate income tax rate of 6.5%. However, Alabama is unique (along with Oregon and Missouri) in that it allows you to deduct the amount of tax you paid to the federal government on your state return. This effectively allows Alabama businesses to pay considerably less on state income tax.
The business privilege tax is different from the income tax, charging $.25 cents to $1.75 for each $1,000 that the business is worth. You pay this along with your annual report fee of $10.
The certificate of existence is optional, needed to register your business in another state. You do not need it unless you’re expanding. It costs $27.75 and is available immediately.
In many states, this is the same as the above. In Alabama, however, it means you’ve paid your taxes. It costs $28 online and says that you’ve filed all your reports and paid your taxes. It may be necessary to conduct some business transactions.
The good news is that many costs associated with your LLC are deductible. These include:
Just the costs? You got it. Make sure to bookmark for later use!
LLC filing fee (articles of organization) | $200 |
Reserve business name (optional) | $28 online, $10 by mail |
Filing a DBA (optional) | $30 |
Registered agent (optional) | $50 to $400 |
Operating agreement (optional) | $0 to $1,000 |
Statement of information or business privilege license | $1 + a county-specific fee |
Business license (cost varies widely by municipality; see examples | $120 minimum in Mobile based on gross receipts in Huntsville |
Annual report | $10 |
Income tax | 6.5% |
Business privilege tax | $.25 cents to $1.75 per $1,000 net worth |
Certificate of good standing | $28 online, $25 by mail |
Certificate of existence | $27.75 |
Perhaps forming an LLC in Alabama won’t be the most exciting or the least nitpicking thing you ever do, and that’s okay. The bottom line is it’s neither expensive nor impossible, especially once you understand the various steps and costs involved. The extra good news? The sooner you start your business, the sooner you can start making money that will leave these upfront expenses in the rearview mirror.
Besides, there’s no rule that you have to go it alone. If you need the help of experts, it might be time to reach out to a registered agent. That way you can get what you need quickly and turn your attention back to what really matters: your business.
No matter what you have in mind for your LLC name, make sure the one you pick is memorable, easy to pronounce, and capable of growing with you. Perform an LLC name search to determine if your name is available, and use a DBA if you want a different public name or if you want multiple arms of your business under the same umbrella.
The basic cost of an LLC in Alabama includes the initial filing fee, annual reporting fees, licenses and permits, and taxes.
When you file online, your LLC gets approved immediately, presuming you have submitted the correct documentation. By mail, it can take about a week.
You do need a federal employment identification number (FEIN) to form an LLC in Alabama.
Your LLC renews when you file your annual report and pay your business privilege tax. You don’t need to do anything else.
To dissolve your LLC in Alabama, you need to pay the Secretary of State $100 to file the paperwork. Then you need to reach out to your local probate judge to ensure the dissolution is recorded. The cost varies by county but is, at minimum, $50.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness. It also does not indicate any affiliation between Tailor Brands and any other brands, services or logos.
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