How To Start An LLC In Alabama 2024?
If you’ve ever wondered how to start an LLC or form a business in Alabama, you probably already know how confusing the process can be. LLC owners have to file tons of forms, apply for various business licenses, and set up things like an employer identification number just to stay in good standing with the Alabama Secretary of State.[1]
But don’t worry. We’re here to give you simple, step-by-step instructions for starting an Alabama limited liability company. Keep reading to discover what it takes to start Alabama LLCs that protect your assets while keeping the Internal Revenue Service happy.
6 Basic Steps To Start An LLC In Alabama 2024
- Choose a name for your LLC
- Choose a registered agent
- File articles of organization
- Create an LLC operating agreement
- Obtain an EIN
- Annual Tax
How To Start An LLC In Alabama?
Here’s a complete look at the process of creating an LLC in Alabama from start to finish. One thing to note before getting started is that you can hire a company to guide you through all of these steps if you’d prefer to do that.
Choose A Name For Your LLC In Alabama
First, you need an LLC name. As we mentioned earlier, your business name can’t be the same as an existing company in the state. You’ll also want to try to select a business name that is easy for customers to remember and potentially one that has some marketing benefits as well.
Naming Rules In Alabama
One thing to know about choosing a company name in Alabama is that it must include either a limited liability company or an LLC at the end of it. You also need to require a certificate of name reservation before filing the formation documents for your Alabama LLC.
Searching Available Name In Alabama
The state makes it easy to figure out whether your name has been taken or not. You can perform a name search by clicking on this link and visiting the state’s search page.
Choose A Registered Agent In Alabama
Now you’re ready to select a statutory agent for your Alabama LLC. This is the person who will accept legal documents on behalf of your business. You can think of them as an official point of contact.
Anyone – including you – can be a registered agent in Alabama. You just have to be at least 18 and have a valid address in the state.
File Organizational Paperwork With the State
The next step is to file organizational paperwork with the Alabama Department of State. This document details how your new LLC is going to be organized from an ownership perspective.
Prepare An LLC Operating Agreement
Now you’re ready to prepare an operating agreement. Operating agreements provide the state with more detailed information about your company, who’s involved with it, and what it will do.
The state offers clear operating agreement paperwork that you can refer to to see what type of information you’ll need to include.
Obtain An EIN For Your LLC In Alabama
At this point; you’ll be ready to set up an employer identification number (EIN). Your federal employer identification number is used for things like sales tax and worker’s compensation insurance.
Annual Tax
Finally, all that’s left to do is set up a business bank account to simplify the process of creating an annual report and filing a business privilege tax return. You’ll want to do this early to make the process of creating your annual report for taxes easier after you get your operating agreement filed.
What Is An LLC?
LLC is an acronym that stands for limited liability company. It’s one alternative to running your business as a sole proprietorship.
You get access to certain business privilege tax benefits from the LLC formation process and will be able to comply with Alabama law as a business owner while also benefitting from personal liability protection. This is true for both a domestic LLC and a foreign LLC.
What Is An LLC In Alabama?
An Alabama LLC is a limited liability company that’s registered in the state of Alabama. This means that your certificate of formation and business licenses come from the state, and your Alabama LLC will need to comply with the Alabama Department of State to remain in good standing.
Alabama LLCs can have many LLC members or just one. You’ll also need to have a registered agent[2] service from a professional service or become your registered agent to accept the service process.
Benefits Of Starting An LLC In Alabama
First, your Alabama LLC will help to protect your assets from seizure in the event of future financial challenges for your company. This is why having a certificate of formation for your LLC is so important – because it offers liability protection.
Additionally, your operating agreement will also give you access to certain Alabama business privilege tax benefits. With an Alabama LLC certificate, you may save money when you pay income tax just for having the right business structure.
Having a registered LLC can be beneficial in other areas as well. For example, it may be helpful when dealing with a credit union to get a business credit card and for certain tax obligations.
Requirements To Start An LLC In Alabama
Now that we know what LLCs are, let’s look at what requirements business entities[3] need to satisfy when filing an Alabama certificate of formation to get valid LLC records in the state.
There are two things you’ll need to do.
Appoint A Registered Agent
First, you need a registered agent. They act as an official point of contact for your business during regular business hours. This has to be listed on your Alabama LLC operating agreement and certificate of formation, so figure it out early.
One thing to note is that most professional LLC services can also become your registered agent for you. This saves small business owners from having to take on this responsibility themselves.
Many registered agent services also offer help with other professional services like federal taxes, personal tax returns, general liability insurance, and even setting up a business bank account.
The LLC’s Name Must Be Different From An Existing Business
When you choose a business name, it will also have to be different than any other LLC name in the state. You’ll put your business name on a name reservation certificate early in the process to save it.
This ensures that a government agency can easily get in touch with you if they ever need to do so regarding something like sales tax, operating agreements, or business privilege tax.
How Much Does An LLC Cost In Alabama?
The Alabama online filing fee is currently $208. That’s the amount you pay when you first file the paperwork with your LLC’s initial registered office.
On top of that, Alabama requires all single-member LLC businesses and LLCs with more than one member to pay at least $100 each tax year. Just keep in mind, that you will likely save more than this over the lifespan of your LLC’s registered agent thanks to the default tax status benefits you get with a limited liability company (LLC).
The other thing to note is that if you create your LLC online with a professional Alabama LLC formation company or registered agent service, they’ll typically charge extra (although some offer packages where you get a certificate of formation for free).
An Alabama LLC company may charge as little as nothing or as much as $299 to manage your LLC creation process for you.
Top 2 LLC Services In Alabama
If you want a little help starting your LLC, here are two of the top companies in the state to look at.
| Product | ||
| Name | ZenBusiness | Northwest Registered Agent |
| Full review | Read full review | Read full review |
| Link | Check Price | Check Price |
ZenBusiness
ZenBusiness is another company that’s worth taking a look at if you want to help create an LLC in the state of Alabama. They offer a low-priced $0 plus State fees LLC formation service that doesn’t require you to pay anything extra to access it.
Plus, if you want to hire a company to get help with statutory agent service, you can hire Zen Business, and they’ll create your LLC for free for you, just like Northwest.
This provider also offers some nice help with accounting and taxes. So if you’re looking for ongoing support in those areas, Zen Business could be a good fit.
Northwest Registered Agent
Northwest is a well-known statutory agent, business formation, and compliance company that operates across the United States. In Alabama, it offers a simple, straightforward LLC formation process at a price that’s hard to beat.
They’ll help you fill out your operating agreement, set up all of your compliance must-haves, and finish the process of starting an LLC from start to finish.
Northwest gives you several ways to get their help. You can either use free online resources from them to do the job yourself or hire them to do everything for you.
However, the $0 fee that you see in the table above only is valid for the do-it-yourself option. There’s technically no fee for hiring Northwest to create your LLC for you, but you have to pay for their registered agent service to get access to this deal, which costs $125 for the first year.
Final Thoughts
Creating an Alabama LLC can feel like a daunting process if it’s something you’ve never done before. But when you get down to it, all that you need to do is fill out some paperwork and make sure you file it with the right government organizations in the state.
You can complete this process on your own. But it’s often easier to do so with the help of a professional service. Companies like ZenBusiness and Northwest take the hard work out of your hands. They’ll guide you through the entire process of filling out all of the necessary paperwork, submitting it to the state, and ensuring you don’t miss any compliance obligations.
Creating an LLC is a great way to protect your assets and take advantage of some nice tax benefits. There’s no time like the present to do it, too. So why wait? If you’re serious about creating an LLC, now’s the best time to get started.
This is a kind of business entity that gives you some nice tax benefits and protects your assets if your company experiences financial challenges down the line.
There’s a one-time Alabama filing fee of $200 and yearly $100 payments at a minimum. But you often make this money back in the form of tax benefits.
The main reason to create an LLC is to enjoy the tax benefits and personal asset protection that you get from doing so. But you may also get more flexibility that could make it easier to run your company the way you wish to do so.
Yes, you don’t have to use any professional service to start an LLC. You can file all of the paperwork on your own if you’d like to do so. Just be prepared to spend a good amount of time on it if you decide to go this route to save money.