How to Incorporate an LLC in Alabama (2025 Guide)

Thinking about starting a business in Alabama? Forming a Limited Liability Company (LLC) is one of the most flexible and protective ways to set up your company. From reserving your name to filing your Certificate of Formation, here’s everything you need to know about how to incorporate an LLC in Alabama in 2025.

1. Reserve Your Alabama LLC Name

Before you can file your Certificate of Formation, you must reserve your business name with the Alabama Secretary of State. This step is mandatory and ensures your chosen name is unique.

• Fee: $28 if filed online (includes $3 convenience fee) or $25 for standard mail filing

• Processing time: Immediate for online submissions

• Requirements: Your LLC name must include “Limited Liability Company,” “LLC,” or “L.L.C.” and be distinguishable from other Alabama businesses

• Validity: Name reservations are valid for one year

Once approved, you’ll receive a Name Reservation Certificate, which you’ll need to attach when you form your Alabama LLC.

2. Appoint a Registered Agent in Alabama

Every LLC in Alabama must designate a Registered Agent—an individual or company authorized to receive legal and state documents on your behalf.

Requirements for your Alabama Registered Agent:

• Must have a physical street address in Alabama (P.O. boxes not accepted)

• Must be available during normal business hours

• Can be an Alabama resident or a registered business authorized in the state

Having a reliable Registered Agent helps ensure your Alabama LLC formation remains compliant with state regulations.

3. File the Certificate of Formation (Form LLC-1)

To officially form your LLC in Alabama, you’ll need to file the Certificate of Formation (Form LLC-1) with the Alabama Secretary of State.

Key details:

• Filing fee: $200 (flat rate for online or mail filing)

• Processing time: Usually 1 business day online; longer by mail

• Submission: Include your Name Reservation Certificate

• Filed with: Alabama Secretary of State (through the county probate judge if mailing)

Once approved, your Alabama LLC incorporation becomes official and recognized by the state.

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4. Create an Operating Agreement (Optional but Recommended)

While not required by Alabama law, having an Operating Agreement is a smart move. It defines how your LLC operates internally and helps maintain clear boundaries between personal and business matters.

Your Alabama LLC Operating Agreement should outline:

• Ownership percentages

• Member roles and responsibilities

• Voting rights and management structure

• Profit and loss distribution

• Procedures for adding or removing members

Even though it’s optional, banks and partners often request this document when verifying your business structure.

5. Obtain an EIN from the IRS

Every LLC needs an Employer Identification Number (EIN) to handle taxes, open a business bank account, and hire employees.

• Apply directly through the IRS website — it’s free

• EIN is issued instantly if you have a valid SSN or ITIN

• Non-US residents can apply by mail or fax

Your EIN links your Alabama LLC to federal tax filings and payroll systems.

6. File the Alabama Business Privilege Tax (BPT)

One unique step in forming an Alabama LLC is filing the Business Privilege Tax (BPT) within about 75 days (2.5 months) after formation.

Here’s how it works:

• Initial filing: Use Form BPT-IN through the My Alabama Taxes (MAT) portal or by mail

• Minimum tax: $50

• Exemption: For tax years after December 31, 2023, businesses owing $100 or less are exempt from filing

• Annual filing: Required each year moving forward

This tax applies to most Alabama LLCs and must be filed even if you’re not generating income yet (unless exempt). Filing promptly keeps your Alabama LLC compliant with state tax laws.

7. Stay Compliant After Forming Your Alabama LLC

Once you’ve completed your Alabama LLC formation, keeping it active and compliant is crucial.

To maintain good standing:

• File annual Business Privilege Tax returns (or confirm exemption status)

• Keep your Registered Agent details updated

• Renew local business licenses and permits

• Maintain accurate financial records for taxes and reporting

Neglecting compliance could result in penalties or administrative dissolution by the state.

How Professional Accounting Services Can Help

Managing tax filings and compliance can be time-consuming, especially for small business owners. Partnering with accounting professionals ensures you stay compliant and financially organized.

Accountants can help by:

• Tracking your BPT filing deadlines

• Preparing accurate financial records

• Advising on deductions and tax structures

• Setting up systems for bookkeeping and reporting

Reliable accounting support allows you to focus on running your business while staying compliant with Alabama LLC requirements.

Summary

Forming an LLC in Alabama in 2025 involves several essential steps: reserving your business name, appointing a registered agent, filing your Certificate of Formation, and setting up your tax and compliance requirements early. The process starts with an online name reservation that costs $28 and continues with a $200 filing for the Certificate of Formation. Once your LLC is approved, you’ll need to obtain an EIN and file your Initial Business Privilege Tax within about 75 days. While an Operating Agreement isn’t mandatory, it’s strongly recommended for clarity and protection. Staying compliant also means maintaining your registered agent information, filing your annual BPT returns, and renewing any required licenses.

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