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How to Start an LLC in South Dakota (2024 Guide)

Wondering how to start an LLC in Alabama? We’ve got you covered.

To get started, you’ll need to pick a suitable business name, choose a registered agent, and file your Certificate of Formation with the Alabama Secretary of State ($200 processing fee). 

You can do this independently, consult with a business attorney for specialized legal guidance, or join the other 65% of our readers and hire a specialized Alabama LLC formation service (recommended).

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Northwest ($29 + State Fees)

three point nine out of five

LegalZoom ($249 + State Fees)

State fees for forming an LLC in Alabama are $200

How to Form an LLC in Alabama in 6 Steps

In order to form your LLC in Alabama, there are certain steps you’ll need to complete:

  1. Name Your LLC
  2. Choose an Alabama Registered Agent
  3. File Your Certificate of Formation
  4. Create an LLC Operating Agreement
  5. Obtain an EIN
  6. File a Beneficial Ownership Information Report

Step 1: Name Your Alabama LLC

Before you get started, you will need to pick a suitable name for your Alabama LLC. 

This will need to comply with all applicable naming requirements under Alabama law and be both succinct and memorable, as this will make it easily searchable by your potential clients.

1. Important Naming Guidelines for Alabama LLCs:

  • All LLCs based in Alabama are required to include the term “limited liability company” or one of its abbreviations (LLC or L.L.C.) in their name.
  • Your LLC’s business entity name cannot contain words that could lead to confusion between your business and a government agency (e.g., FBI, Treasury, State Department, etc.).
  • Certain words — such as “Bank,” “Attorney,” and “University” — are restricted, meaning that your LLC may need to obtain specific paperwork, as well as hire a licensed individual, in order to include them. 
  • Your name must be sufficiently distinguishable from any other Alabama limited liability company, corporation, limited partnership, or registered limited liability partnership.

For more information, see the Alabama Code guidelines for naming LLCs.

2. Is the name available in Alabama?

To check whether your desired name has already been taken by another business entity in Alabama, you can elect to perform a Business Entity Search on the Alabama Secretary of State’s website.

For more information, you can have a look at our Alabama LLC Name Search guide.

3. Should you reserve your name?

If you plan to mail in your LLC registration, you will need to complete the Name Reservation Request for Domestic Entities form at least two weeks prior to registration. 

If you plan to start your LLC online, you will reserve your business name automatically when you complete your LLC’s registration.

Keep in mind that even if you don’t plan on registering your LLC right away, it might be a good idea to reserve your LLC name online for up to one year ($25 processing fee).

4. Is the URL available?

We recommend that you check online to see if your business name is available as a web domain. Even if you don’t plan to make a business website right away, this is an extremely important step as it will prevent others from acquiring it, potentially saving you both time and money in the long term.

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Once you have verified your name is available, you may now select a professional service to complete the LLC formation process for you.


FAQ: Naming an Alabama LLC

LLC is short for limited liability company. It is a simple business structure that offers more flexibility than a traditional corporation while still providing legal protection for your personal assets. 

An LLC is one of several business structures, such as a sole proprietorship, partnership, and corporation (which includes C corp and S corp). For more information, read our What is an LLC guide.

Watch our video: What is an LLC?

You must follow the Alabama LLC naming guidelines when choosing a name for your LLC:

  1. Include the phrase "limited liability company" or one of its abbreviations (LLC or L.L.C.).
  2. Do not use words that could confuse your business with a government agency (FBI, State Department, CIA, etc.).
  3. Receive the proper licensing when using the words such as lawyer or doctor.

If you are having trouble coming up with a name for your LLC use our LLC Name Generator. That will not only find a unique name for your business but an available URL to match.

Most LLCs do not need a doing business as (DBA) name. The name of the LLC can serve as your company’s brand name and you can accept checks and other payments under that name as well. However, you may wish to register a DBA if you would like to conduct business under another name.

To learn more about DBAs in your state, read our How to File a DBA guide.

Step 2: Choose a Registered Agent in Alabama

After you find the right name for your LLC, you will need to nominate an Alabama registered agent. This is a necessary step in your Certificate of Formation (i.e., the document used to file and register your LLC with the Secretary of State).

What is a registered agent? A registered agent is an individual or business entity responsible for receiving important tax forms, legal documents, notice of lawsuits, and official government correspondence on behalf of your business. You can think of your registered agent as your business’s primary point of contact with the state.

Who can be a registered agent? A registered agent must be a resident of Alabama or a corporation authorized to transact business in the state. You can choose to elect an individual within the company (e.g., yourself, etc.), use a business attorney, or hire a registered agent service.

Get Free Registered Agent Services

Form an LLC with Northwest Registered Agent to get one year of registered agent services free of charge.

FORM YOUR LLC


FAQ: Naming an Alabama LLC

Yes. You or anyone else in your company can serve as the registered agent of your Alabama LLC.

Read more about being your own registered agent.

Hiring a professional registered agent service can be a budget-friendly approach to handling your LLC's government documentation. For a majority of companies, the benefits of using these services greatly outweigh the annual costs they incur.

Step 3: File the Alabama LLC Certificate of Formation

To register your LLC in Alabama, you’ll need to reserve your LLC name and file the Certificate of Formation with the Secretary of State. You can do this online or by mail.

Alabama LLC Formation Document

Before filing, make sure you have completed your Certificate of Formation correctly. You will need to have filled in the following sections:

  • The name of your LLC
  • The name and address of your LLC’s registered agent
  • The mailing address of the registered office (if different from street address)
  • The name and address of the person who prepared this form
  • The date upon which this document will become effective (if not immediately)
  • The name and signature of the organizer

File the Certificate of Formation

OPTION 1: File Online With Alabama Interactive

File Online

– OR –

OPTION 2: Apply for an EIN by Mail or Fax

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State Filing Cost: $200

When filing by mail you must attach the Name Reservation certificate from the Office of the Secretary of State.

Mailing Address: 
Secretary of State
Business Services
P.O. Box 5616
Montgomery, AL 36103-5616.

If you’re filing the Certificate of Formation online, you’ll complete the name reservation when you complete the online Certificate of Formation.

If you’re filing your Certificate of Formation by mail, you’ll need to mail in the Name Reservation Request for Domestic Entities form first. You’ll get a name reservation certificate from the state within a few weeks. Then, you’ll mail in the approved name reservation certificate with your Certificate of Formation.

For help with completing the form, visit our Alabama Certificate of Formation guide.

Note: If you’re expanding your existing business to the state of Alabama, you’ll need to register as a foreign limited liability company (LLC).

FAQ: Filing Alabama LLC Documents

Your LLC’s Certificate of Formation will typically be processed within 10 business days if filed online or by mail. However, you can pay a $100 expedited filing fee to have this document processed within three business days.

An LLC is referred to as a "domestic LLC" when it conducts business in the state where it was formed. Normally when we refer to an LLC we are actually referring to a domestic LLC. A foreign LLC must be formed when an existing LLC wishes to expand its business to another state.

Read our What Is a Foreign LLC article to learn more.

 

To start an LLC in Alabama, the initial fee for filing your Certificate of Formation is $200. However, there are a number of additional expenses that may increase the overall cost of setting up your LLC, such as the expedited filing fee if you need faster processing, or the cost of hiring a professional registered agent service.

To learn more, read our guide on the cost to form an Alabama LLC.

Step 4: Create Your Alabama LLC Operating Agreement

An operating agreement, known in Alabama as a limited liability company agreement, isn’t required for Alabama LLCs, but it’s a good practice to have one.

What is an operating agreement? An operating agreement is a legal document outlining the ownership and operating procedures of an LLC.

Why are operating agreements important? A comprehensive operating agreement ensures that all LLC members are on the same page and reduces the risk of future conflict.

For more information on operating agreements, read our Alabama LLC operating agreement guide.

FAQ: Creating an Alabama LLC Operating Agreement

Your LLC’s Certificate of Formation will typically be processed within 10 business days if filed online or by mail. However, you can pay a $100 expedited filing fee to have this document processed within three business days.

Step 5: Get an Alabama LLC EIN

You can get an Employer Identification Number (EIN) from the IRS for free. It is used to identify business entities and keep track of a business’s tax reporting. It is essentially a Social Security number (SSN) for the company.

Why do I need an EIN? An Employer Identification Number (EIN) number is required for the following:

  • To open a business bank account for the company
  • For federal and state tax purposes
  • To hire employees for the company

Where do I get an EIN? An EIN is obtained from the IRS (free of charge) by the business owner after forming the company. This can be done online or by mail.

FOR INTERNATIONAL APPLICANTS: You do not need an SSN to get an EIN. Learn more here.

Get an EIN

Option 1: Request an EIN from the IRS

Apply Online

– OR –

OPTION 2: File by Mail

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Mail to:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999

Fax: (855) 641-6935

Fee: Free

Your LLC’s Certificate of Formation will typically be processed within 10 business days if filed online or by mail. However, you can pay a $100 expedited filing fee to have this document processed within three business days.

Your LLC’s Certificate of Formation will typically be processed within 10 business days if filed online or by mail. However, you can pay a $100 expedited filing fee to have this document processed within three business days.

Your LLC’s Certificate of Formation will typically be processed within 10 business days if filed online or by mail. However, you can pay a $100 expedited filing fee to have this document processed within three business days.

Step 6: File a Beneficial Ownership Information Report

Beginning January 2024, LLC owners must file a Beneficial Ownership Information (BOI) report with the US Financial Crimes Enforcement Network (FinCEN). Existing LLCs can file their report any time between January 1, 2024, and January 1, 2025, while new LLCs must file their report within 90 days of formation. 

This contains similar information to that of your Certificate of Formation, such as your LLC name and member information, and can be filed online for free. Failure to file an accurate report on time can result in a $500 per day fine.

Note: There are certain filing exemptions, such as for large companies (i.e., more than 20 full-time employees), tax-exempt entities, and publicly traded companies. 

Considering Using an LLC Formation Service?

We reviewed and ranked the top LLC formation services. Find out which is best for you.

BEST LLC SERVICES

Maintain Your Alabama LLC

After you’ve successfully formed your LLC, there are a couple of steps you’ll need to periodically take in order to maintain it, including:

  • Getting a Business Privilege License
  • Signing up for Alabama Privilege Tax
  • Sorting out your taxes

We’ve broken down how to complete each of these steps in greater detail below.

Get a Business Privilege License

In Alabama, all businesses are required to purchase a business privilege license. You must purchase a license in every county where you do business. Licenses can be purchased from the local county probate judge.

Get a Business Privilege License

Find Your County to Get an Alabama Business Privilege License

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Fee: Varies by county

Sign Up for Business Privilege Tax

Every LLC that conducts business in Alabama is required to submit an annual PPT form, or Privilege Tax Form for Pass-Through Entities, before the third week of April. This tax is between 0.00025% – 0.00175% of the net worth of your LLC.

File your Alabama Privilege Tax

File by Mail with the Alabama Department of Revenue

Dowunload PDF

Fee: $100+, depending on your business’s income

Instructions: Follow the steps provided by the Alabama Department of Revenue.

The exact tax rate depends on your business’s income during the previous taxable year. The minimum Business Privilege Tax amount is $100.

Sort Out Your Taxes

Regardless of where your LLC is registered, you will be required to pay certain federal taxes. This includes corporation and employer taxes (for LLCs filing as a C corporation) and federal income tax and self-employment taxes (for LLCs taxed as pass-through entities).

In addition, there are a number of different taxes you’ll be required to pay at a local and state level, which can vary depending on the nature of your business.

Below are some of the most common taxes in Alabama:

Income Taxes

This group of taxes describes the fees levied by the state on the income generated by your Alabama LLC. In general, there are two main types of state income taxes for you to be aware of:

  • State Personal Income Tax: A gradual tax rate that ranges from 2% to 5% depending on the adjusted gross income (AGI) as well as the taxpayer category of each of your LLC members.
  • State Corporate Income Tax: LLCs organized as corporations for federal tax purposes are subject to a flat tax rate of 6.5% on the total taxable income they earn from business operations within Alabama.

Your LLC can use the My Alabama Taxes (MAT) online platform to file its returns, make payments, and manage your accounts. While you can also do this by mail or in person, filing online is generally the preferred method as it offers faster processing and secure transactions.

Sales and Use Taxes

In Alabama, sales tax is set at a base rate of 4% on the sale of most tangible goods and services. However, local jurisdictions are also able to impose their own rates up to a maximum of 7% that your LLC may also be required to pay. 

Depending on the size of your business’s sales and use tax liability, it will be required to file a return on a monthly, quarterly, semi-annual, or annual basis. Regardless of how often your LLC needs to file sales tax, returns and remittances are due on or before the 20th day of the month following this filing period (for annual filers, the due date is January 20).

Note: For your LLC to be able to collect and remit sales taxes, you’ll typically need to register for a seller’s permit online using the My Alabama Taxes (MAT) portal.

How to Start an LLC Tip Icon

Steps After LLC Formation

After forming your LLC, you will need to get a business bank account and website, sort all required business licensing, and get business insurance, among other things. 

Visit our After Forming an LLC guide to learn more.

Empowering individuals by providing accessible, actionable information is key to helping them achieve success. By equipping people with the knowledge and tools they need, we enable informed decision-making and foster personal and professional growth.

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