How to Start an LLC in Alabama

Forming an LLC in Alabama means filing one core document, the Certificate of Formation, with the Alabama Secretary of State, paying a $200 filing fee, and lining up a few supporting pieces before and after that filing. This guide walks through the exact steps, in order, with the current fees and forms so you're not guessing at any part of the process.

This article is informational only. It is not legal or tax advice. Alabama LLC law and tax rules can affect your specific situation in ways a general guide can't cover, so talk to a business attorney or CPA before you file if your situation involves multiple owners, outside investors, professional licensing, or anything beyond a straightforward single-member LLC.

Skip the paperwork

Let a pro file your Alabama business for you

Filing in Alabama means state registration, an EIN, and a registered agent. These two services handle all of it, and here's our honest take on when to use each.

Top pick · Best value

Northwest Registered Agent

$39 + state fee

Keeps your home address private
Free registered agent for year one
Real US-based support, no upsell maze

Best for: most Alabama founders who want privacy and value without the markup.

Form my Alabama LLC →

BetterLegal

Fastest setup · premium

Business filed in about 2 business days
Bundles your EIN + operating agreement
One streamlined, hands-off checkout

Best for: founders who need it done fast with everything bundled.

Set up with BetterLegal →

Affiliate partners: we may earn a commission at no extra cost to you. Pricing is set by each provider and may change.

What You Need Before You Start

A proposed LLC name that includes "Limited Liability Company," "LLC," or "L.L.C."
A registered agent with a physical Alabama street address (no P.O. boxes)
$25 for name reservation and $200 for the Certificate of Formation filing fee, paid to the Alabama Secretary of State
Access to the Secretary of State Online Services portal, or the paper Certificate of Formation form if filing by mail
An EIN application (free, done directly through the IRS)
An operating agreement template or attorney to draft one (not filed with the state, but you should have one)
Knowledge of which county your business will operate in, for the local business privilege license

Step-by-Step: How to Form an LLC in Alabama

1. Choose and Check Your LLC Name

Under Ala. Code Section 10A-1-5.06, your name must contain "Limited Liability Company," "LLC," or "L.L.C." It also has to be distinguishable from every other name already on file with the Secretary of State (Section 10A-1-5.03). Search the existing database at the Alabama Secretary of State business entity search before you fall in love with a name. If your name implies a licensed profession (like "Engineering" or "Law"), you'll need to show evidence of that Alabama license. Names referencing banking or insurance require a letter from the relevant state commissioner.

2. Reserve Your Name

Alabama is unusual here: you can't just file your Certificate of Formation with a name you like. You must first reserve the name and attach a copy of the Certificate of Name Reservation to your formation filing. The reservation fee is $25, filed through the Alabama Secretary of State. Confirm the current reservation period on the Secretary of State's site before you file, since it isn't listed in every version of the fee schedule.

3. Appoint a Registered Agent

Every Alabama LLC needs exactly one registered agent listed on the Certificate of Formation. The registered office has to be a physical street address in Alabama, not a P.O. box, and you must list the county where that address sits. You can serve as your own registered agent if you have an Alabama street address and are willing to be reachable during business hours, or you can hire a commercial registered agent service, which typically runs $100 to $300 a year. If you ever need to change your registered agent later, that's a separate $100 filing.

4. File the Certificate of Formation

This is the actual formation document: the Domestic Limited Liability Company Certificate of Formation, governed by Ala. Code Section 10A-5A-2.01. The filing fee is $200. You have two filing paths:

Online, through the Secretary of State Online Services portal (operated by Alabama Interactive). The official form language notes you can file "in the time it takes to type the request," and online filings are processed in real time.
By mail, using the paper form. Mailed filings are processed in the order received, and the Secretary of State doesn't publish a guaranteed turnaround window for paper submissions.

There's no separate expedited-service fee listed on the current fee schedule. If speed matters, file online rather than by mail.

5. Draft an Operating Agreement

Alabama doesn't require you to file an operating agreement with the state, but you should still have one, even as a single-member LLC. It documents ownership percentages, management structure, and what happens if a member leaves or the business dissolves. Banks often ask to see it when you open a business account, and it's one of the first things a court looks at if anyone ever tries to argue your LLC isn't a real separate entity from you personally.

6. Get an EIN From the IRS

An Employer Identification Number is free and takes a few minutes to get online directly through the IRS. You'll need it to open a business bank account, hire employees, and file federal taxes, even if you're a single-member LLC with no employees.

7. Register for Alabama State Taxes

Register through My Alabama Taxes, the Alabama Department of Revenue's online portal. Registration is free, and account numbers typically arrive within 3 to 5 days. What you register for depends on your business:

Sales tax permit: required if you sell tangible personal property. The state general rate is 4%, with reduced rates for food (2%), automotive vehicles (2%), and certain machinery. Counties and municipalities layer on additional local sales tax ranging from 0.10% to 5%, so your effective rate depends on where you're located.
Alabama Business Privilege Tax: administered by the Department of Revenue, this is separate from the one-time formation fee. The rate runs $0.25 to $1.75 per $1,000 of net worth in Alabama, capped at $15,000 for most entities. For tax years beginning after December 31, 2023, if your calculated tax due is $100 or less, you're fully exempt and don't even need to file a return (Act 2022-252). If you do owe it, it's filed on Form PPT, due two and a half months after the start of your tax year, which is March 15 for calendar-year LLCs.

8. Get Your County Business License

Alabama has no single statewide business license from the Secretary of State. Instead, Title 40, Chapter 12 of the Code of Alabama requires a business privilege license from the county probate judge or license commissioner in every county where you conduct business. This is separate from any city or municipal license, which is administered locally. Check with your county's probate office directly, since license categories and costs vary by business type and county.

9. Open a Business Bank Account

Once you have your filed Certificate of Formation and EIN, open a dedicated business checking account. Mixing personal and business funds is one of the fastest ways to undermine the liability protection an LLC is supposed to give you.

10. Handle Ongoing Compliance

Alabama LLCs currently have no separate annual report requirement and no annual report fee. Your main recurring obligation is the Business Privilege Tax return (Form PPT) each year if you owe more than the $100 exemption threshold, plus whatever sales tax filings your business type requires through My Alabama Taxes.

Tips and Common Mistakes to Avoid

Don't skip the name reservation step. Alabama requires the Certificate of Name Reservation to be attached to your Certificate of Formation. Filing without it is a common reason submissions get rejected.
Don't use a P.O. box for your registered agent address. Alabama requires a physical street address in the state.
Don't assume you need to file an annual report. Alabama doesn't currently require one for LLCs, unlike many other states, so don't pay a third-party service to file something that isn't due.
Don't forget the county license. Because there's no statewide business license, it's easy to form your LLC with the state and forget the separate county-level privilege license requirement.
File online if timing matters. Mailed filings go in a queue with no published turnaround estimate, while online filings through the Secretary of State's portal process in real time.

What to Expect

If you file online with all documents in order, including your attached name reservation certificate, you may generally expect your Alabama LLC to be formed quickly, often the same day. Mailed filings tend to take longer, and processing times can vary depending on filing volume at the Secretary of State's office. Your LLC's liability protection and tax treatment can also depend on details specific to your situation, so these results aren't guaranteed for every business.

Helpful Resources

This article is for general informational purposes only and does not constitute legal or tax advice. Alabama LLC requirements and fees can change, and your specific situation may call for guidance from a licensed attorney or CPA. Verify current fees and forms directly with the Alabama Secretary of State and Alabama Department of Revenue before filing.