How to Form an LLC in Alabama (2026)
Reviewed by DocDraft Legal Team · Alabama · Last updated 2026-08-06
A limited liability company (LLC) is a business structure that legally separates the company from the people who own it, so the owners are generally not personally responsible for the company's debts. Forming one in Alabama means filing a formation document with a state agency and paying its fee to bring the company into legal existence. In Alabama you create an LLC by filing the Certificate of Formation with the Secretary of State, Business Entities Division, and paying a $200 filing fee. Two features set Alabama apart. First, the formation document is called a Certificate of Formation, not the Articles of Organization that many states use. Second, Alabama does not require LLCs to file a recurring annual report with the Secretary of State, but it does levy a Business Privilege Tax with a $50 annual minimum. Alabama LLCs are governed by the Alabama Limited Liability Company Law of 2014, in the Code of Alabama Title 10A, Chapter 5A. This guide explains what an LLC is, the exact Alabama steps and fees, and the deadlines that keep the company in good standing.
Find out where you stand in Alabama
Where are you in forming your LLC?
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How do you form an LLC in Alabama?
File the Certificate of Formation with the Alabama Secretary of State, Business Entities Division, and pay the $200 filing fee. You must name a registered agent with an Alabama street address. Alabama does not require newspaper publication, so the LLC exists once the Secretary of State records the certificate.
How much does it cost to form an LLC in Alabama?
The core cost is the $200 fee to file the Certificate of Formation with the Alabama Secretary of State. Reserving your business name in advance costs an additional $25. After formation, an Alabama LLC owes the Business Privilege Tax, which carries a $50 annual minimum, separate from the one-time filing fee.
Does an Alabama LLC have to file an annual report?
Alabama does not require LLCs to file a recurring annual report with the Secretary of State. Instead, Alabama LLCs file an annual Business Privilege Tax return with the Department of Revenue, which carries a $50 minimum tax. Keeping current on that tax is the main ongoing state obligation for an Alabama LLC.
Does Alabama require newspaper publication to form an LLC?
No. Alabama does not require an LLC to publish notice of its formation in a newspaper. This is unlike New York, Arizona, and Nebraska, where publication is a condition of forming or operating. In Alabama the Certificate of Formation filing with the Secretary of State completes the formation, with no separate publication step.
Alabama LLC formation at a glance
You form an Alabama LLC by filing the Certificate of Formation with the Secretary of State, Business Entities Division, for a $200 filing fee. Alabama calls the formation document a Certificate of Formation, not the Articles of Organization used in many other states. Before filing, you can reserve your business name with the Secretary of State for $25. What sets Alabama apart on the ongoing side is that there is no recurring annual report to the Secretary of State. Instead, every Alabama LLC files a Business Privilege Tax return with the Alabama Department of Revenue, subject to a $50 annual minimum. Every LLC must name and maintain a registered agent with a physical Alabama street address to receive lawsuits and official notices. Alabama does not require newspaper publication. The governing statute is the Alabama Limited Liability Company Law of 2014, Code of Alabama Title 10A, Chapter 5A, and the Business Privilege Tax is imposed under Title 40, Chapter 14A.
Forming a two-owner Alabama LLC, step by step
Suppose two friends in Birmingham want to open a small design studio as an LLC. First they search the Alabama Secretary of State's business entity records to confirm their name is available and includes a designator such as LLC, and they can reserve the name for $25 while they prepare paperwork. Next they appoint a registered agent: one owner lives in Alabama and agrees to serve, using an Alabama street address, not a P.O. box, where legal papers can be delivered during business hours. They then file the Certificate of Formation with the Secretary of State, Business Entities Division, and pay the $200 filing fee. The LLC legally exists once the Secretary of State records it. Because they have two members, they also write an operating agreement setting each owner's percentage and how profits split, even though Alabama does not require them to file it. They apply to the IRS for a free EIN so the partnership can file taxes and open a bank account. Finally, because Alabama has no recurring Secretary of State annual report, they calendar the Business Privilege Tax return with the Alabama Department of Revenue, which carries a $50 annual minimum, so the company stays in good standing.
Relevant Laws
Alabama Limited Liability Company Law of 2014 (Ala. Code Title 10A, Chapter 5A)
This chapter governs the formation, management, and dissolution of every Alabama LLC. It sets who may form an LLC, the required contents of the Certificate of Formation, the registered agent requirement, and the default rules for member-managed and manager-managed companies. It replaced Alabama's earlier LLC act and applies to LLCs formed on or after January 1, 2015.
Certificate of Formation (filed with the Secretary of State)
An Alabama LLC is formed by delivering a Certificate of Formation to the Secretary of State, Business Entities Division, for filing. The certificate states the LLC's name, its registered agent and registered office, and whether it is member-managed or manager-managed. The filing fee is $200, and the LLC comes into existence when the Secretary of State records the certificate.
Registered agent requirement
Alabama requires every LLC to designate and continuously maintain a registered agent with a physical Alabama street address, not a P.O. box. The agent, an individual residing in Alabama or an authorized business entity, receives lawsuits and official notices for the company. The agent's Alabama address goes on the Certificate of Formation.
Name reservation (Ala. Secretary of State)
Alabama lets you reserve an available LLC name with the Secretary of State before you file the Certificate of Formation. The name reservation fee is $25. The name must include a designator such as LLC or Limited Liability Company and must be distinguishable from other entities on record. Reserving the name holds it while you prepare your formation paperwork.
Alabama Business Privilege Tax (Ala. Code Title 40, Chapter 14A)
Alabama imposes a Business Privilege Tax on LLCs doing business in or organized under Alabama law, administered by the Department of Revenue. The tax is based on the entity's net worth apportioned to Alabama, subject to a $50 annual minimum. Every Alabama LLC files a Business Privilege Tax return, which functions as the main recurring state obligation in place of an annual report.
IRS federal tax classification (default pass-through)
The IRS does not tax the LLC as a separate category. By default a single-member Alabama LLC is disregarded and taxed like a sole proprietorship, and a multi-member LLC is taxed as a partnership, with income passing through to the owners. An LLC may instead elect S corporation or C corporation treatment. This federal classification is separate from Alabama's Business Privilege Tax, which applies either way.
Regional Variances
How forming an LLC in Alabama differs from other states
The document is a Certificate of Formation
Alabama calls its formation document the Certificate of Formation, filed with the Secretary of State, Business Entities Division. Many states call the same document the Articles of Organization, and a few use a Certificate of Organization. The label differs, but the function is the same: it is the filing that brings the LLC into legal existence.
No recurring annual report to the Secretary of State
Alabama does not require LLCs to file an annual report with the Secretary of State, unlike most states that charge a yearly report fee. The recurring obligation in Alabama is the Business Privilege Tax return filed with the Department of Revenue, with a $50 annual minimum. The tax return, not a report, keeps the company in good standing.
A $200 filing fee on the higher end
Alabama's $200 Certificate of Formation fee sits above the national middle. Several states charge well under $100 to form, while others run higher. The fee is a one-time cost, so the more meaningful long-run difference between states is usually the recurring tax or report, which in Alabama is the $50 minimum Business Privilege Tax.
No newspaper publication requirement
Alabama does not require you to publish notice of formation in a newspaper. New York, Arizona, and Nebraska do, which adds cost and a deadline. An Alabama LLC is complete once the Secretary of State records the Certificate of Formation, with no publication step.
Name reservation before filing
Alabama offers a name reservation with the Secretary of State for a $25 fee, letting you hold an available name while you prepare the Certificate of Formation. States handle name reservation differently and charge different fees, so confirm Alabama's current process before you rely on it.
Suggested Compliance Checklist
Confirm your LLC name is available and compliant
Before filing days after startingSearch the Alabama Secretary of State's business entity records to confirm your desired name is not already in use and that it includes a required designator such as LLC or Limited Liability Company. Avoid restricted words that need special approval. You can reserve an available name with the Secretary of State for a $25 fee while you prepare your Certificate of Formation.
Appoint a registered agent
Before filing days after startingAlabama requires a registered agent with a physical Alabama street address who is available during business hours to accept legal documents. Decide whether you, a co-owner who lives in Alabama, or a commercial registered agent service will serve. You will name the agent on the Certificate of Formation, so settle this first.
File the Certificate of Formation with the Secretary of State
To create the LLC days after startingFile the Certificate of Formation with the Alabama Secretary of State, Business Entities Division, and pay the $200 filing fee. The LLC legally exists only once the Secretary of State records it. Keep the recorded confirmation as proof of formation.
Adopt an operating agreement
At or soon after formation days after startingPut the ownership percentages, profit split, management structure, and exit rules in writing. Alabama's LLC law lets members set their own rules through an operating agreement, but you do not file it with the state. It governs how the LLC runs and overrides the law's default rules. Attorney review of the agreement is available as an option through DocDraft.
Get a federal EIN from the IRS
Before opening a bank account or hiring days after startingApply for an Employer Identification Number free on the IRS website. Multi-member LLCs, LLCs with employees, and LLCs electing corporate tax treatment need one. Single-member LLCs with no employees usually get one anyway to open a business bank account and keep business and personal finances separate.
File the Business Privilege Tax return with the Department of Revenue
Annually, per Department of Revenue schedule days after startingAlabama LLCs file a Business Privilege Tax return with the Alabama Department of Revenue under Title 40, Chapter 14A. The tax is based on net worth apportioned to Alabama, subject to a $50 annual minimum. This return is the main recurring state obligation in place of an annual report, so calendar it to keep the LLC in good standing.
Confirm local licenses and Alabama business tax registrations
Before doing business days after startingDepending on your activity and location, you may need a business privilege license from the county probate office, a city business license, and registration with the Alabama Department of Revenue for sales or other taxes. Check the requirements for your county and city before you begin operating, since these vary across Alabama.
| Task | Description | Document | Days after starting |
|---|---|---|---|
| Confirm your LLC name is available and compliant | Search the Alabama Secretary of State's business entity records to confirm your desired name is not already in use and that it includes a required designator such as LLC or Limited Liability Company. Avoid restricted words that need special approval. You can reserve an available name with the Secretary of State for a $25 fee while you prepare your Certificate of Formation. | - | Before filing |
| Appoint a registered agent | Alabama requires a registered agent with a physical Alabama street address who is available during business hours to accept legal documents. Decide whether you, a co-owner who lives in Alabama, or a commercial registered agent service will serve. You will name the agent on the Certificate of Formation, so settle this first. | - | Before filing |
| File the Certificate of Formation with the Secretary of State | File the Certificate of Formation with the Alabama Secretary of State, Business Entities Division, and pay the $200 filing fee. The LLC legally exists only once the Secretary of State records it. Keep the recorded confirmation as proof of formation. | - | To create the LLC |
| Adopt an operating agreement | Put the ownership percentages, profit split, management structure, and exit rules in writing. Alabama's LLC law lets members set their own rules through an operating agreement, but you do not file it with the state. It governs how the LLC runs and overrides the law's default rules. Attorney review of the agreement is available as an option through DocDraft. | llc-operating-agreement | At or soon after formation |
| Get a federal EIN from the IRS | Apply for an Employer Identification Number free on the IRS website. Multi-member LLCs, LLCs with employees, and LLCs electing corporate tax treatment need one. Single-member LLCs with no employees usually get one anyway to open a business bank account and keep business and personal finances separate. | - | Before opening a bank account or hiring |
| File the Business Privilege Tax return with the Department of Revenue | Alabama LLCs file a Business Privilege Tax return with the Alabama Department of Revenue under Title 40, Chapter 14A. The tax is based on net worth apportioned to Alabama, subject to a $50 annual minimum. This return is the main recurring state obligation in place of an annual report, so calendar it to keep the LLC in good standing. | - | Annually, per Department of Revenue schedule |
| Confirm local licenses and Alabama business tax registrations | Depending on your activity and location, you may need a business privilege license from the county probate office, a city business license, and registration with the Alabama Department of Revenue for sales or other taxes. Check the requirements for your county and city before you begin operating, since these vary across Alabama. | - | Before doing business |
Frequently Asked Questions
An LLC, or limited liability company, is a business structure that legally separates the company from its owners. The owners, called members, are generally not personally responsible for the company's debts or lawsuits, so a creditor usually cannot reach a member's home or personal savings for a business obligation. In Alabama, LLCs are created under the Alabama Limited Liability Company Law of 2014, in the Code of Alabama Title 10A, Chapter 5A. The structure pairs that liability protection with pass-through taxation and lighter paperwork than a corporation.
Alabama simply uses a different name for the same filing. Many states call the document that creates an LLC the Articles of Organization, but Alabama's LLC law names it the Certificate of Formation. You file it with the Alabama Secretary of State, Business Entities Division, for a $200 fee. It lists the LLC's name, its registered agent and registered office, and whether the company is member-managed or manager-managed. The LLC exists once the Secretary of State records it.
Yes. Alabama levies a Business Privilege Tax on LLCs organized under or doing business in the state, administered by the Department of Revenue under Title 40, Chapter 14A. The tax is based on the LLC's net worth apportioned to Alabama and carries a $50 annual minimum, so even a small or inactive LLC owes at least $50 each year. Every Alabama LLC files a Business Privilege Tax return, which is the company's main recurring state obligation.
Yes. Alabama lets you reserve an available business name with the Secretary of State before you submit your Certificate of Formation. The name reservation fee is $25, and it holds the name while you prepare your paperwork. The name must include a designator such as LLC or Limited Liability Company and must be distinguishable from other entities already on record. Reserving is optional, but it prevents someone else from taking the name first.
Alabama requires every LLC to name and continuously maintain a registered agent with a physical Alabama street address, not a P.O. box. The agent can be you, a co-owner who lives in Alabama, or a commercial registered agent service authorized to do business in the state. The agent must be available during business hours to accept lawsuits and official notices, and you list the agent and registered office on the Certificate of Formation.
One person can form an Alabama LLC. The state recognizes both single-member and multi-member LLCs, and the Certificate of Formation and $200 filing fee are the same either way. The main difference is federal tax treatment: the IRS treats a single-member Alabama LLC as a disregarded entity taxed like a sole proprietorship, while a multi-member LLC is taxed as a partnership. Both still owe Alabama's $50 minimum Business Privilege Tax.
No. You can file the Certificate of Formation with the Alabama Secretary of State yourself and follow the steps in this guide without a lawyer. That said, a multi-owner operating agreement, a business holding significant assets, or an unusual ownership structure can benefit from professional review. DocDraft provides guided LLC documents, and attorney review is available as an option if you want a licensed attorney to check your paperwork before you file.
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