How to form an LLC in Alabama

Alabama makes name reservation mandatory: under Ala. Code § 10A-1-4.02(f), you need a Certificate of Name Reservation before you file formation documents, so a new Alabama LLC typically starts with two state filings. By mail, the state fees total 225(25 for the reservation and $200 for the Certificate of Formation), both set by Ala. Code § 10A-1-4.31.

The ongoing side is short. Alabama LLCs do not file an annual report with the Secretary of State, and Act 2022-252 ended Business Privilege Tax filing for entities whose calculated tax is $100 or less, for tax years beginning after December 31, 2023.

Alabama LLC formation requirements

Five items are required, though the LLC agreement can be oral or implied; the EIN depends on structure.

Certificate of Formation filing fees

The $200 fee on the SOS fee schedule applies online or on paper; online adds portal payment charges.

The fee schedule lists no expedited option for LLC formations. Check the Alabama business entity records after filing; your status changes to "Exists" once processed.

Step-by-step LLC formation process

The five steps run in order, because the reservation certificate from step 1 must be attached to the Certificate of Formation in step 3.

Step 1: Reserve your LLC name

Your name must include "Limited Liability Company," "LLC," or "L.L.C." under § 10A-1-5.06 and be distinguishable on SOS records from existing and reserved names under § 10A-1-5.03. Names using "bank," "trust," or "insurance" can need regulator approval, such as from the State Banking Department. The reservation lasts one year from acceptance under § 10A-1-5.14.

Step 2: Appoint a registered agent

Ala. Code § 10A-1-5.31 requires every LLC to designate and continuously maintain a registered agent and registered office in Alabama:

• The agent can be an Alabama resident or a domestic or foreign entity registered to transact business in Alabama.

• The registered office must be an Alabama street address where the process can be personally served; the SOS forms bar PO boxes.

• Changing agents later means filing a statement of change under § 10A-1-5.32, signed by the new agent, with a $100 state fee.

You can serve as your own agent at no cost, but your address goes on the public record; see Alabama registered agent requirements for the trade-offs.

Step 3: File the Certificate of Formation

The Certificate of Formation creates the LLC. Under Ala. Code § 10A-5A-2.01(a), which applies notwithstanding the general rules in § 10A-1-3.05, it states:

• The LLC name

• The registered office's Alabama street address and county

• The registered agent's name

• That the LLC has at least one member

• Any series designation and other matters the members choose to include

No purpose statement is required, and an organizer signs under § 10A-5A-2.04. The SOS formation form requires a copy of the Name Reservation Certificate, so match the name character for character. A delayed effective date under § 10A-1-4.12 can be up to 90 days after signing.

Step 4: Create an operating agreement

Alabama law calls this the LLC agreement, and § 10A-5A-2.01(d) says one "shall be entered into," but § 10A-5A-1.02(l) lets it be written, oral, or implied, and the state never files it. A written agreement matters because, under § 10A-5A-1.08(b)(2), only a written agreement can limit or eliminate liability for breach of contract or fiduciary duties. Provisions worth writing down include:

• Ownership percentages and capital contributions

• Management structure and voting

• Profit and loss allocation and distributions

• Member admission, withdrawal, and dissolution procedures

Banks also typically ask for one before opening a business account.

Step 5: Obtain required licenses and permits

Tax and local registrations run through separate agencies.

• Get a free Employer Identification Number (EIN) using Form SS-4 or the online application, which issues the number immediately; the IRS says forming the entity with the state first avoids delays.

• LLCs whose calculated Business Privilege Tax exceeds $100 file Form BPT-IN within 2 1⁄2 months after organizing; the Alabama Business Privilege Tax guide covers the calculation.

• Sellers of taxable goods or services register through the My Alabama Taxes portal.

• County business privilege licenses come from the county probate office, per the ADOR business license page; cities license separately.

• Domestic LLCs no longer file beneficial ownership reports; FinCEN's final rule exempting U.S. companies took effect August 14, 2026.

Professional and industry licenses come from the relevant state board.

Alabama LLC ongoing compliance requirements

After formation, an Alabama LLC keeps a registered agent in place and files a Business Privilege Tax return in any year its calculated tax exceeds $100.

• No annual report: Alabama LLCs do not file one with the Secretary of State. Act No. 2024-213 repealed the separate corporate requirement effective October 1, 2024; see Alabama annual report filing rules.

• No return or payment is due if the calculated tax is $100 or less, per the Business Privilege Tax page.

• Above $100, the ADOR due dates page ties each return to the corresponding federal return. For calendar-year filers, LLCs taxed as partnerships file Form PPT generally by March 15, single-member LLCs disregarded for federal tax file by their owner's federal due date (generally April 15 for an individual owner), and LLCs taxed as corporations file Form CPT with the corporate return. These dates track the federal deadline; confirm them against current ADOR instructions each year.

• Name or other Certificate of Formation changes require a $100 amendment.

Rerun the calculation each year, since the $100 threshold decides whether a return is due.

Let Discern handle your Alabama LLC formation

Alabama formation takes two filings in a fixed order plus a yearly Business Privilege Tax check. Discern's entity formation service handles the name reservation and Certificate of Formation for $99 plus state fees, and Discern's registered agent service covers Alabama within the $350 per state registration, per year subscription, with change of agent filings free. For the Business Privilege Tax, Discern provides deadline tracking and notifications, while the return stays with you or your tax preparer.

When the LLC registers in other states, Discern handles foreign registrations across all 51 jurisdictions in under an hour and annual report filings across jurisdictions in less than 15 minutes. Customers with 200+ registrations spend 5 to 10 minutes annually on compliance.

Book a demo with Discern to see how formation and ongoing SOS compliance run from one platform.

FAQs about LLC formation in Alabama

These answers cover what founders ask most after working through the steps above.

How long does it take to form an LLC in Alabama?

The Secretary of State does not publish a guaranteed processing timeline, and its current fee schedule lists no expedited option for LLC formations. Check the SOS business entity records after filing; your status changes to "Exists" once the Certificate of Formation is processed.

Do I need an attorney to form an LLC in Alabama?

Most people handle the paperwork themselves or use a filing service unless they have a complex structure or outside investors who need customized terms.

What's the difference between a Certificate of Formation and an operating agreement?

The Certificate of Formation is filed publicly with the Secretary of State and creates the LLC, while the operating agreement is an internal contract among members that never gets filed.

What happens if I don't file my Business Privilege Tax return?

If your calculated tax is $100 or less, nothing; no return is required. If it exceeds $100, an unfiled return can bring Department of Revenue late-filing penalties and interest.