Forming a Limited Liability Company (LLC) in Alabama can be an excellent decision for your business. LLCs offer many benefits, including liability protection for personal assets, tax savings, and ownership flexibility that corporations simply can’t provide.
Unfortunately, starting an LLC is daunting by design. The idea of paperwork and fees causes some business owners to shy away from forming an LLC. Luckily, it’s not nearly as complicated as you might think, and Alabama LLC fees and primarily one-time and very affordable for what you get.
In this post, we’ll discuss everything you should know about LLC fees in Alabama, including:
Let’s get started.
Business Name Reservation Fees
Alabama is home to more than 445,000 employer and nonemployer establishments, so before you add your LLC to the list, you need to make sure your organization’s name is available.
Check out Alabama’s business entity records page to see if your selected name is distinguishable from other organizations. Also, because it’s an LLC, your organization’s name must include either “Limited Liability Company,” “LLC,” “L.L.C.,” “LC,” or “L.C.”
Next, look up your organization’s name in the Trademark Electronic Search System (TESS) database. If another company is using your name, you could risk trademark infringement, so it never hurts to double-check.
If you’re good to go on both fronts, you fill out a name reservation request form. You’re not required to reserve your LLC’s name, but we recommend it just in case. If another organization secures your chosen name while you’re forming your LLC, you will have to choose a different name and start the process all over again. It only costs $25 to reserve your business name for 120 days, which should be ample time to get your paperwork in order.Register Your “Doing Business As” Name
Your LLC’s legal name is required on all your official documents, including your registered agent form and articles of organization. However, you’re not obligated to use it in your day-to-day communication. If you wish to establish brand recognition with a more memorable, conversational name, you can file for a “Doing Business As” (DBA) name.
Registering your DBA name costs $30.
Registered Agent Fees
Your registered agent is an individual or commercial entity responsible for handling any state and legal correspondence on behalf of your LLC. To be a registered agent, you must have a physical address in Alabama. You cannot only have a P.O. Box.
Before you agree to become your organization’s registered agent, please note that the physical address of the registered agent becomes public knowledge once you officially form your LLC. For privacy reasons, many business owners opt to work with a commercial registered agent service instead.
If you or another member of your LLC becomes your organization’s registered agent, you won’t have to pay anything. Otherwise, Alabama registered agent services typically charge between $100 and $300 per year.
LLC Filing Fees In Alabama: Articles Of Organization
Once you have selected your business name and registered agent, you’re ready to file your articles of organization. The term “articles of organization” may sound intimidating, but it’s simply a formal name for the legal documents that provide basic information about your LLC.
To complete your articles of organization, you will need to provide:
Be sure to thoroughly review this document before filing it with Alabama’s Secretary of State. If you make an error, you might end up having legal issues down the road.
Processing your articles of organization is a one-time fee of $200.
Business Licensing Fee In Alabama
If you want to operate your LLC in Alabama, you need to obtain the proper permits and licenses. In Alabama, businesses are required to obtain a business privilege license in every county they plan on operating in. Your business privilege license is valid for one year, from October 1st through September 30th.
The fees for these licenses vary by county, so check your local government’s website, as well as the websites of any county you plan on doing business in.
Operating Agreement Costs
Alabama doesn’t require you to submit your operating agreement when forming your LLC. However, having one is strongly recommended, whether you’re an organization with hundreds of members or a single-member LLC with no employees.
Your operating agreement outlines the rules, regulations, and liabilities. It’s sort of like your organization’s constitution. It defines:
Having an operating agreement can be a lifesaver if you ever have to resolve a legal or financial dispute. Without one, vital decisions may be left to the courts, and their rulings may not be in the best interest of your or your LLC.
You can draft an operating agreement for free, but given the importance of this document, you should consider having a lawyer draft one for you or read through your current one, just in case.
Sales Tax Registration Fees
If you’re selling tangible personal property, you’re required to obtain an Alabama sales tax license. If you’re not sure if this applies to you, visit Alabama’s Department of Revenue website to see if you have a “sales tax nexus.”
To file for a sales tax permit, you need the following information:Luckily, it won’t cost you anything to apply for a sales tax permit, but other fees may apply.
Annual LLC Filing Fees In Alabama
Once your LLC is up and running, you must remain in good standing with the local, state, and federal governments. To do so, you’ll be required to file an annual report. This report requires you to submit much of the same information you filed when forming your LLC in the first place, including:
Your annual file costs $200 to file, and you should receive an email from the Secretary of State notifying you when it’s due.
While no one likes to pay additional fees, Alabama’s annual fee is far more affordable than in some other states. For example, Tennessee LLC fees are $300 plus an additional $50 for each partner or owner, while California LLC fees are $800+ each year!Total Cost Of LLC Fees In Alabama
To recap, here’s a list of the LLC fees we’ve covered so far and how often they’re due:
Fee Type | Cost | HOW OFTEN |
|---|---|---|
Business name reservation | $25 | One time |
DBA name designation | $30 | One time |
Articles of organization filing fee | $200 | One time |
Operating agreement costs | $0, or $50 - $200 or more | One time |
Statutory agent fees | $0, or $100 - $300 | Annually |
Business license fee | Varies | Annually |
Sales tax registration fees | $0 | Annually |
Annual fees | $200 | Annually |
Additional FAQs: Alabama LLC Fees
Still have questions about LLC fees in the heart of dixie or just questions about LLCs in general? We’ve got answers:
If you already have all the information, forming an LLC in Alabama can be done in a matter of hours. However, to officially become an LLC, you need to get approval from the Secretary of State’s office, which usually takes five to seven business days.
LLCs offer you flexibility concerning your tax classification, allowing business owners to adopt the tax status of other business entities, like sole proprietorships, C corporations, and S corporations. By default, the IRS will treat your LLC as a disregarded entity, meaning that you’ll enjoy the same tax benefits as a sole proprietorship unless you opt to be taxed as a corporation
This isn’t a requirement, but it is something you should think about—especially if most of your customers are going to find you online. Check your business domain name availability and see how much it’ll cost by running a search on who.is. This site lists the availability and price for domain names ending in:
Banks and lending institutions usually require a Certificate of Compliance (also known as a Certificate of Good Standing). You can obtain a Certificate of Compliance for $14 ($10 for the certificate and a $4 processing fee).
Paying yourself from an LLC is a straightforward process. All you need to do is move a portion of your organization’s cash reserve from the business account to your personal account. If you’re also paying other partners of your LLC, distribute the funds according to the terms outlined in your operating agreement.
Conclusion: Alabama LLC Fees
By identifying and understanding how much it will cost to start and maintain your LLC in Alabama, you’re on your way to running a successful organization! To capitalize on that success, check out The Lazy Man’s Guide to Living The Good Life, and discover how to optimize your chances of running a thriving business/
Are you ready to form an LLC in Alabama and reap the many benefits that come from it?
