How Much Does an LLC Cost in Alabama? (Filing Fees Guide)

If you are considering establishing an LLC in Alabama, domestic LLC filings cost $200, while foreign LLC formation is $150. In addition to these initial costs, all LLCs in Alabama must pay a $10 annual report fee to remain in good standing with the state.

But there are a few optional costs you might want to consider.

If you’re out of state and need a registered agent, factor that in. You might also want to reserve your business name or register a DBA if you plan to operate under a different name.

Here’s the surprising part:

Many people assume that creating an LLC is complicated and pricey.

However, with these manageable fees and simple requirements, starting an LLC in Alabama is more accessible than you might think.

How Much Does an LLC Cost in Alabama?

If you’re looking to form an LLC in Alabama, here’s a comprehensive breakdown of the costs you can expect:

• Formation Fee: The filing fee for domestic LLCs is $200 while forming a foreign LLC in Alabama costs $150.
• Annual Report Fee: Each year, you’ll need to file an annual report with a minimum fee of $10. The exact amount can vary depending on your LLC’s federal tax return.
• Registered Agent Fee: There are no extra fees if you choose to be your Registered Agent or appoint someone you know to take on the role for your LLC. Depending on your chosen provider, this service can range from $0 to $300 annually. A registered agent is required to receive legal documents for your LLC.
• Alabama LLC Name Registration: Registering a unique LLC name typically costs around $28.

Understanding these costs helps you plan effectively and ensures you’re prepared for your Alabama LLC’s initial setup and ongoing maintenance.

LLC Costs in Alabama (Formation Fees)

Here’s a summary of the Alabama LLC’s main requirements and their fees:

Alabama LLC Requirements	Cost
Certificate of Formation	$200
EIN Number	$0 (free from IRS)
Operating Agreement (optional)	$0 (with Northwest)
Annual Report Fee	$10/annually
LLC Name Reservation (optional)	$28
Foreign LLC Registration (optional)	$150
Alabama Fictitious Name (DBA) (optional)	$30
Taxes	Varies
State Business License Fee	Varies depending on the type of business and its location
Registered agent services	$0-$125 (Northwest)
LLC formation service	$39
Total LLC Costs in Alabama	$160 – $382

Total LLC costs in Alabama range from $160 to $382, which might surprise you! If you take the DIY route and skip the optional extras, you could get started for as low as $160. However, if you invest in additional services and requirements, your costs could increase to between $200 and $300.

Let’s dive into the details.

The most significant mandatory expense is the Certificate of Formation, which will set you back $200. You’ll also need to budget for an Annual Report Fee of $10 annually.

On the flip side, there are several optional expenses that you might want to consider based on your business needs. Getting an EIN? That’s a bonus—it’s free from the IRS!

While having an Operating Agreement is highly recommended for clarity and protection, you can create one at no cost if you utilize services like Northwest.

If you’re considering hiring a registered agent, remember that you can either serve as your agent at no cost or opt for professional registered agent services, which typically range from $100 to $300.

For example, if you want to reserve your LLC name ahead of time, that will cost you $28. If you plan to register as an Alabama foreign LLC, that will cost an additional $150. And if you need a fictitious name (DBA), expect to pay around $30.

Don’t forget about taxes and state business license fees, which vary depending on your business activities. If you prefer an LLC formation service, that could add about $39 to your expenses.

While you can certainly keep your startup costs low by handling everything and skipping the optional services, you must be aware of the mandatory and optional fees.

So, that’s the rundown on what it costs to start a new LLC in Alabama. Want to learn more about the key requirements? Keep reading as I dive into the details below!

Alabama LLC Name Reservation ($28)

The first step in starting your LLC in Alabama is to reserve your business name. This can be done online for a fee of $28. Reserving your name secures it for up to one year, ensuring no other business can take it while setting up your LLC.

Here’s how the process works:

• File Online: The quickest way is through the Alabama Secretary of State’s website.
• One-Time Fee: The $28 payment is a one-time fee for the reservation.
• Immediate Approval: Filing online grants immediate approval for your name reservation.

If you prefer to file by mail, you might save a bit, as the fee is only $25. While reserving a name isn’t required, it’s a smart move if you want peace of mind knowing your chosen name is secure when you’re ready to file your LLC.

Before reserving, make sure your name meets Alabama’s naming requirements, which include being distinct from other businesses and including “Limited Liability Company,” “L.L.C.,” or “LLC.”

LLC Operating Agreement Cost in Alabama ($0)

Creating an operating agreement for your LLC in Alabama is free. While it is not required by law, having this document is highly recommended.

An operating agreement outlines your LLC’s management structure and operating procedures. It helps clarify members’ roles and provides guidelines for daily operations.

You can create an operating agreement by following these steps:

• Outline Membership Details: List each LLC member’s names, roles, and initial contributions (if any).
• Management Structure: Decide if your LLC will be member-managed (run by the owners) or manager-managed (run by appointed managers).
• Voting Rights: Specify how voting will work, including the percentage of votes needed for key decisions and how voting power is distributed among members.
• Profit Distribution: Clearly outline how profits and losses will be shared among members, including any special allocations.
• Member Responsibilities: Define each member’s duties and obligations, including their day-to-day roles and involvement in the business.
• Ownership Changes: Detail the procedures for adding or removing members and how ownership shares can be transferred.
• Dispute Resolution: Include guidelines for handling internal conflicts or disputes among members, such as mediation or arbitration.
• Termination Procedures: Explain the steps to dissolve the LLC, distribute remaining assets, and handle outstanding debts.
• Amendment Process: Specify how changes to the operating agreement can be made and who must approve them.

Creating a detailed operating agreement ensures that everyone’s rights and responsibilities are clear, reducing potential conflicts.

While drafting this agreement is free, you may be charged if you consult with a lawyer or use an online service.

Alabama Registered Agent Fee ($0-$300/year)

In Alabama, having a registered agent for your LLC is a must.

This agent can be either an individual or a business responsible for receiving essential legal documents on your company’s behalf. You have a few options for registered agent services, and it’s important to choose wisely.

One option is to serve as your registered agent, which costs nothing. However, if you don’t have a physical address in Alabama (a requirement by law), or if you’d prefer to keep your address off public records, hiring an Alabama registered agent service is a smart move.

There are plenty of services to choose from. For example, LegalZoom charges about $249 annually, while ZenBusiness offers its service for $199 annually. Northwest Registered Agent provides a great deal, offering their service free for the first year if you hire them to form your LLC. After the first year, the cost is $125 annually, which remains competitive compared to other options.

Hiring a registered agent service is beneficial in situations like these:

• You don’t have a physical address in Alabama.
• You want to maintain privacy by keeping your address off public records. Depending on your chosen service, some companies allow you to use their address instead.

Choosing the right registered agent is key to managing your business effectively. They are crucial in promptly ensuring you receive legal notices and other critical documents.

When selecting a service, consider reliability, customer support, and cost factors. The right decision will save you stress and keep your business running smoothly.

EIN Cost in Alabama ($0 from the IRS website)

If you’re starting an LLC in Alabama, you’ll most likely need an Employer Identification Number (EIN). The good news is that you can get this number for free directly from the IRS.

To obtain your EIN, visit the IRS website and apply online. The application is quick and available on weekdays, making getting your EIN convenient and hassle-free. While you can hire a professional service to handle the application, this typically costs between $10 to $50—an easily avoidable expense if you apply directly through the IRS.

Alabama Annual Report Fee ($10/annually)

Your LLC must pay an annual report fee to stay active and in good standing with the state of Alabama. The cost is currently $10, which you’ll need to budget each year. It’s a flat fee and is essential for keeping your LLC compliant.

Here’s how it works: Your annual report is due on the 1st day of your LLC’s anniversary month.

So, if you formed your LLC in January, you must pay the fee every January. Missing this deadline could lead to your LLC being dissolved, which every business owner wants to avoid.

Be sure to mark this due date on your calendar and plan for it each year. Staying on top of this small but crucial detail will help keep your LLC running smoothly in Alabama.

Fictitious Name/DBA Cost in Alabama ($30)

In Alabama, if you want to operate your business under a name other than your legal name, you must register a DBA (Doing Business As).

The cost to register a DBA in Alabama is $30. This fee is paid when you file your application with the Alabama Secretary of State.

Here are your options for filing:

• Online: You can complete the registration on the Secretary of State’s website.
• By Mail: Download the application and send it in.
• In-Person: Visit the Secretary of State’s office to file your application directly.

You do not need to get a separate EIN (Employer Identification Number) for a DBA. Your existing EIN or personal Social Security Number suffices for tax purposes.

Before filing, ensure another business does not already use your chosen name. You can check for this on the Secretary of State’s website.

Keep your DBA registration up to date. If you change your business address or your business name, you will need to file again.

Alabama Certificate of Formation ($200)

To start a limited liability company (LLC) in Alabama, you must file the Certificate of Formation. This document is essential for legally creating your LLC in the state.

The cost to file this document is $200. This fee is a one-time payment and covers the state processing of your formation. After the initial cost, you do not need to pay any monthly or annual fees for this filing.

The Certificate of Formation requires specific information:

• Name of LLC: Must include “Limited Liability Company,” “L.L.C.,” or “LLC.”
• Registered Agent: This person or entity handles legal documents on behalf of your LLC.
• Business Address: Provide a physical address where your LLC operates.

Before filing, it’s recommended to reserve your LLC name. This ensures no one else can use it while you complete your formation. The Alabama LLC processing time is 1-2 business days.

Once you submit your Certificate of Formation and pay the fee, the Alabama Secretary of State will review your application. If approved, your LLC is officially created.

Alabama Foreign LLC Registration Fee ($150)

To register a foreign LLC in Alabama, you must pay a filing fee of $150. This fee is necessary when you submit your application to operate your LLC in the state.

To start the process, you’ll need to complete the “Foreign Limited Liability Company Application for Registration” and submit it along with the filing fee. You can pay this fee either by mail or online, depending on what’s most convenient for you.

If you choose to mail your application, send it to:

Alabama Secretary of State
Attention: Business Entities Division
P.O. Box 5616
Montgomery, Alabama 36103

Be sure to include two original copies of the application. Following the guidelines carefully will help you avoid processing delays.

Also, selecting a registered agent in Alabama is crucial for managing your LLC’s legal documents and compliance.

In addition to the filing fee, look for other potential costs, such as name reservation fees or charges for expedited processing. Staying informed about all the requirements will help ensure a smooth registration process for your foreign LLC.

Alabama State Business License Fee (varies based on industry and locality)

In Alabama, the cost of a state business license depends on your industry and where your business is located. Each city or county may have different requirements.

Here are some key points to consider:

• Industry-Specific Costs: Different industries have unique licenses and fees. For example, a restaurant will pay fees that are different from those of a retail shop.
• Local Variations: Fees can vary even within the same industry based on the local government. Check with your city or county for specific rates.

Alabama LLC Taxes (varies)

As an LLC in Alabama, you must know various taxes that may apply to your business. Here are some key taxes you might pay:

• Federal Taxes: You must pay federal income tax on the earnings of your LLC. This can vary based on your business structure and profit.
• State Income Tax: Alabama LLCs are subject to state income tax. The rate may differ based on your taxable income.
• Local Income Tax: Some cities in Alabama impose local income taxes. Check if your location applies this tax.
• Business Taxes: Alabama has a Business Privilege Tax. This tax applies to most LLCs and is based on your net worth.
• Self-Employment Taxes: If you are a member of your LLC, you might also owe self-employment taxes. This usually covers Social Security and Medicare.
• Sales and Use Tax: If your LLC sells products or provides certain services, you must collect sales tax from customers.
• Payroll Tax: If you have employees, you are responsible for payroll taxes, including federal and state withholding.
• Property Tax: Should your LLC own property, it is subject to property tax in Alabama.

Understanding these taxes will help you manage your finances and comply with state and federal laws.

Alabama LLC dissolution fee ($100)

When it’s time to dissolve your LLC in Alabama, you must pay a $100 fee to the Secretary of State. This covers the official processing of your dissolution application.

To get started, you’ll need to gather some important documents. Typically, this includes your Articles of Dissolution and meeting minutes that show all members have approved the decision to dissolve.

Having all your paperwork in order will help ensure a smooth process when you submit your fee.

Remember that there might be additional costs beyond the $100 fee. For example, if you need to check recording fees with the Judge of Probate Office, those usually start around $50.

Alabama LLC Change of Registered Agent Fee ($100)

If you need to change your registered agent in Alabama, you’ll have to pay a $100 fee. This fee is the same whether you’re moving to a new registered agent or just updating the details for your current one.

Your registered agent is like your LLC’s main point of contact. They’re responsible for receiving legal documents and important notices for your business.

Here’s how you can make the change:

Start by filling out the Change of Registered Agent form, which you can grab from the Alabama Secretary of State’s website. Then, make sure to include a $100 payment with your submission. You can send the completed form either online or by mail.

Be sure to update your registered agent information promptly to avoid missed communications or legal hiccups. Keeping up with the current regulations helps you avoid unnecessary problems and keeps your business running smoothly.

What is the Cheapest Way to Start Alabama LLC?

When you’re ready to start your LLC in Alabama, you have a few different paths to choose from, each with its own pros and cons.

First off, you can file online. This method is the simplest and most direct way to get your LLC up and running. The state filing fee for the Certificate of Formation is $200, a one-time expense.

If you want to ensure the security of your business name before proceeding, you might consider reserving it. This step involves a reservation fee of $25 to $28, and while it’s optional, it can be a good way to ensure that your preferred name is available.

Another route is the DIY approach. You can handle all the filing and paperwork yourself. This option saves you money on hiring an attorney or service but will require extra time and attention to detail.

Remember to consider other potential fees. Depending on the nature of your business, you might need additional licenses or permits, which can vary depending on your location and business type.

Should You Use an LLC Formation Service in Alabama? (here’s why)

Using an LLC formation service in Alabama can be a smart choice for many reasons. These services can simplify the process of setting up your LLC.

• Peace of Mind: Using an LLC formation service like Northwest Registered Agent means experts handle your paperwork, helping you avoid mistakes and delays.
• Privacy Benefits: Many services keep your personal information private, protect your identity, and keep your business address confidential.
• Compliance Tools: Formation services often provide tools and reminders to help you comply with Alabama’s regulations and meet important deadlines.
• Cost Considerations: While a formation service can save you time and reduce stress, it comes with a fee. Weigh this cost against the benefits.
• DIY Option: If you prefer a hands-on approach and are confident in navigating the process, you might form your LLC without a service.
• Expert Support: If you’re busy or unsure about the process, the support from attorneys and experts provided by these services can be invaluable.
• Evaluate Your Needs: Consider the pros and cons based on your comfort level and specific situation to decide what’s best for you as a business owner.

Weigh the pros and cons based on your comfort level and situation. Your choice should align with your needs as a business owner.

Frequently Asked Questions

What Are The Ongoing LLC Operational Costs in Alabama?

Forming an LLC in Alabama involves ongoing costs you should plan for. You’ll need to pay an annual report fee of about $10 and a Business Privilege Tax, which ranges from $100 to $300 based on your revenue.

If you hire a registered agent, expect to pay $100 to $300 annually. Additionally, professional services like bookkeeping can cost $300 to $1,000 or more per year. Budgeting for these expenses helps keep your business compliant and running smoothly.

How much does it cost to reinstate an LLC in Alabama?

A limited liability company (LLC) cannot be reinstated since Alabama has no administrative dissolution. You must complete the formation process if your LLC wishes to do business again after voluntary dissolution.

How much does it cost to dissolve an LLC in Alabama?

Dissolving an LLC in Alabama does not have a direct fee, but you must file a Certificate of Dissolution. This filing typically carries a fee of $100. Ensure that all debts and obligations of the LLC are settled before dissolving.

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

You do not have to hire an attorney to form an LLC in Alabama. Many people complete the process independently by following the state’s guidelines. However, consulting an attorney can provide guidance, especially if your situation is complex.

Should I hire an LLC formation service in Alabama?

Using an LLC formation service can simplify the process if you prefer assistance. These services handle paperwork and filing for you, which may save you time and reduce errors. Weigh the cost of the service against the complexity of your needs.

Are there penalties for paying my fees late in Alabama?

Yes, if you fail to pay your fees on time, you may face penalties. This can include additional fees, interest on unpaid amounts, and potential dissolution of your LLC. It’s important to stay updated on your payment deadlines.

Is Alabama an excellent state in which to start an LLC?

Alabama is often considered favorable for LLC formation due to its reasonable filing fees and business-friendly regulations. Additionally, the state has a growing economy that can support new businesses.

What happens if I do not file my Alabama LLC annual report?

If you do not file your annual report, your LLC may face penalties, including fines. Failure to file can also lead to the dissolution of your LLC. Keeping up with annual requirements prevents complications.