Cost To Form An LLC in Alabama 2024: Detailed Review & Guides
Starting a business in Alabama in 2024? One important step is to form a limited liability company or LLC. But before you do that, it’s important to understand the costs involved in the LLC formation process. Not only will you need to pay state fees, but there may also be other expenses to consider.
In this article, we’ll take a comprehensive look at the cost of forming an LLC, including state fees, additional expenses, and tips for budgeting and saving money. We’ll also provide free guides and resources to help you navigate the LLC formation process with ease.
Whether you’re an entrepreneur just starting out in the business world or an experienced business owner looking to expand your operations, this article will provide valuable information to help you make an informed decision about LLC formation in Alabama in 2024.
What Is an LLC in Alabama?
An Alabama LLC, or limited liability company, is a type of business structure that combines the personal asset protection of a corporation with the tax benefits of a partnership or sole proprietorship. In Alabama, an LLC is a separate legal entity from its owners, known as LLC members.
This means that the LLC can enter into contracts, sue or be sued, and own assets in its own name reservation certificate. Alabama LLCs also provide their members with limited liability protection, which means that the members’ personal liability and personal assets are generally not at risk in the event of the LLC’s debt or legal issues.
Forming an LLC is a relatively simple process. It can be done by filing articles of organization with the Alabama Secretary of State’s office and paying the required filing fee.
LLCs in Alabama are also required to have an agent who is available at a physical address in the state during normal business hours, and they must file annual reports with the state. It’s important to note that Alabama LLCs are also required to follow state and federal laws related to taxes, accounting, and compliance.
Read More: Best LLC Formation Services in Alabama 2024
LLC Cost in Alabama
When it comes to starting a business in Alabama, one of the most important decisions to make is how to structure it legally. One popular option is to form a Limited Liability Company (LLC). However, before diving into the Alabama LLC formation process, it’s important to understand the costs involved.
In this section, we’ll take a detailed look at the LLC cost in Alabama, including state filing fees, additional expenses, and tips for budgeting and saving money. We’ll also provide an overview of what LLCs are and the benefits they offer. By the end of this section, you’ll have a clear understanding of the costs associated with forming an LLC and be well-equipped to make an informed decision about whether an LLC is a right choice for your business.
Alabama LLC Filing Fees
When forming a domestic Alabama LLC, the main cost to consider is the state filing fee. The current fee for filing articles of organization with the Alabama Secretary of State is $200. This fee is non-refundable and must be paid when you submit your articles of organization. It’s important to note that this fee may be higher for LLCs with multiple classes of membership or that have additional requests.
Alabama LLC Annual Business Privilege Tax and Annual Report
LLCs are also subject to Alabama Business Privilege Tax and are required to file an annual report with the state. The filing fee for the annual report is $10. The annual report is due on the last day of the anniversary month of the LLC’s formation. Failure to file an annual report may result in penalties and the dissolution of the Alabama LLC.
Registered Agent Fee
Another cost to consider when forming an LLC is the fee for a registered agent. An agent is a person or business that is responsible for receiving legal documents on behalf of your LLC. The fees for an agent can vary and typically range between $100 and $300 up to a year.
Cost to Form a Foreign LLC in Alabama
If your LLC is based in another state, but you wish to conduct business, you’ll need to register as an Alabama foreign LLC. The cost to file as a foreign Alabama LLC cost is $150. This fee is paid to the Alabama Secretary of State’s office when you file your application for registration.
Business Permits and Licenses
In addition to the Alabama LLC formation documents and fees, you may also need to obtain business permits and a business privilege license to operate in Alabama. These costs can vary depending on the type of business and location.
Alabama business licenses can cost anywhere from $15 to several hundred dollars, depending on several factors. If your business is based in Alabama, refer to the Alabama DOR for business license information specific to your business.
Other LLC Filing Costs
In addition to the state filing fees, there may be other costs associated with forming an Alabama LLC. These can include expenses related to legal services, professional fees, and other miscellaneous costs.
While these costs may vary depending on the specific circumstances of your LLC, it’s important to be aware of them and budget accordingly. In this section, we’ll take a look at some of the most common additional costs associated with an Alabama LLC formation, so you can better understand the full financial picture and plan for your LLC’s success.
LLC Name Reservation Fee
Before you can file your articles of organization, you’ll need to reserve a unique business name for your LLC. In Alabama, you can reserve a name by filing an Application for Reservation of Name with the Alabama Secretary of State’s office. The filing fee for this application is $20, and it must be paid with cash, check, money order, MasterCard, Visa, or American Express.
It’s important to note that the name you reserve must be distinguishable from the names of other Alabama LLCs on file with the state, and must contain certain designators such as “LLC” or “Limited Liability Company”.
“Doing Business As” (DBA) Name
If you wish to conduct business under a name other than the official name of your LLC, you’ll need to file a “Doing Business As” (DBA) name. In Alabama, you can file a DBA name by submitting a completed application and a $30 filing fee to the Office of the Secretary of State.
Business Domain Name & Website
When forming an LLC, you may also want to consider the cost of registering a domain name and creating a website for your business. The cost of a domain name can vary but typically ranges from $10 to $15 per year. The cost of website design and development can also vary greatly, depending on the complexity of the site and the services provided.
Certified Document Copies
If you need to obtain certified copies of your LLC’s articles of organization or other documents filed with the state, you can request them from the Alabama Secretary of State’s office and the county probate office. The fee for certifying a document by affixing the state seal is $10.00 per document. You can also acquire copies and certified copies online here.
Certificate of Good Standing (Certificate of Compliance)
An Alabama certificate of good standing, also known as a certificate of compliance, verifies that your LLC is in compliance with state taxes and other regulations. In Alabama, you can request a certificate of compliance from the Alabama Department of Revenue (ALDOR) for $14.
Articles of Organization Fee
The fee for filing articles of organization with the Alabama Secretary of State’s office is $200.
Attorney Fees
If you choose to hire an attorney to help you form your LLC, you can expect to pay attorney fees. The typical lawyer in Alabama charges between $107 and $516 per hour. Costs can vary depending on the type of lawyer and the services provided.
Tax ID Number (EIN)
Finally, you’ll need to obtain an EIN or Employer Identification Number for your LLC. An EIN is a unique identification number assigned to a business by the Internal Revenue Service (IRS). If you chose to form your business with a formation company or attorney, getting your EIN should be part of the deal. But because EINs are not strictly part of the formation process, some services try to upsell EINs for $30 to $70.
6 Basic Steps to Start an LLC in Alabama 2024
Starting an Alamaba LLC in 2024 can seem like a daunting task, but it doesn’t have to be. By following these six basic steps, you can get your LLC up and running in no time.
Choose a Name for Your LLC in Alabama
The first step in forming an Alabama LLC is to choose a unique name for your business. Your LLC’s name must be distinguishable from the names of other LLCs on file with the state and must contain certain designators such as “LLC” or “Limited Liability Company”.
Choose a Registered Agent in Alabama
Every Alabama LLC must have a registered agent with a professional license. This is a person or business that will be responsible for receiving legal documents on behalf of your LLC. The registered agent must have a physical address in Alabama and be available during normal business hours.
Read More: Best Alabama Registered Agents 2024
File Organizational Paperwork With the State
Once you’ve chosen a unique name and an Alabama registered agent service, you’ll need to file articles of organization with the Alabama Secretary of State’s office. The articles of organization must include the name and address of your LLC, the name and address of your own registered agent, and the purpose of your LLC.
Obtain a Certificate from the State
You will need to obtain a certificate of compliance and certificate of formation from the Alabama Department of Revenue to show that your LLC is in compliance with state taxes and other regulations.
Prepare an LLC Operating Agreement
An operating agreement is a document that outlines the management and ownership structure (e.g. liability, S Corporation) of your LLC. It’s not required by Alabama state law, but it’s a good idea to create one to ensure that your LLC is run in a manner that’s consistent with your goals and operating agreements.
Obtain an EIN for Your Domestic LLC in Alabama
An EIN is a unique identification number assigned to a business entity by the Internal Revenue Service (IRS). You’ll need an EIN to open a business bank account and file taxes. Obtaining an EIN is a simple process that can be done online or by mail.
The Top 2 LLC Services in Alabama
| Product | ||
| Name | ZenBusiness | Northwest Registered Agent |
| Full review | Read full review | Read full review |
| Link | Check Price | Check Price |
ZenBusiness
ZenBusiness is another popular LLC certificate of formation service provider in Alabama. They offer a basic LLC formation package starting at $49, which includes state filing fees, registered agent services for the first year, and annual report filing alerts.
After the first year, registered agent services cost $99 per year. They also offer expedited filing options for an additional fee. Their professional service makes compliance easy by sending annual report filing alerts.
Northwest Registered Agent
Northwest Registered Agent Service is a reputable Alabama LLC certificate of the formation service provider in Alabama. They offer a basic LLC formation package that starts at $39, which includes the preparation and filing of the necessary government documents to form an LLC.
However, state filing fees and expedited fees are not included in this package and need to be paid separately. They also offer a registered agent service for $125 per year which will take care of receiving important legal documents on behalf of your LLC.
Final Thoughts
In conclusion, starting an Alabama LLC in 2024 involves several steps, including choosing a unique name, choosing a registered agent, filing organizational paperwork with the state, obtaining a certificate of compliance, preparing an LLC operating agreement, and obtaining an EIN. The cost of starting an LLC can vary depending on the services you choose and the fees associated with them.
There are many LLC formation service providers in Alabama, but two of the top ones are Northwest Registered Agent and ZenBusiness. Both have their own pros and cons, so it’s important to do your research and choose the one that best suits your needs. Remember, it’s always a good idea to consult with a lawyer or accountant to ensure that you’re in compliance with all state and federal regulations.
The cost of starting a new LLC can vary depending on the services you choose and the fees associated with them. Typically, you can expect to pay a filing fee for the articles of organization, registered agent fees, and any additional services such as expedited filing or name reservation certificates.
The steps involved in starting an LLC include choosing a unique name, choosing a registered agent, filing organizational paperwork with the state, obtaining a certificate of compliance, and certificate of formation, preparing an LLC operating agreement, and obtaining an EIN. It can then up to two weeks or more.
Two of the top LLC services in Alabama are Northwest Registered Agent and ZenBusiness. Both offer a wide range of services to help you start your LLC in Alabama and have a good reputation in the market.
Although it is not legally required under Alabama law, it is recommended to have an operating agreement for an LLC. It outlines the management and ownership structure of the LLC and ensures that the LLC is run in a manner that’s consistent with your goals.
While it is not legally required, it is highly recommended to have business insurance for your LLC. Business insurance can protect your LLC from financial losses due to unexpected events such as accidents, property damage, and liability claims. It is important to consult with an insurance agent to determine the appropriate coverage for your LLC based on the specific risks and needs of your business.
The minimum Alabama business privilege tax is $100 per year. However, the actual amount of tax owed may vary depending on the net business income of the LLC and any applicable deductions or credits. It is important to consult with a tax professional or the Alabama Department of Revenue to determine the exact amount of tax owed by your LLC.
In Alabama, the Business Privilege Tax is a tax imposed on business entities for the privilege of doing business in the state. The Business Privilege Tax Return is the form that businesses are required to file with the state to report their business privilege tax liability.
The Business Privilege Tax rate in Alabama is currently set at $100 per year for most businesses, but it can vary depending on the nature of the business and its net taxable income. Certain types of businesses may be exempt from the tax or may have different rates.
It is important to check with the Alabama DOR for specific information about the business privilege tax for your LLC.