Updated on: June 24th, 2024

How Much Does It Cost to Form an LLC in Alabama in 2023?

Hire Professionals to Create an Alabama LLC (from $0 + state fees)

Founding an LLC in Alabama isn’t just about submitting the initial paperwork; there are also associated costs. But it doesn’t have to break your bank account! We will give all of you the essential details regarding initial and ongoing expenses for a business located in this state, as well as helpful advice on how to save money.

Want to start your own LLC, but don’t know where to begin? See our guide on how to start your own LLC.

If you want to skip the hassle of starting an Alabama LLC yourself, consider using professional help for the best price in the market:

Quick Costs for Alabama LLC Breakdown & Best Options

Who forms the LLC?Total fees


You form the LLC in Alabama Yourself
$240 = ($208 Article of Organization + $28 Name reservation)  
by using ZenBusiness$0 + state fees
by using Northwest Registered Agent$39 + state fees
see our other best LLC servicesvaries

Pros and Cons of Forming an LLC in Alabama

If you are thinking about forming an LLC in Alabama you must take a look at these pros and cons.

Pros

Starting a business is a huge decision, and choosing the right location can make all the difference. Alabama may not be the first place that comes to mind when considering where to start your LLC, but it has a lot to offer entrepreneurs. Here are some pros of starting your LLC in Alabama:

  • First, the cost of living is low, which means you can stretch your startup budget further.
  • Second, the business-friendly culture means you’ll have access to resources and networking opportunities.
  • Third, the state offers tax breaks and incentives to encourage economic growth.
  • Finally, the area’s natural beauty and outdoor activities provide a high quality of life for you and your employees.

All in all, starting your LLC Alabama could be the smart move you’ve been looking for.

Cons

Starting your LLC in Alabama may seem like a tempting option, but there are certainly some drawbacks to consider.

  • One major drawback is the fact that Alabama is notorious for having a less-than-ideal business climate, with high business taxes and strict regulations. This can make it difficult for small businesses to thrive and grow, especially when competing against larger corporations.
  • Another con of starting your LLC in Alabama is the limited access to resources and funding, as the state is not typically considered a hub for startup activity.

Lastly, while Alabama may offer small-town charm, it may not offer the same level of networking opportunities and access to talent that larger cities do. Ultimately, it is important to carefully weigh the pros and cons of starting your LLC in Alabama before making any decisions.

How Much Does an LLC Cost in Alabama?

Forming an LLC in Alabama will cost you a one-time fee of $200 for the Certificate of Formation. To begin the process, simply submit your completed form to the Alabama Secretary of State and wait for approval so that your business can officially come into existence!

Alabama LLC Online Filing Fee ($200)

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When setting up an LLC, the primary cost is to file your Certificate of Formation with the Alabama Secretary of State through an online application – and this just costs $200.


Alabama Business Privilege Tax and Annual Report ($100+)

All Limited Liability Companies that conduct business within the state of Alabama are mandated to submit their annual Privilege Tax Form (PPT) before the third week of April. This tax is a range between 0.00025% and 0.00175%, depending on your LLC’s income from the prior taxable year, with no less than $100 required as payment for this fee.

Complying with Alabama state law is simple when you maintain updated information for your LLC. All that’s required to remain in good standing and keep operating is filing the Annual Report and Business Privilege Tax Return with the Alabama Department of Revenue, confirming their accuracy, then paying whatever amount due from them. Doing so ensures your next business owner can stay up-to-date on any legal requirements!

Each year Alabama LLCs must pay $50 Annual Business Privilege Tax to keep their businesses active. The exact tax amount that is due depends on the results of your federal tax return; however, the minimum cost for minimum business privilege tax filing is still at least $50 annually. With this small price tag each year, you gain peace of mind knowing that your business will continuously remain operational.


Foreign LLC in Alabama Cost ($150)

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If you’ve already established an LLC in a different state and wish to expand your enterprise into Alabama, registering as a foreign LLC is essential. Filing the necessary Foreign Limited Liability Application for Registration with the Alabama Secretary of State will cost $156 online or $150 by mail. Don’t let distance be an obstacle to growing your business – register as a foreign LLC today!


Alabama Registered Agent Fee ($39 or $125/year)

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When forming an LLC in Alabama, you must assign a Registered Agent to receive official papers and state notices. This individual or entity requires a physical address within the state and should be available during typical business hours for proper document management.

When you choose to be your own registered Agent, or a known individual as the LLC’s Registered Agent, there are no extra fees incurred. But if you opt for a professional service-based provider of such services, then it will cost in between $100 and $300 annually. Despite this additional expense, these companies offer some handy business solutions that also ensure your privacy is protected with utmost security.

Here are our recommended LLC formation service providers:

  • Northwest Registered Agent services is the perfect choice for those seeking to establish a new business and gain access to a registered agent, with a full LLC creation package starting at only $39 + state fees.

OR:

When you only require a professional registered agent service, Northwest is the perfect solution. Their exceptional RA service comes at an unbeatable price of $125/year!


Alabama Business Privilege License: Varies

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If you’re in Alabama and want to start a business, there’s one essential step—obtaining your Business Privilege License. Take note: you must acquire this license annually from the Probate Judge of each county where your venture operates. It’s worth mentioning that fees vary depending on the county.


LLC Operating Agreement Fee ($0)

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An Alabama LLC Operating Agreement is an essential document for all Single-Member and Multi-Member Limited Liability Companies that outlines the Members’ ownership rights, how they will be managed, and any profits or losses divided among them. To ensure everything runs smoothly with your business operations, we highly recommend you draft one of these agreements – they’re easily obtainable online at a cost ranging anywhere from $50 to $200! Plus make sure to keep yours on record along with providing each Member with their own copy.


LLC EIN Number Fee ($0)

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An Employer Identification Number (EIN) or Federal Employer Identification Number (FEIN), also known as an EIN number, is necessary for filing income taxes, opening a Limited Liability Company bank account and employing workers. Although many websites require you to pay fees in order to acquire an EIN, the process of acquiring it can be done at no cost!

Completing the online application for an EIN (Employer Identification Number) from the IRS is fast, free, and easy. Within a few minutes, you can obtain your LLC’s new EIN without spending a penny!


LLC Taxes (varies)

Alabama Limited Liability Company owners are liable for many different types of taxes, resulting in annual costs that can vary greatly. Some of the potential tax liabilities include:

  • Federal taxes
  • State income tax
  • Local income tax
  • Business taxes
  • Self-employment taxes
  • Sales and use tax
  • Payroll tax (if you have employees)
  • Property tax (if the LLC owns property)

When it comes to taxes for your Alabama LLC, the amount you pay ultimately depends on which sector you are in and how much business activity is taking place. We wish we could provide a clear figure right away, however every company is unique thus its respective tax obligations will differ accordingly.

Business Permits and Licenses

Regardless of the type of business structure you form—be it an LLC or any other structure—if your industry and geographic area are situated in Alabama, then acquiring federal, state, and local permits/licenses is necessary for legitimate operations.

Other LLC Filing Costs

Formation of an LLC may include additional fees that you can decide to incur or not.

LLC Name Reservation ($28)

Get a head start on your LLC formation process by submitting the Name Reservation Request Form for Domestic Entities at least 12 months in advance. You can easily submit this form online for just $28 or file it via mail with an accompanying fee of $25 – don’t miss out on securing the perfect name!

Foreign LLC Name Reservation ($28)

Secure your desired name for up to a year before forming an LLC by filing the Name Reservation Request Form for Foreign Entities. The cost is low at $28 if you file online, and even lower at just $25 when submitting via mail.

Doing Business As (DBA) Name ($30)

Register your trade name application with the state and create a full business name or alias for just $30 online or $31.20 if you mail in your filing! This is the perfect way to express yourself while keeping up a professional presence.

Certified Document Copies ($10)

If you would like to receive a Certified Document Copies of your Alabama business paperwork, simply place an order with the Secretary of State for $10 plus $2 per page.

Certificate of Compliance ($14)

Commonly referred to as an Alabama certificate of good standing, you can easily obtain it from the Department of Revenue for just a $14 fee. It is routinely requested by banks and other financial entities when conducting business operations.

Costs Change Often. Where Can I Find the Most Up-to-date Cost & Tax Info?

Are you curious about the fees associated with launching an Alabama LLC? If so, don’t hesitate to get in touch with the Business Services Division of the Alabama Secretary of State -they will be more than happy to answer any inquiries that you may have.


Cost of Filing Formation Certificates

AlabamaDomestic LLCForeign LLC
Online Filing$208 $156
Annual Report/Taxes$100$100
Name Reservation fee $28$28
By MailBy Mail: Fill out the application form, and send it to Secretary of State Business Services, P.O. Box 5616, Montgomery, Alabama 36103-5616.  Costs $200.
By Mail: Fill out the application form, and send it to Secretary of State Business Services, P.O. Box 5616, Montgomery, Alabama 36103-5616. Costs $150.




Get Professional Help in Forming an LLC in Alabama

It can be difficult and time-consuming to form an Alabama LLC all by yourself.
That’s why we decided to give you a few of the best options for professional services that can help you start an LLC in no time & with 0 effort!

#1 – Create an LLC in Alabama Using Northwest Registered Agent

Northwest has vast experience in creating LLCs and Corporations. They by far have the best support and client satisfaction rate. We’ve used and tested them ourselves and can guarantee that they’ll do an exceptional job for you.
You can read our extensive Northwest Registered Agent review here.

$39+State Fees

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Rating: 4.9/5
Review count: 4850+

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Form an LLC today with Nortwest. They have 98% customer satisfaction rating and over 4150+ verified reviews. They will include 1 year of free registered agent service!


#2 – ZenBusiness Will Form an LLC in Alabama For You

ZenBusiness is one of our top-rated LLC services as well. They have a super value-to-price ratio. And it’s perfect for those who are looking for the cheapest option to form their LLCs. When we tested their service — they’ve done a great job, so we can honestly recommend them.
To know more about them — read our ZenBusiness review here.

$0 + State Fees

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Rating: 4.8/5
Review count: 4830+

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Form an LLC today with ZenBusiness for only $0 + State fees. They Have 98% customer satisfaction rating and over 4830+ verified reviews.


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