How Much Does an LLC Cost in Alabama - Fees & Taxes in AL
Most people who want to start a for-profit activity in Alabama prefer to choose an LLC as their business structure. And that's not surprising at all, given the benefits and level of protection it offers.
And if the LLC type is fine for you along all parameters, you need to learn not only how to start a business step-by-step but also explore the cost to form an LLC in Alabama. After reading this article, you will learn the answers to the following questions:
- How much does an LLC cost in Alabama?
- How much taxes does an LLC pay in Alabama?
- What are the Alabama LLC annual fees?
- What optional activities call for additional expenses?
How Much Does an LLC Cost in Alabama?
This section covers the cost of those processes that are basic and that every LLC owner is obligated to perform. The Alabama LLC cost includes not only the state fee but also:
- Business name reservation;
- Registered agent;
- Annual report;
- Licenses and permits;
- Taxes;
- Other fees.
Let's take a look at how much a limited liability company will end up costing you and what exactly you can't miss while building a solid reputation.
Alabama LLC Online Filing Fee: $200
The most basic document in the formation of a limited liability company is considered to be the Articles of Organization. This paper contains key information about the future LLC.
The Articles of Organization (incorporation documents) are submitted to the Secretary of State, and as soon as the latter approves it, the owner receives a Certificate. It confirms the fact of the company registration.
Alabama LLC cost through the online application system will be $208. This includes a $200 state-mandated fee and an $8 online filing fee.
Processing time: Documents sent online are processed within a few days.
Note! Documents can also be mailed to the Secretary of State, Business Services:
P.O. Box 5616 Montgomery,
AL 36103-5616.
It is the cheapest way to start an LLC in Alabama (but also the slowest). But remember, you have to put two versions of the document in the envelope along with a postage stamp.
Alabama Annual Report Fee: $10
Annual reports are filed in almost all states, and Alabama is no exception. All LLC owners have to file this document each year with up-to-date information about the firm.
But the most important thing is that in Alabama, the annual report is combined with the business privilege tax return. Consequently, these two documents should be filed together!
- Deadline for filing: by March 15;
- Submission method: online or by mail to the state Department of Revenue.
Alabama LLC annual fee will cost the business $10, and it is important that the document is filed on time. Otherwise, you will have to pay penalties at the rate of 10% on the total tax burden + 1% for the month overdue.
Registered agent (Statutory Agent, Resident Agent) Fee
In Alabama, every LLC is required to have a registered agent to serve as a liaison between the business and the state. RA's tasks include accepting incoming mail from the government and notifying the owner of their receipt.
The business owner can become an RA for his/her company, and then, the Alabama LLC cost of his/her services will be $0. Other individuals can also serve as agents. They have to be:
- Residents of the state;
- At least 18 years of age;
- Willing to stay in the office during business hours.
Commercial registered agents (there are a fairly large number of them on the market) can be reached at an annual LLC fee Alabama starting at $49. In addition, some companies will provide you services for $0 during the first year of cooperation.
Initial Report Fee
The initial annual report fee along with business privilege tax is filed 2.5 months after LLC formation.
They are sent in any convenient way (online or by mail). As for payment, the initial annual report will cost $10 + tax on business privileges, which are calculated individually for each LLC.
Cost to Form a Foreign LLC in Alabama: $150
To form a foreign LLC, you need to email the proper application to the Secretary of State. It is also possible to send it by regular mail, but then, 2 copies of the application + a postage stamp should be enclosed in the envelope.
The cost of forming a foreign LLC in Alabama is $150.
Note! There may be an additional convenience fee for online processing.
On top of the state fee, foreign companies also need to file an annual report along with the business privilege tax return. The price for the annual report will be $10 + $100 for declaration.
Cost to Form a Series LLC in Alabama
To form a Series LLC in Alabama, you have to:
- Choose a legal name. The cost is $25-$28;
- Complete Articles of Organization and mail it to the Secretary of State along with 2 copies of the document;
- Pay the state fee.
Note! The cost of forming a Series LLC varies by county.
- Standard Processing: the state has a rule that applications to form Series LLCs are processed within 1 month;
- Expedited processing: the application time can be expedited for an additional $100 fee. It will take up to 2 weeks.
Cost to Form a PLLC (Professional LLC) in Alabama
Only certain types of businesses are allowed to form a professional LLC in Alabama. All members of the firm are required to have special licenses and permits to be eligible to form this type of business.
The Alabama LLC fee is $100 if you settle for standard processing time. An expedited procedure is priced at $200.
Note! The formation of a PLLC authorizes other financial expenditures as long as the laws of the county stipulate it. Therefore, you should contact the probate judge in the county where your firm is registered and inquire as to the applicable information.
Business Entity Income Tax
In the state of Alabama, the Business Entity Income Tax is in effect, and its rate depends on the number of earnings. It can range from 2% to 6%. Benefits and possible deductions may be applicable.
Franchise Tax
Franchise tax applies to LLCs created in Alabama and is paid at the Comptroller of Public Accounts office. It is also called the privilege tax, and its rate depends primarily on the amount of the firm's income.
Rate: $0.25 to $1.75 for each $1,000.
Note! Privilege tax cannot be less than $100. You should consult with your accountant or contact the Department of Revenue for assistance in determining how much you should pay.
Other LLC Filing Costs
Next, let's cover the steps that may become an extra obligation for you when creating an LLC. This information will help form a more thorough picture of the formation cost for LLCs in Alabama.
LLC Name Reservation
It is necessary to select a legal name that will not be used by any other business in the state. Therefore, before proceeding with the reservation process, check it for uniqueness. This step is free for anyone wishing to open an LLC.
Note! You can conduct a business name search on the Secretary of State's website. You have to apply for the business name reservation prior to submitting your formation certificate.
- Cost: $25 - by mail, $28 - online;
- Reservation period: up to 12 months.
Foreign LLC Name Registration
The reservation of a name for a foreign LLC is almost the same process as for a local one. However, you will need to submit a foreign company name reservation form.
- Cost: $25 - by mail, $28 - online;
- Reservation period: up to 12 months.
"Doing Business As" (DBA) Name
When it is necessary to operate under a different name than the previously reserved legal name, the owners register a DBA. It is applicable as a trade name and is most often used for branding.
Registering a trade name is done online or by mail. The request is sent to the Secretary of State's Trademark Office.
- Alabama LLC costs: $30 if the form is sent online, $31.2 if mailed;
- Reservation period: for 10 years.
The renewal cost is the same as the registration price.
Certified Document Copies
You can get certified copies in Alabama through a request to the Secretary of State. If the demand is made through regular mail, you need to enclose two completed forms + a postage stamp in the envelope.
Note! If sent by mail, it is important to enclose a receipt for payment of the state fee with the basic documents.
- Service fee: $10 + additional $2 for each page;
- Fee for each certified document: $1;
- If filing online, the state fee should be paid by credit card;
- Processing time: For online applications, it is almost instantaneous, and for postal requests, you need to take into account post office hours.
Certificate of Good Standing (Existence, Status, Legal Existence, Certificate of Fact)
You can apply for a Certificate of Good Standing through the Department of Revenue. It can be obtained only by those firms that meet all requirements in a timely manner and are in good standing with the state.
- Cost of the Certificate: $14;
- Period of validity: unlimited.
Note! The Certificate of Good Standing is often required by lenders and banks. But even though the document has no expiration date, interested parties may request a more "recent" Certificate.
Initial Report
The Initial Report is the initial tax return that is filed shortly after the formation of the limited liability company. In Alabama, this document needs to be filed no later than 2.5 months after company registration.