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A series LLC is one of the most popular options for scaling a small or mid-sized business. In Alabama, series limited liability companies (SLLCs) can be formed as of 2017. This is a great option for real estate investors and entrepreneurs with multiple lines of business.
A series LLC consists of an umbrella company and an unlimited number of subsidiary companies or "cells." Each cell has its own assets.
Another important feature of series LLCs is that they are isolated from each other.
Even if one of the subsidiary companies is embroiled in litigation, all others in the series are protected from liability.
In Alabama, series LLC registration is virtually the same as for a regular limited liability company. The key difference is that when you form the parent company, you must indicate that you plan to form a series of subsidiary "cells" in the future.
First, you have to file a paper copy of the Alabama Name Reservation Request Form for Domestic Entities with the Secretary of State. The filing fee is $28 (for non-subscribers; varies from county to county) or $100 for expedited processing within 24 hours.
In fact, Alabama is the only state where you will need to send a statement of information and reserve your business name.
To officially name your series LLC, you must use "limited liability company" (or its abbreviation) in your chosen (and available) business name.
After this, you will have to obtain/complete two documents to legalize your business:
The Certificate of Formation for your Alabama Series LLC will cost you $208 to file.
Under Alabama law, to legally register and operate a series LLC in Alabama, you will need to appoint and maintain a registered agent (RA).
According to Alabama State Code Section 10-2B-5.01, this can be an individual or a commercial entity with a registered office (must be a physical address, not just a P.O. box) in the state.
The good news is that you can hire one RA for the entire series LLC (including all sub-cells), thereby saving you money.
Preferably, this should be a local company, e.g. Alabama Registered Agent. Or you can choose a national provider that works in all 50 states, in case you’re planning to expand your business to other states in the future.
To find out how to start a series LLC in Alabama, you will need to follow this next step, which is filing a Certificate of Formation. Namely, you should complete the required form and mail it to the Secretary of State, including the following attachments:
When starting a series LLC in Alabama, make sure you include the following information about your company in the Certificate of Formation:
Secretary of State, Business Services,
P.O. Box 5616,
Montgomery, Alabama 36103.
To file a Certificate of Formation online, visit the Secretary of State's online business portal.
For more information on other forms, visit the Business Downloads page on the official website of the state.
Next, to form a series LLC in Alabama, you need to prepare an operating agreement (in written form). This internal company document contains basic information about your venture and describes the following:
Note that the state does not require business owners to have an operating agreement to start a series LLC in Alabama. However, it's highly recommended to have one for your company.
This way, you will be able to easily resolve any internal disputes, challenges, and controversies among members of your LLC in the future.
Moreover, an OA authorizes your Series LLC to establish individual cells and defines the structure of your organization, including:
You can find a template for creating an LLC OA online to further adapt it to the needs of your business.
After you file the Certificate of Formation for your Series LLC in Alabama, you will need to submit a combined Initial Report / Business Privilege Tax Return (Form BPT-IN) to the Alabama Department of Revenue, Business Privilege Tax Section.
Note that the initial report must be filed within two and a half months of forming the venture. The tax base is your series LLC’s net worth, however, the minimum tax is $100. One report will cover each cell of your series LLC in Alabama.
If you plan to open a separate business account in a bank, hire employees for your series LLC or take advantage of tax elections (i.e. if you want to be taxed as an S corporation), you will need to obtain a federal employer identification number (FEIN or EIN).
To do this, you'll need to fill out and submit the Application for Employer Identification Number (Form SS-4) to the IRS. You can do this online on the official website of the Internal Revenue Service or by fax/mail.
The time it takes to obtain an EIN depends on how you apply. The fastest way is to apply online, as it can take up to 7 days to receive it by mail or by fax.
After you register a series LLC in Alabama, you will have the same EIN, even if you decide to change your company name.
Before you are fully aware of how to create a series LLC in Alabama, it's worth researching county law, as LLC name reservation fees vary from county to county.
Also, included in the basic list of series LLC costs in Alabama for 2022 are:
|LLC Name Reservation
|$28 for online fillings $25 for filings by mail
|Certificate of Formation (for domestic series LLCs)
|$200 (by mail) $208 (for online filings)
|Certificate of Formation (for foreign entities)
|$156 online $150 by mail
|Registered Agent fees
|$39 - $300 per year
|Alabama Privilege Tax / Annual Report
|from $100 and up
|Trade Name Application (DBA)
|$30 for online fillings $31.20 when filing by mail
|Certified document copies
|$10 per document for a Certified Copy + $2 per page
|Certificate of Compliance
The total cost varies by county.
Additionally, you want to consult the County Probate Office Directory to find out if you need an application for a business license. If you do, this will also increase the total LLC Alabama cost.
Also, you can register for Alabama business taxes and renew your tax license online through My Alabama Taxes.
Once you finally know how to get a series LLC in Alabama, keep in mind that you might also need to:
Additionally, there are employee compensation, real estate, and other insurance policies.
Note that if you decide to temporarily shut down your company after setting up a series LLC in Alabama, you will need to obtain income protection insurance.
Once you find out how to create a series LLC in Alabama and register it in the state, your company will be fully operational.
However, it is important to remember that throughout the life of your business, you also have obligations to various federal agencies. Plus, you will need to clarify additional requirements at the state and county level where your company is registered.
A list of required actions includes:
To open a series LLC in Alabama, you need to get a business license from the County Probate Office Directory or licensing commissioner. Next, you need to file a tax return.
Since a limited liability company is considered a "pass-through" entity in the state, you need to be sure to list your company's income on your personal income tax return.
After that, you can be considered a bona fide owner of a series LLC, which means you will avoid penalties.