Business Law | Alabama
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If you own an LLC or corporation in Alabama, you owe the Alabama Business Privilege Tax every year — regardless of whether your business made money. Many new Alabama business owners discover this requirement late and face penalties, interest, and even the risk of administrative dissolution of their entity.
At Colvin & Sawyer Law Offices, Christopher Colvin provides practical business legal counsel for entrepreneurs across Birmingham, Mountain Brook, Hoover, Vestavia Hills, and throughout Alabama. This is one of the compliance issues we walk every new business client through from the beginning.
"The Alabama Business Privilege Tax is one of the most commonly missed compliance requirements for new Alabama business owners — and ignoring it can cost far more than just the tax itself."
What Is the Alabama Business Privilege Tax?
The Alabama Business Privilege Tax (BPT) is an annual tax imposed on every business entity organized in Alabama or doing business in Alabama. It applies to Alabama LLCs, corporations, limited partnerships, and foreign entities doing business in Alabama. Who does NOT owe the BPT: Sole proprietorships, general partnerships, and qualifying nonprofits.
How Is It Calculated?
The BPT is calculated based on the net worth of the entity apportioned to Alabama at $1.75 per $1,000 of net worth. Key limits: Minimum: $100 (owed even if net worth is zero). Maximum: $15,000 regardless of entity size.
When Is It Due?
- Corporations: Same date as the federal corporate return — typically March 15
- LLCs and partnerships: Same date as the federal partnership return — typically April 15
- Newly formed entities: Initial BPT return due 2.5 months after the date of formation — this catches many new business owners off guard
What Happens If You Don't File?
- Penalties and interest on unpaid tax
- Loss of good standing with the Alabama Secretary of State
- Administrative dissolution — Alabama can dissolve your LLC or corporation
- Loss of liability protection — a dissolved entity provides no separation between personal and business debts
See also: How to Form an LLC in Alabama and Alabama Small Business Attorney.
Questions about Alabama business compliance for your LLC or corporation?
Call Colvin & Sawyer Law Offices at (205) 202-9801 or send us a message. We help Alabama business owners stay compliant from day one.Alabama Business Privilege Tax Quick Reference
- Who owes it: All Alabama LLCs, corporations, LPs, and LLPs
- Minimum: $100 per year
- Maximum: $15,000 per year
- Rate: $1.75 per $1,000 of net worth apportioned to Alabama
- Due date: Same as federal return (March 15 for corps, April 15 for LLCs)
- New entities: Initial return due 2.5 months after formation
- Filed with: Alabama Department of Revenue
Frequently Asked Questions
What is the Alabama Business Privilege Tax?
The Alabama Business Privilege Tax is an annual tax imposed on every business entity doing business in Alabama — including LLCs, corporations, and limited partnerships. It is calculated based on net worth apportioned to Alabama and is due annually regardless of profit.
When is the Alabama Business Privilege Tax due?
For most entities, the BPT return is due on the same date as the federal income tax return — March 15 for corporations, April 15 for LLCs. For newly formed entities, the initial return is due 2.5 months after formation — a deadline many new business owners miss.
What is the minimum Alabama Business Privilege Tax?
The minimum Alabama Business Privilege Tax is $100 for most business entities. Even businesses with minimal or negative net worth owe this minimum. The maximum is capped at $15,000 regardless of entity size.
Christopher Colvin
Christopher Colvin is an Alabama business attorney, honor graduate of the Birmingham School of Law, and former small business owner. He helps entrepreneurs across Birmingham, Mountain Brook, Hoover, and all of Alabama build legally sound businesses from the ground up.
Legal Disclaimer: This article is for general informational purposes only and does not constitute legal advice. Alabama laws are subject to change. Please consult a qualified Alabama attorney before taking action. Reading this article does not create an attorney-client relationship with Colvin & Sawyer Law Offices.
Questions About Your Alabama Business Compliance?
Christopher Colvin helps business owners across Birmingham, Mountain Brook, Hoover, and all of Alabama stay compliant, protected, and focused on building their businesses.
Schedule a Consultation Call (205) 202-98014 Office Park Circle, Suite 305, Mountain Brook, AL 35223
Serving Birmingham, Mountain Brook, Hoover, Vestavia Hills, and all of Alabama.