Alabama LLC Requirements: Everything You Need to Know

Forming an LLC in Alabama is relatively straightforward — but Alabama has some requirements that catch new business owners off guard, particularly the two-step filing process and the ongoing Business Privilege Tax obligation. This guide covers everything you need to know about Alabama LLC requirements, from formation through ongoing compliance.

At Colvin & Sawyer Law Offices, Christopher Colvin helps entrepreneurs across Birmingham, Mountain Brook, Hoover, Vestavia Hills, and throughout Alabama form their LLCs correctly and stay compliant year after year.

Formation Requirements: What You Need to Form an Alabama LLC

1. A Unique Business Name

Your LLC name must be distinguishable from all existing business entities registered in Alabama. It must include "Limited Liability Company," "L.L.C.," or "LLC." You can check name availability through the Alabama Secretary of State's online business search. You can also reserve a name for 120 days for $28.

2. A Registered Agent

Every Alabama LLC must designate a registered agent — an individual or entity with a physical Alabama street address (no P.O. boxes) who is available during normal business hours to receive legal documents on behalf of the LLC. This can be you personally, another member, or a professional registered agent service.

3. Certificate of Formation — Filed in Two Places

Alabama has a unique two-step filing requirement that most online formation services miss:

• Alabama Secretary of State — file the Certificate of Formation online or by mail. Filing fee: $150. This is where most guides stop.
• County Probate Court — record a copy of the Certificate of Formation with the probate court in the county where your LLC's registered office is located. Recording fee: approximately $50. This step is required by Alabama law.

Both filings are required. Skipping the county recording step means your LLC may not be fully and properly formed. See: Alabama Certificate of Formation.

4. Operating Agreement (Not Required, But Strongly Recommended)

Alabama law does not require an operating agreement, but every LLC should have one. Without it, Alabama's default LLC statutes control how profits are split, how the LLC is managed, and what happens when a member leaves or dies — rules that often bear no resemblance to what the members actually intended. See: Do I Need an LLC Operating Agreement?

Post-Formation Requirements

EIN and Business Bank Account

Get a federal Employer Identification Number (EIN) from IRS.gov — free and takes minutes. Open a dedicated business bank account in the LLC's name. Keeping personal and business finances separate is essential for maintaining your liability protection and is a basic compliance requirement for any LLC.

Alabama Business Privilege Tax

Every Alabama LLC owes the annual Business Privilege Tax — minimum $100, maximum $15,000 based on net worth apportioned to Alabama. The initial BPT return is due within 2.5 months of the date of formation — a deadline many new business owners miss. Subsequent returns are due with the federal return (April 15 for most LLCs). See: Alabama Business Privilege Tax.

Local Business Licenses

Alabama does not have a statewide business license, but most cities and counties require their own licenses for businesses operating within their jurisdiction. Check the requirements for the city and county where your business operates.

Registered Agent — Ongoing

You must maintain a current registered agent with a valid Alabama address at all times. If your registered agent changes, you must file an update with the Alabama Secretary of State. Failure to maintain a registered agent can result in loss of good standing.