Established with business-friendly policies and a skilled workforce population, many entrepreneurs seek to incorporate in Alabama. However, despite all these advantages, its formation process still entails charges like any other state. In this post, let our trade experts recount all Alabama LLC fees to ensure that you wouldn’t miss any crucial requirements.
Formation Costs for an Alabama LLC
Business Name Reservation
Coming up with a distinct trade name is among the essential parts of planning a business. Not only because it adds value to your brand, but it also has to comply with state law. While you can claim your desired LLC name through filing your formation documents, stalling time could result in other entities applying for it.
To prevent this scenario, we highly suggest requesting a business name reservation to the Secretary of State and an online filing fee of $28 or $10 for paper submissions to gain exclusive rights for the said label prior to your registration.
Certificate of Formation
Similar to other states, the submission of formation documents is one of the most costly Alabama LLC fees you have to prepare and add to your budget. To accomplish your certificate of formation, you can file it online or via expedited services for a $200 processing fee or opt for the standard filing procedure and pay $150.
While operating agreements are not necessarily required when forming an LLC in Alabama, our business specialists assure you that it offers perks highly beneficial in outlining management obligations and ownership rights.
Technically, you can craft this internal document yourself without the worry of paying anything. However, considering its legal significance to your business, we suggest seeking professional assistance.
Accomplishing tax documents, employment requirements, and bank transactions, you’ll be obliged to provide an Employee Identification Number or EIN. This nine-digit code serves as your business social security number that can be requested from the IRS free of charge.
As the main point of communication between you and the state, electing a top-rated registered agent is a must. While you can choose to be your company’s registered agent as long as you fit the qualification standards, failure to fulfill the obligations of this role could lead to dissolution risks and penalties.
Meanwhile, if you decide to hire a professional service to handle your time-sensitive notices from the state, expect annual or monthly charges ranging from $0 to $300 depending on the provider you chose.
Business Privilege License and Other License/s
Besides filing a certificate of formation, an Alabama LLC must obtain Business Privilege License to operate legally within the state . State and county licenses released by the Probate Judge or License Commissioner may vary depending on the nature of your business.
To see all the municipal license and permit requirements, our team suggests checking out the Alabama League of Municipalities website.
Initial Business Privilege Tax
In the span of 2 and a half months after your formation has been confirmed, your LLC is required to pay an initial privilege tax to maintain your state obligations. The minimum charges for this type of tax are $100, depending on your business income.
Failure to submit the form and settle dues will result in apparent penalties or risk of being labeled non-compliant by the government.
Foreign LLC Registration
For existing businesses wanting to expand in Alabama, you’re obliged to pay a foreign qualification fee of $250 for online filing and $150 for paper submissions of your Application for Registration. Failure to submit these documents could lead to hefty penalties, so we advise doing it as soon as possible.
LLC Formation Services (Optional)
Not everyone is a cut-out for handling legal paperwork, which is why it’s understandable why many owners opt to sign up for dependable LLC formation services. Besides instant registration of your business entity, these experienced providers also offer guaranteed accuracy on your filings.
These professional services are often charged in monthly or annual subscriptions ranging from $0 to $300.
(For online options, here is our list of outstanding online incorporation services that can assist in your business concerns)
Alabama Annual LLC State Fees
Business Privilege Tax Return and Annual Report
On or before April 15th of each year, you’re required to submit the Form PPT: Business Privilege Tax Return and Annual Report to the state. These periodic reports come with a minimum payment of $100, similar to the terms of the initial privilege taxes discussed above.
Considering the filing fees for the formation documents, the minimum payment for initial privilege tax, and annual levies, the overall estimated cost of an LLC in Alabama is between $350 to $400. This calculation may vary depending on the acquired taxable income and additional services.
How much does an LLC cost in Alabama?
The cost of an LLC in Alabama is between $350 to $400 for a domestic entity and $550 to $650 for foreign businesses. These expenses could increase depending on the taxable income and professional services your company signed up for, like formation providers and registered agents.
While we commend your dedication to handling all Alabama LLC fees personally, there’s no pressure to rush yourself through the process. Keep in mind that your company’s good standing relies on how well you’ll maintain these obligations. So take your time to assess your budget and strategies before embarking on any new venture.