How Much Does an LLC Cost in Alabama

Written by: Mary Gerardine

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The minimum Alabama LLC cost is $225, which covers the processing fee for filing your Certificate of Formation and reserving your business name. 

Having said that, the total cost of forming an Alabama LLC will depend on several factors, including your personal preferences and business needs. 

In our How Much Does an LLC Cost in Alabama article, we’ve broken down everything you need to know about the different costs associated with launching and maintaining an LLC.

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Alabama LLC Cost

In the table below, you can find a summary of the main requirements of forming an Alabama limited liability company (LLC) and their associated fees.

                                                         
RequirementFee
Certificate of Formation$200
Registered Agent$0-$150+
LLC Name$0-$57.75
Operating Agreement$0+

Alabama LLC Filing Fee ($200+)

To form your LLC in Alabama, you will be required to submit the necessary formation documents with the Secretary of State.

The specific document you will need to file will depend on whether your registering a domestic LLC (formed in Alabama) or a foreign LLC (formed outside of Alabama):

Keep in mind that, as part of your application, you will need to attach a copy of your LLC’s name reservation.

This is meant to ensure that your chosen business name complies with Alabama’s naming regulations and is not already in use by another entity within the state.

Having said that, if you choose to use an LLC formation service, the cost will be a little higher as it will include a small service fee in addition to Alabama’s state filing fee.

The fees for an LLC formation service can range significantly, but can start from as low as $29, increasing if you decide to purchase any additional offerings.

Note: For more details on the formation process, you can check out our Alabama LLC Formation guide.

Alabama Registered Agent ($0-$150+)

In Alabama, you will need to appoint a registered agent in order to form your LLC. This is a person or business entity that you must assign to receive tax, legal, and governmental correspondence on behalf of your Alabama LLC.

While you can act as your own registered agent at no extra cost, it’s often recommended to hire a professional service so you avoid any potential penalties or legal issues caused by non-compliance with state regulations.

This can also be an affordable alternative to working with a business attorney, and will help keep your personal information private.

If you want to use a third-party service, you can have a look at the Alabama Secretary of State’s List of Registered Agents page. Keep in mind that this is offered as a resource, and it is not meant to be interpreted as an endorsement or recommendation of any service provider.

The cost of registered agent services can vary significantly, with prices starting as low as $49 and sometimes exceeding $150.

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Naming Your Alabama LLC ($0-$57.75)

When forming your Alabama LLC, you’ll be required to pick a suitable name that’s available to use.

There are two potential costs to be aware of when naming your LLC.

Reserving Name

Prior to submitting your Certificate of Formation, you will be required to reserve a name for your LLC.

To do this, you will need to fill out this Name Reservation Request form and pay the $25 processing fee.

This form can be submitted in one of two ways:

  • Mail or Courier:  You can send your submission to the SOS at the following address: Secretary of State, Business Services, PO Box 5616, Montgomery, AL 36103. This will need to be accompanied by a check, money order, or credit card payment
  • Online: You can submit your request online for a slightly higher fee of $27.75, attributed to convenience charges. This method allows for the immediate printing of your reservation certificate upon completion

Keep in mind that you can check the availability of your desired name on the Alabama Secretary of State’s website by completing a Business Entity Search.

Note: If you choose to file online, the system automatically includes a name search in the process, so you won’t need to conduct it separately.

When choosing a name for your LLC, it’s important to select one that corresponds to an available domain. This is because a matching domain ensures consistency between your LLC’s name and its online presence, which helps to strengthen its brand recognition and credibility.

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Doing Business As (DBA) Name

If you plan to operate your business under a name that differs from your LLCs official one, you’ll need to obtain a Doing Business As (DBA) name — which is also known as a Trade Name.

To do this, you will first need to verify the availability of your desired DBA name through a search on the Alabama Secretary of State’s Business Entity Search website.

It’s important to note that Alabama has a unique requirement compared to most states, which is that you must have actively used a trade name in Alabama before you can register it as a DBA.

This means that the name cannot be reserved in anticipation of future business operations.

You can submit your DBA application either online or by mail to the Alabama Secretary of State.

This process requires a filing fee of $30; your registration must be renewed every five years at the same cost.

Alabama LLC Operating Agreement ($0+)

While not mandatory, it’s good practice for LLCs to have an operating agreement.

This document defines the roles and responsibilities of the members or managers in your LLC and will help prevent and solve any business disputes that may arise later on.

While you can opt to hire an online service or business attorney to draft this document for you (which typically costs at least a few hundred dollars), it’s actually quite straightforward to do it yourself at no extra cost.

It’s also important to note that this doesn’t actually need to be filed with the Alabama Secretary of State — it’s purely an internal document.

Additional Alabama LLC Formation Costs

On top of the more common fees outlined above, there are a number of additional formation costs that LLCs in Alabama may encounter depending on their circumstances.

We’ve summarized some of these additional costs below:

Expedited Alabama LLC Filing

If you’re looking to speed up the processing of your LLC’s paperwork, the Secretary of State’s office offers expedited processing for an additional fee of $100.

Should you choose to utilize this service, the SOS office will guarantee that your filing will be processed within three business days following the date it’s received.

Keep in mind that you will need to include the expedite fee with your filing at the time of submission.

This is because the SOS office cannot associate expedited fees with filings that have already been processed into their workflow if the fees are sent separately.

Local Business Licenses

In order to comply with the local-level regulations of your city and county, your business may be required to obtain one — or several — local business licenses.

While very few municipalities impose a general licensing requirement for businesses operating within their limits, your LLC might need a municipal license if it’s involved in certain activities.

The cost of Alabama business licenses at the local level may range from $15 to $1,000, depending on your county and how your business operates.

Certificate of Existence

An Alabama Certificate of Existence is a document often required to open a business bank account, or by lenders in order to check that your LLC is properly registered and legally authorized to conduct business with the state.

To obtain a certificate of existence, you will have to submit an Application For Certificate Of Existence Of Registered Entities form — along with the required $25 processing fee — to the office of the Alabama Secretary of State by mail.

For those who need it more promptly, an expedited online service is available for $27.75, which allows for immediate printing.

Certified Copies of Business Documents

You may need certified copies of your business documents if you’re dealing with financial institutions, regulatory bodies, or are involved in legal proceedings.

You can obtain certified copies of your business documents from the Alabama Secretary of State’s office, either online or by mail.

The process involves a standard fee of $2 per page for all entity types. Additionally, if you need a document to be officially certified, which includes affixing the State’s seal, a separate certification fee of $10 per document will apply.

It’s important to note that convenience fees, which are 3% of the total charge plus a fixed $2, apply to payments made by credit or debit card.

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Cost to Maintain an LLC in Alabama

In addition to the cost of forming an LLC in Alabama, there are also several ongoing costs you’ll be responsible for paying each year.

We’ve outlined these recurring costs associated with maintaining an Alabama LLC below.

Business Privilege License

In Alabama, all LLCs are required to purchase a business privilege license, which is issued by the county Probate Judge or License Commissioner in the county where your business is located.

Should your LLC operate across multiple counties, you should be prepared to secure a license for each county where you conduct business, unless specific exceptions allow otherwise.

The cost will depend on several factors, such as:

  •  The municipality’s population where your business operates
  • The amount of capital your LLC has invested
  • The gross volume of orders or contracts your business accepts

Note: You can visit the Association of County Commissions of Alabama website in order to locate your county’s website. There, you can find detailed information on the process for obtaining a Business Privilege License that is specific to your county.

Business Privilege Tax

In Alabama, LLCs are subject to the Business Privilege Tax (BPT), which must be submitted before the third week of March each year.

This tax is calculated based on an entity’s net worth within Alabama — taking into account additions and exclusions — and is then multiplied by an apportionment factor to determine the taxable net worth.

The tax rates are structured as follows:

  • For taxable income less than $1, the tax rate is $0.25 per $1,000 of net worth
  • For income of at least $1 but less than $200,000, the rate is $1.00 per $1,000
  • For income of at least $200,000 but less than $500,000, the rate is $1.25 per $1,000
  • For income of at least $500,000 but less than $2,500,000, the rate is $1.50 per $1,000
  • For income of $2,500,000 or more, the rate is $1.75 per $1,000

As of 2024, the Alabama business privilege tax includes an exemption for entities that meet specific criteria.

Specifically, if your LLC is organized under Alabama law and your calculated business privilege tax is $100 or less, your LLC will be exempt from paying the tax.

Note: With the recent elimination of the minimum business privilege tax, the Alabama Department of Revenue has issued an explanatory notice.

Registered Agent Maintenance

If you decide to take advantage of a professional registered agent in order to handle your legal documents, you’ll be required to pay an annual fee in return for their services. This fee commonly ranges between $45 and $300 depending on the provider and features you select.

While you’re not required to use a professional registered agent service, it’s highly recommended.

Taxes

In addition to the federal taxes your LLC is required to pay regardless of the state it’s based in, there are a variety of state-specific taxes in Alabama you need to be aware of, including:

  • Sales tax
  • Employment taxes
  • Business privilege taxes
  • Property taxes

Additionally, there are various local taxes your LLC may need to pay depending on the municipality or county it’s based in, such as:

  • Sales and use taxes
  • Property tax

Alabama vs Other States

Alabama provides various economic incentives to attract businesses, including tax credits, financing programs, and grants designed to encourage investment and job creation within the state.

Regardless, it’s important to understand that the best state to form your LLC will generally be the one in which you plan to primarily operate your business from.

This is because this makes it far easier to stay legally compliant on a number of levels, including taxation, licensing, and filing requirements, as you’ll only need to deal with one state’s set of rules.

LLC Cost in Alabama FAQ

How much does an LLC cost in Alabama?

In Alabama, forming an LLC costs a minimum of $225, which covers the filing fee for the Certificate of Formation and reserving your business name. Additionally, you may need to pay an Alabama registered agent fee if you choose to hire a registered agent service.

How much does it cost to reserve a name in Alabama?

Reserving a business name for your LLC in Alabama costs $25 if you submit the form by mail. If you choose to reserve your name online, on the other hand, the fee will be slightly higher (i.e., $27.75) due to the added convenience charges. For more information, you can have a look at our How to Start an LLC in Alabama guide.

Does Alabama require an operating agreement for an LLC?

While the Alabama Department of Revenue doesn’t mandate LLCs to have an operating agreement, drafting one is advised for LLC members. For additional details, such as the Alabama annual renewal cost, please refer to our How Much Does it Cost to Start an LLC article.

What is required to form an LLC in Alabama?

To form an LLC in Alabama, you first need to reserve your business name, which incurs a $25 fee. Following that, you must file a certificate of formation with the Secretary of State and pay a $200 filing fee, bringing the total minimum cost to $225.

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