Alabama LLCs cost $200 to form and $100/year for Business Privilege Tax (annual report equivalent). Due by tax deadline (April 15 for calendar year). Alabama Secretary of State processes online filings in 7-10 business days. Moderate costs and central Gulf location make Alabama competitive for manufacturing and logistics.
Alabama LLC Formation
Alabama Secretary of State processes LLC formations. $200 filing fee (higher than most Southern states).
Standard processing: 7-10 business days. Expedited processing: +$100 (2-3 business days). Same-day: Not available.
Name Requirements
Must include "Limited Liability Company", "L.L.C.", or "LLC". Alabama accepts standard abbreviations.
Restricted words: Bank, Trust, Insurance, University. Alabama rejects 16% of names for similarity to existing entities.
Name Availability Search
Search Alabama business entities at arc-sos.state.al.us/CGI. Free search but interface dated.
Name reservation: $25, holds 180 days (longer than most states). Can be extended. Good for complex formations.
Formation Process
File Certificate of Formation with Alabama Secretary of State. Online filing at sos.alabama.gov or mail to Montgomery.
Required: LLC name, registered agent with AL address, principal office address, organizer information, management structure.
Registered Agent Requirement
Must have Alabama registered agent with physical AL address (no PO boxes). Individual or entity.
Can use yourself if you have AL address. Professional registered agent: $100-200/year.
Business Privilege Tax
Alabama Business Privilege Tax functions as annual report. $100 minimum for LLCs under certain thresholds.
Due April 15 for calendar-year LLCs (aligned with federal tax deadline). Fiscal year LLCs use different deadlines.
Business Privilege Tax Calculation
Based on Alabama net worth (assets in Alabama). $100 minimum for most small LLCs.
$1.75 per $1,000 of net worth above threshold. Can reach $200-500 for larger LLCs with significant Alabama assets.
AL vs Other Gulf States
Alabama $200 + $100/year vs Mississippi $50 + $25/year: MS significantly cheaper ($125/year savings).
Alabama $200 + $100/year vs Louisiana $100 + $35/year: LA saves $165/year ($1,650 over 10 years).
Manufacturing Hub
Alabama strong manufacturing state. Mercedes-Benz, Honda, Hyundai all have Alabama assembly plants.
Automotive supply chain well-established. Steel, chemical, aerospace industries also strong.
Tax Considerations
Alabama income tax: 2-5% graduated brackets (moderate). Pass-through taxation like all LLCs.
Sales tax: 4% state + local (varies by county, typically 8-11% combined). Business Privilege Tax separate (annual $100 minimum).
County and Municipal Taxes
Some Alabama cities/counties charge additional business license taxes. Birmingham, Mobile, Montgomery have varying rates.
Factor local taxes when choosing Alabama location. Can add $50-200 annually depending on municipality.
Operating Agreement
Not required by AL law but HIGHLY RECOMMENDED for all LLCs.
Alabama courts enforce Operating Agreement provisions. Critical for multi-member LLCs.
Foreign LLC
Out-of-state LLCs doing business in Alabama must register as foreign LLC. $150 filing fee.
Business Privilege Tax still required: $100/year minimum due April 15.
When Foreign Registration Required
Maintaining office in AL, employing AL workers, owning AL real estate, regularly conducting business in state.
Online sales to AL customers typically don't require foreign registration (no physical presence).
Common Mistakes
Confusing Business Privilege Tax with income tax: Separate taxes. BPT is annual report equivalent ($100 min), income tax is 2-5% on profits.
Missing April 15 deadline: Business Privilege Tax due same day as federal taxes. Easy to forget among tax season chaos.
Underestimating local taxes: Municipal business licenses in Birmingham, Mobile add costs beyond state fees.
When AL Makes Sense
Choose Alabama LLC if: Manufacturing business (automotive supply chain), Birmingham/Mobile/Huntsville operations, want 180-day name reservation, central Gulf Coast location needed.
Best for: Automotive suppliers, manufacturing, aerospace contractors (Huntsville), logistics companies, Birmingham metro businesses.
Consider alternatives if: Very cost-sensitive (Mississippi, Louisiana significantly cheaper), no Alabama nexus, prefer simpler annual filing (not tax-based).
Aerospace in Huntsville
Huntsville major aerospace hub (NASA Marshall Space Flight Center, Redstone Arsenal). Defense contractors, space startups cluster there.
Growing commercial space industry. Alabama LLC gives access to established aerospace ecosystem.
Port of Mobile
Port of Mobile handles significant tonnage (coal, steel, containers). 11th largest port by tonnage in US.
Import/export, shipping, logistics businesses benefit from Gulf access and central location between New Orleans and Florida.
Trademark Lens verifies Alabama LLC name availability before $200-225 formation costs.