Alabama Business Privilege Tax: Everything You Need to Know
The Alabama Business Privilege Tax (ABPT) is a requirement for all businesses in the state of Alabama.3 min read
What Is the Alabama Business Privilege Tax?
The Alabama Business Privilege Tax (ABPT) is a requirement for all businesses in the state of Alabama. While LLCs, LLPs, corporations, limited liability companies, and limited liability partnerships must file an annual report, the business privilege tax must be paid by all entities.
For filing convenience, any designated person who has authority within the company and is responsible for preparing the corporation's tax return and paying taxes is also eligible to file the annual report.
When filing the Alabama annual report, original signatures are not required.
The Business Privilege Tax ensures that a business is operating legally in Alabama.
Failure to file the Alabama Business Privilege Tax by its due date results in a minimum late fee of $50. The amount may be more based on the amount of tax owed.
Should an entity fail to file an annual report and pay any privilege tax due, the company could receive a poor rating. This means any lenders or customers needing the validation of your company's standing will find it is not in good standing with the state. This can have financial repercussions for your business.
While filing an annual CPT form online, which combines the tax return with the annual report and calculates any tax owed, the process is complicated.
Steps/Forms for Entities Filing a Business Privilege Tax Return
Each type of business entity in the state of Alabama has a specific tax form to fill out each year. The forms are as follows:
- CPT – This form combines the Annual Report and the Alabama Business Privilege Tax Return into one convenient form. C Corps and professional corporations use this dual form when filing. The CPT form is filed with the Alabama Department of Revenue.
- PPT – S Corps, Limited Liability Companies, and PLLCs file a PPT form for their business privilege tax. The PPT form also includes the AL-CAR form, which is used for the annual report. Both are filed with Alabama's Department of Revenue.
- Form 65 – This form is filed with the Department of Revenue by Limited Partnerships (LPs).
- Annual Notice – The notice is filed with Secretary of State for Alabama. It is used by Limited Liability Partnerships (LLPs).
- Charitable Organization Renewal – The annual renewal statement is filed by an entity operating as a charity. A notarized Charitable Organization Renewal form is filed with the Attorney General's Consumer Protection Division.
- When do corporations need to file their Alabama Business Privilege Tax?
For corporations, the ABPT needs to be filed by March 15 annually.
- When do LLPs, LPs, or LLCs need to file their Alabama Business Privilege Tax?
The ABPT needs to be filed no later than April 15 annually for LLPs, LP, and LLCs.
- Where do I find the business' formation date?
The date a business was formed can be found on the Certificate of Formation next to the authorized signature of the company representative.
- Can I download a Business Privilege Tax form?
Yes. At the Alabama Department of Revenue website, downloadable Business Privilege Tax forms are available. Scroll down the page to the “Forms” tab and click to see a listing of forms, including the privilege tax form.
- My company needs to file an Annual Notice. Can this be done online?
Yes. The form can be filed on the Alabama Secretary of State website.
- How much does it cost to file an annual report in Alabama?
The amount of tax owed is based on the form used plus other factors. These include the net worth for corporations in Alabama. A $10 fee is for the annual report, and $100 is the minimum tax. For LLCs and PLLCs, the tax is also based on net worth. The PPT form used automatically does the calculations. Limited partnerships are not required to file a privilege tax or annual report form. LLPs, however, must pay $100 to file an Annual Notice. Alabama non-profit charities pay a $25 annual renewal fee to the Attorney General.
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