Alabama LLC: Everything You Need to Know
An Alabama LLC, or limited liability company, is a legal structure that keeps your personal assets separate from your business assets. 3 min read
2. How to Form an LLC in Alabama
An Alabama LLC, or limited liability company, is a legal structure that keeps your personal assets separate from your business assets. This separation gives your personal assets protection in the event your LLC is sued.
Forming an LLC in Alabama
An LLC will protect your personal assets from judgments and lawsuits brought against your business. If your business isn't clearly separated as a legal entity, you could be personally liable for certain lawsuits and debts incurred by your company.
You don't need an attorney to form an LLC in Alabama. The minimum cost of forming one is $150, and you can do it yourself to save money.
The office of the Secretary of State handles LLC formations in many states (it may have another name in other states, but the duties are the same). In Alabama, however, a County Probate Judge processes LLC formations for the county where an LLC's registered agent is located. This is in addition to the Secretary of State.
County probate judge fees start at $50 and can be higher in some counties. County probate judges forward a business's Articles of Organization (formation documents) to the Secretary of State. The filing fee due to the Secretary of State is $100. To expedite filing fees, an additional $100 is required.
All LLCs in Alabama must file the following every year:
- Annual reports
- Alabama Business Privilege tax return
- Renewal fees
You must name at least one manager or member in your Articles of Organization, but you don't have to specify the person's age or residence. Business owners have to check for any required permits and licenses when forming an LLC.
How to Form an LLC in Alabama
Business owners need to file their Articles of Organization (otherwise known as a certificate of formation) when forming an LLC. They also need to pay the following fees:
- Name reservation fee: $28
- Filing fee: $150
The standard filing time in the state is six months, but you can pay an additional $100 to cut the time down to three weeks. You also need an operating agreement.
You can reserve a name online, and Alabama requires business owners to reserve an LLC name before filing their Articles of Organization.
Your business name must end with either the words “Limited Liability Company” or an abbreviation, such as LLC or L.L.C. You must choose a unique business name that can't be easily confused with an existing business. You'll have to conduct a search to make sure your desired business name is available.
Some words—such as attorney, bank, and university—are typically restricted, unless you complete additional paperwork showing why you can use the words in your LLC name. You might also have to have a licensed individual as part of your LLC to use restricted words (i.e., a lawyer or doctor).
Other words are prohibited because they can confuse the public into believing an LLC is associated with a state or federal agency. Such prohibited words include the following:
- Secret Service
Once you check the availability of a business name, you might also want to reserve a domain name, even if you don't plan on creating a website right away. If you secure the domain name, you prevent someone else from getting it.
You'll attach a copy of your name reservation to your formation certificate, and list your business's physical address and mailing address (if it's different).
Your business must have a registered agent, which is an individual or company that agrees to accept and send legal papers on your LLC's behalf. The type of papers a registered agent deals with include state filings and service of process. The registered agent must have a physical address in the state. P.O. boxes and drop boxes are not acceptable. If there's a suite number, that should be included in an agent's registered office address.
LLCs are considered the easiest business structure to form. It's relatively inexpensive to start an LLC, and because it's simple, most people don't need an attorney to help them. As long as you follow all guidelines, pay the required fees, and turn in all necessary paperwork, you can start your own LLC quickly and easily.
If you need help with forming an LLC in Alabama or another state, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.