LLC Cost in Alabama – How Much to Pay for an LLC


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Perhaps you are hoping to form an LLC in Alabama. People assume that starting an LLC is difficult and costly. However, it’s generally easy, and the cost would vary across states. We have all the info you need to know about the cost of forming an LLC, particularly the LLC cost in Alabama.

Alabama LLC Cost of Filing

Here are the costs involved in forming an LLC in Alabama.

Cost of Filing Formation Certificates

The Alabama Certificate of Formation is responsible for the majority of the cost, which also varies depending on whether you’re forming a domestic LLC or a foreign LLC. Still, you can file both at the Alabama Secretary of State

Alabama Domestic LLC

  • Online Filing costs $208. 
  • By Mail: Fill out the application form, and send it to Secretary of State Business Services, P.O. Box 5616, Montgomery, Alabama 36103-5616.  Costs $200.

Alabama Foreign LLC

  • Online Filing costs $156.
  • By Mail: Fill out the application form, and send it to Secretary of State Business Services, P.O. Box 5616, Montgomery, Alabama 36103-5616. Costs $150.

Note that filing online is ideal, not only because you need to go to the Secretary of State office, but also it would be faster. You won’t have to wait in a queue in doing so.

Alabama LLC Formation Service or Registered Agent Fee

You need a registered agent to form an LLC in Alabama, hence, added costs for service fees. Here are three of the best LLC services on our list.

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Business Permits and Licenses 

Business licenses are renewed yearly and depend on your business activity and location, so the cost will vary. Check the Alabama Department of Revenue for regulatory boards or agencies requiring licensing. 

Alabama Business Privilege Tax and Annual Report

Once you have your EIN or Employer Identification Number, apart from filing sales tax, the company needs to pay the Business Privilege Tax (BPT) after 2.5 months as an LLC in Alabama. This is a requirement for all LLCs formed in Alabama. 

All LLCs need to pay their taxes before the third week of April and it can vary from 0.00025% to 0.000175%, depending on the net worth of the LLC. The exact rate will be obtained based on the entity’s taxable income in the previous year. The minimum amount that the business will have to pay for this tax is $100. 

Cost Comparison Among States

Money is needed to operate a company. Also, when forming an LLC, you need to pay some filing fees and other costs like those for the certificate of formation, registered agent, name reservation, and forming a foreign LLC

Still, every state will have different costs related to forming an LLC. Suppose you are deciding where to form your LLC, it helps to compare costs. Here’s a sample table comparing costs among states to help you decide where to set up our LLC. 

StatesAlabamaTennesseeGeorgiaMississippiNorth Carolina
Online filing fee$200$300$100 for online and $110 for filing by mail$50$125
LLC Annual fee$100$300 minimum$50$200
Name reservation fee$25 for online and $28 for filing by mail$20 $25 for online and $35 for filing by mail$25 $30
Sales Tax4%7%4%7%4.75%

You can do further comparisons by checking out the costs in other states.

When it comes to having an LLC in Alabama, it won’t cost too much. Those who want to start an LLC in Alabama can go into the manufacturing sector or retail trade. Both these sectors are well known and contribute a great amount to the GDP too. 

Other Costs

How Much Does It Cost to Maintain an LLC in Alabama

To maintain an LLC in Alabama you will need to pay an annual fee of $100 along with sales tax (4%), Business Privilege Tax and federal taxes.

Creating and maintaining an LLC in Alabama requires a few different expenses. While some of them are one-time, there are some recurring expenses that you should consider paying on a regular basis. These fees include annual reports and franchise taxes. Understanding which ones are required is essential when determining the total cost of your new company. The following guide will cover the costs you need to anticipate. It will also help you determine which fees are optional and what you should skip.

Filing an LLC requires you to pay a filing fee of around $200 to the Alabama Secretary of State. You will also need to pay a fee of about $50 to the Probate Court. Although an operating agreement is not required in Alabama, you will be better off with a written document outlining the operations of the LLC and who will be responsible for what. An operating agreement will help preserve the LLC’s limited liability protection and demonstrate that it is a separate entity.

In order to start your business, you’ll need to file an Alabama Certificate of Formation and a Name Reservation Certificate with the Secretary of State. You can file these documents online or by mail and get instant approval. If you are applying for a name reservation in Alabama for the first time, it’s a good idea to reserve your name in advance. Using the Internet to reserve a name is a faster way to secure your desired name, but you must pay a fee of $25 before you can complete the process.

In addition to filing the proper forms and fees for your Alabama LLC, you may also need to pay an Annual Business Privilege Tax. This fee varies depending on the type of business you plan to run. If you plan to make sales, you’ll also need to file for a store license in Alabama. The Secretary of State website has an extensive list of licensing fees and forms for your Alabama business.

One of the most important things you can do for your LLC in Alabama is to hire a registered agent. The registered agent is the middleman between the state and your business, accepting official communications from the state. Though you can self-serve as the registered agent, it’s best to hire a registered agent to protect your business. It’s worth the small fee. If legal status is important to you, this fee is worth it.

In addition to business licenses, every Alabama LLC must file an annual Business Privilege Tax. This tax is due between two and half months after the entity is established. Failure to file these taxes could result in penalties and interest. You can sign up for an Annual Report Service to ensure you’re meeting your obligations every year. And don’t forget about sales tax. Every Alabama LLC must file sales tax and pay Business Privilege Tax.

F.A.Qs

Can I start an LLC for free?

It is possible to form an LLC without professional help, but forms still have associated costs, regardless of where your LLC is formed.

Is an LLC expensive?

It is difficult to say whether forming an LLC is expensive. Nevertheless, the cost could be anywhere from $40 to $500. If you refuse to hire professionals, you’ll still have expenses like form fees to cover.

Does an LLC need a bank account?

The need to separate personal money from business funds, thus necessitating the creation of a business bank account for your LLC.

In Conclusion

The cost of Alabama is much lower compared to other forms of business. Apart from the state filing fees and annual taxes, you might bear the cost of the registered agent. Compare the price of professional LLC services and choose the most affordable one.

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