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

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.

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.

Firstly, let’s address the elephant in the room: the cost of forming an LLC in Alabama. While it typically varies depending on your specific requirements, forming an LLC is not free. You must file the necessary paperwork with the Alabama Secretary of State and pay the associated fees. These expenses cover the administrative tasks involved in processing and incorporating your business, ensuring legal compliance, and establishing your company’s legal identity. Keep in mind that forming an LLC requires careful attention to detail and, therefore, may necessitate the aid of legal or professional services, thus incurring additional costs.

Following the initial formation, maintaining an LLC in Alabama requires ongoing financial commitment. LLCs in the state are subject to an annual report filing fee, measured annually from the date of formation. This fee varies according to the LLC’s capital, including both authorized and paid-in capital. It is prudent to consult the official guidelines or seek professional advice to determine the specific expenses you will be liable to pay based on your LLC’s financial details.

Moreover, LLCs in Alabama are also required to pay annual state income taxes. However, the exact amount is dependent on the LLC’s taxable income as the state implements a progressive taxation system. Ultimately, the total charged is determined by the company’s yearly profits rather than merely the existence of the LLC itself. Thus, businesses should be well-prepared to accommodate these potential expenses when they come to calculate their budgets.

Apart from mandatory payments to the state, LLCs should also consider other potential ongoing costs associated with maintaining it within the legal framework. It is advantageous for an LLC to adopt an Operating Agreement, specifying the rights, responsibilities, and financial arrangements among its members. Although drafting an Operating Agreement is not legally required in Alabama, having one in place can protect the business’s long-term interests and ensure a clear panoply of responsibilities for all parties involved. Thus, professional legal advice and services may be prudent here as well.

Furthermore, it’s essential to stay up to date with changes in the tax laws and corporate governance regulations. As legislation evolves, compliance requirements may change, necessitating considerations for financial adjustments and, if necessary, legal consultancy.

While starting and maintaining an LLC in Alabama incurs several expenses, it’s crucial not to let these financial considerations discourage potential entrepreneurs. Instead, wise planning and budgeting are key. By familiarizing themselves with these potential costs from the outset, entrepreneurs can make sound financial decisions and ensure the smooth establishment and operation of their LLCs in Alabama.

In conclusion, starting and maintaining an LLC in Alabama entails several costs. From the initial filing fees and ongoing annual report payments to taxes and potential legal services, it’s crucial for entrepreneurs to budget and plan accordingly. By acquainting themselves with the financial intricacies and being prepared to meet ongoing expenses, aspiring business owners can confidently navigate the process of establishing and maintaining an LLC in Alabama.

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.


About Author & Editorial Staff

Steve Goldstein, founder of LLCBuddy, is a specialist in corporate formations, dedicated to guiding entrepreneurs and small business owners through the LLC process. LLCBuddy provides a wealth of streamlined resources such as guides, articles, and FAQs, making LLC establishment seamless. The diligent editorial staff makes sure content is accurate, up-to-date information on topics like state-specific requirements, registered agents, and compliance. Steve's enthusiasm for entrepreneurship makes LLCBuddy an essential and trustworthy resource for launching and running an LLC.

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