How to Start an LLC in Alabama (2026): Step-by-Step Guide

Published: June 2026 · Updated for the 2026 tax year

Starting an LLC in Alabama trips people up in two specific places, and almost every generic guide gets at least one of them wrong. First, Alabama makes you reserve your name before you're allowed to file — it's a required first step, not the optional nicety it is everywhere else. Second, the $100 minimum Business Privilege Tax that every old article still quotes is gone: as of the 2024 tax year, most small LLCs owe $0 and file nothing. This guide walks through every step, what an Alabama LLC actually costs year by year, how to form one from outside the US, and the deadlines worth putting on your calendar.

Form your Alabama LLC for free with Jupid. We prepare and file your name reservation and Certificate of Formation — you pay only the state fees, with no service markup. Start your Alabama LLC →

A note from Slava

I'm Slava, co-founder and CEO of Jupid. Before this I co-founded and scaled an AI-powered accounting platform to around $30M in revenue and more than 100,000 business users — the kind of company that ends up filing a lot of paperwork in a lot of states and watching customers trip over the same potholes again and again.

Alabama has two potholes that are uniquely Alabama. The first is the mandatory name reservation. In most states, reserving a name is an optional convenience; in Alabama, you literally cannot file your Certificate of Formation until your name reservation clears. Founders who skip it — or who file the reservation by mail and then try to file the formation before it's approved — lose weeks. The second is the Business Privilege Tax. For years, every Alabama LLC owed a $100 minimum, profit or no profit. That minimum was eliminated for tax years beginning after December 31, 2023, so most small LLCs now owe $0 and don't even file a return — yet a remarkable number of guides, and plenty of formation services, still tell you to pay it.

So this guide does the things the others skip: it puts the name reservation first where it belongs, it tells you the truth about the now-$0 Business Privilege Tax, it adds up the real cost over time, it spells out the non-resident path, and it hands you a dated checklist for your first 90 days. Everything here is current for 2026, with links to the official sources so you can verify before you file.

Alabama LLC at a glance

Sources: Alabama Secretary of State — LLCs, Alabama SOS — Fee Schedule (PDF), Alabama Department of Revenue — Business Privilege Tax, Alabama DOR — Important Changes to the 2024 BPT Filing Requirements.

Should you actually form your LLC in Alabama?

If you live in Alabama and run your business from Alabama, form your LLC in Alabama. The popular advice to "form in Wyoming or Delaware instead" doesn't help you here: an out-of-state LLC that does business in Alabama has to register as a foreign LLC with the Secretary of State, keep a registered agent here, and deal with the same Business Privilege Tax rules anyway — on top of whatever the other state charges. You end up paying twice for more paperwork, and now that the BPT minimum is gone, Alabama's ongoing costs are low enough that there's little to dodge.

Forming elsewhere makes sense in a narrower set of cases: you genuinely don't operate in Alabama (no office, employees, or meaningful activity here), you're a non-resident with no US footprint at all, or you have a specific reason — outside-investor expectations, say — that points to Delaware. If you're weighing it, our best state to form an LLC tool walks through the trade-offs, and our Wyoming LLC guide covers the privacy-and-non-resident case in detail.

For everyone else: Alabama it is. Here's how.

How to start an LLC in Alabama, step by step

1. Reserve your LLC name — this comes first in Alabama

Here's the quirk that catches people: in Alabama you must reserve your name before you can file the Certificate of Formation. This is not optional. Your name has to include "Limited Liability Company," "LLC," or "L.L.C." and be distinguishable from every other entity on the Secretary of State's records. Search the Alabama business entity records first — and if you'd like ideas or want to check several options at once, our Alabama business name generator is built for exactly that.

Once you've picked a name, file a Name Reservation Request. Online it costs $28 and is approved instantly — and you can do it in the same online session right before you file the formation. By mail it's $25, but it has to be approved before you file the Certificate of Formation, which adds days. Either way, the reservation holds your name for one year. File it online unless you have a reason not to; a mail name reservation that hasn't cleared yet is the single most common cause of a multi-week delay in Alabama.

2. Appoint an Alabama registered agent

Every Alabama LLC needs a registered agent — a person or company designated to accept legal papers and official notices on the LLC's behalf — with a physical Alabama street address. That can be an individual who actually lives in Alabama (you can be your own LLC's agent if you're an Alabama resident), or a business entity authorized to do business in Alabama. A P.O. box won't do. The registered agent's name and address become public record, which is one reason people who'd rather not publish a home address — and everyone who lives out of state — hire a commercial registered agent for roughly $100–$300 a year.

3. File the Certificate of Formation

This is the step that creates your LLC. Since 2020 it's filed directly with the Secretary of State — not through the county probate judge, the way it used to work, and the way some outdated guides still describe. File online for the $200 state fee plus an ~$8 online convenience fee, or by mail for $200 with no online fee. You'll list the LLC name (matching your reservation), the registered agent and Alabama street address, the organizer, and the management structure. Online filings are usually approved within a few business days; mailed filings are reviewed in about one to two business days plus mail time. Once it's approved, download your stamped Certificate of Formation — your bank will ask for it.

4. Write an operating agreement

Alabama doesn't legally require an operating agreement, but every LLC should have one in writing. You don't file it with anyone; you keep it with your company records. It sets out ownership percentages, how profits are split, who can make decisions, and what happens if a member leaves. Even a single-member LLC should have one — it's part of how you keep the liability shield intact and how a bank or investor sees you're running a real entity.

5. Get your EIN from the IRS

An EIN is your LLC's federal tax ID, and you need it to open a bank account, hire anyone, and file taxes. It's free. Apply at irs.gov — if you have an SSN or ITIN, the online application takes a few minutes. If you don't (common for non-resident owners), file Form SS-4 by fax or mail, or call the IRS international phone line; see the non-resident section below. Never pay a third party for the EIN itself — the number is always free from the IRS.

6. Check your Business Privilege Tax position

This is the step everyone gets wrong, so read it carefully. Alabama used to charge every LLC a $100 minimum Business Privilege Tax. That minimum was eliminated for tax years beginning after December 31, 2023 (Act 2022-252). The rule now: if your LLC's calculated Business Privilege Tax is $100 or less, you owe $0 and you are not required to file a BPT return at all — no Form PPT, no initial BPT-IN. Because the BPT is based on net worth, most small LLCs land well under that threshold and owe nothing.

Only if your calculated tax exceeds $100 do you file: the initial BPT-IN within 2.5 months of forming, and then Form PPT annually (due on the same date as your federal income tax return). Don't pay $100 because an old article or a formation service told you to — verify your position against the Alabama DOR Business Privilege Tax page and the 2024 filing-changes notice.

7. Register for Alabama taxes and local licenses

Forming the LLC doesn't cover your operating obligations. If you sell tangible goods, register for Alabama sales and use tax through the My Alabama Taxes (MAT) portal. If you'll have employees, register for state withholding through MAT and for unemployment insurance with the Alabama Department of Labor, and set up federal payroll. Most Alabama cities and counties also require a local business license (a business privilege license) — check with your city hall or county. And any professional or industry license you'd need as a sole proprietor — contractor, cosmetology, food service, alcohol — you still need as an LLC.

What an Alabama LLC really costs, year by year

Most guides quote a single confusing number — and many still add a phantom $100 tax. Here's the fuller picture.

Year one

Every following year

The $100 BPT that isn't there anymore. This is the single biggest place Alabama LLC guides — and formation services — get it wrong. For years the line was "$100 minimum Business Privilege Tax, every year, profit or not." For tax years beginning after December 31, 2023, that minimum is gone: if your calculated BPT is $100 or less, you owe $0 and file no return. If you see a $100 "Business Privilege Tax" charge on a formation invoice, question it.

DIY versus a formation service versus Jupid. Doing it yourself costs the state fees (the name reservation plus the Certificate of Formation) and your time. A formation service charges $0–$300 on top of that — and the "$0" packages still pass through the state fees and then upsell you a registered agent and a "compliance" subscription, sometimes including that dead $100 BPT. Jupid forms your Alabama LLC for free — you pay only the state fees — and then handles the bookkeeping and tax filings afterward, which is where the real ongoing work lives. To model the annual numbers for your situation, use our Alabama LLC annual cost calculator.

Forming an Alabama LLC as a non-resident or foreign founder

You can own an Alabama LLC without being a US citizen or resident — Alabama imposes no residency requirement on members or managers. The practical hurdles are an Alabama registered agent, an EIN, a US bank account, and your US and Alabama tax filings.

Registered agent. If no member or manager lives in Alabama with a real street address, you must use a commercial registered agent here — budget around $100–$300 a year. P.O. boxes and mailbox-store addresses don't qualify, and the address is public.

Getting an EIN without an SSN. The IRS online EIN tool requires the responsible party to have an SSN or ITIN, so foreign founders generally can't use it. Instead, file Form SS-4: on the line asking for the responsible party's SSN/ITIN/EIN, write "Foreign" — don't invent a number. Submit it by fax or mail, or call the IRS international EIN line (it's not toll-free), where someone outside the US can get the number over the phone. Check the current Form SS-4 instructions for the right fax and phone numbers, since the IRS changes them. Fax turnaround is usually a few business days; phone is immediate. The EIN is free.

ITIN. An ITIN (Form W-7) is a tax ID for individuals who aren't eligible for an SSN. Your LLC gets an EIN; you as an owner may separately need an ITIN if you have a personal US filing obligation — for instance, if the LLC is engaged in a US trade or business. ITINs are issued with a tax return attached or through an IRS Certifying Acceptance Agent and can take a couple of months.

The Form 5472 obligation — don't skip this. A single-member LLC owned by a non-US person is a "disregarded entity" that generally must file Form 5472 along with a pro-forma Form 1120 every year, reporting reportable transactions between the LLC and its foreign owner — even with no US income, and regardless of the fact that your Alabama Business Privilege Tax is $0. The penalty for missing it is $25,000, plus another $25,000 for continued failure. It's due with the Form 1120 deadline (generally April 15, extendable to October). Almost no Alabama LLC guide mentions this; build it into your annual calendar from day one.

US bank account. Most US banks want the owner physically present to open a business account, along with the EIN confirmation letter, the filed Certificate of Formation, the operating agreement, and a passport. Several fintech business-banking platforms onboard non-resident-owned US LLCs remotely — eligibility and policies change, so check current terms before you rely on any of them. You'll typically need a US business address, which can be your Alabama registered agent or a virtual office depending on the bank.

Alabama tax. The Business Privilege Tax is $0 for most small LLCs, and there's no separate franchise tax on the LLC itself. Alabama income tax applies only to Alabama-source income, and a nonresident member with Alabama-source distributive income may face Alabama nonresident filing or withholding. Federally, if the LLC is engaged in a US trade or business, the foreign owner has US filing obligations of their own (Form 1040-NR for an individual, plus the Form 5472 filing above) — coordinate the effectively-connected-income rules with a US tax pro before your first filing season.

Registered agents and the Corporate Transparency Act (BOI)

Your registered agent is the person or company designated to receive lawsuits and official notices for the LLC, and it has to be an Alabama resident or an authorized business entity with a physical Alabama street address. Because that address is public, plenty of Alabama residents hire a commercial agent purely to keep their home address off the record.

On the federal beneficial-ownership side: under the Corporate Transparency Act, LLCs were originally required to file a Beneficial Ownership Information (BOI) report with FinCEN. That changed. FinCEN's interim final rule, published in March 2025, redefined a "reporting company" to mean only entities formed under foreign law that register to do business in a US state. As of early 2026, that means an Alabama-formed LLC — even one with foreign owners — has no BOI filing obligation. It's still an interim final rule, and FinCEN has said it intends to finalize one in 2026, so this could shift; check fincen.gov/boi before you assume one way or the other. (If you register a foreign-formed entity to do business in Alabama, the BOI rules still apply to that entity.)

Your first 30, 60, and 90 days

Days 1–30

• Get your EIN from the IRS (free; online if you have an SSN/ITIN, otherwise by fax, mail, or phone).
• Adopt your operating agreement — not required by Alabama, but kept with your records.
• Confirm your registered agent designation is on file with the Secretary of State.
• Open a US business bank account (EIN letter, filed Certificate of Formation, operating agreement, ID).
• Check your city and county for a local business license and apply.
• Check your BOI status. As of early 2026 a domestic Alabama LLC has no FinCEN filing to make; re-verify at fincen.gov/boi.

Days 31–60

• Register for Alabama sales and use tax through My Alabama Taxes if you sell tangible goods; register for withholding and unemployment insurance if you'll have employees, and set up federal payroll.
• Set up bookkeeping. If profit will consistently clear roughly $40,000–$50,000, look into an S-corp election (Form 2553) with your accountant.
• Get any professional or industry licenses your work requires.
• Look into business insurance — general liability now, workers' comp once you have employees.
• If you're a foreign-owned single-member LLC, note the annual Form 5472 + pro-forma 1120 filing.

Days 61–90 — the Business Privilege Tax check

• Work out your calculated Business Privilege Tax. If it's $100 or less, you owe $0 and file nothing — no initial BPT-IN, no Form PPT.
• Only if your calculated tax exceeds $100, file the initial BPT-IN within 2.5 months of forming, then Form PPT annually with your federal return. Mark the 2.5-month date the day you form so it doesn't sneak up on you.
• Re-confirm there's no recurring Secretary of State annual report for your LLC (there isn't) so you're not paying for a filing that doesn't exist.

Common mistakes with Alabama LLCs

Forgetting the mandatory name reservation. Why it hurts: Alabama won't let you file the Certificate of Formation until your name reservation has cleared. Skip it, or file the reservation by mail and then try to file the formation before it's approved, and your filing stalls — sometimes for weeks. Fix: reserve the name online ($28, instant) and file the formation in the same session, or wait for a mailed reservation to be approved before you file.

Assuming you still owe the $100 BPT minimum. Why it hurts: you pay $100 a year — and maybe file a return — that you don't owe. The minimum was eliminated for tax years beginning after December 31, 2023; if your calculated tax is $100 or less, you owe $0 and file nothing. Fix: compute your BPT (or have your accountant do it) and only file Form PPT if it exceeds $100. Push back on any invoice that bundles a $100 "Business Privilege Tax."

Thinking a Wyoming LLC dodges Alabama's costs. Why it hurts: if you operate in Alabama, the out-of-state LLC has to register here as a foreign LLC, so you keep an Alabama registered agent and face the same tax rules anyway — plus the other state's fees. Fix: if Alabama is where you do business, form in Alabama. With the BPT minimum gone, there's little to escape.

Forgetting the local business license. Why it hurts: most Alabama cities and counties require a local business (privilege) license, and operating without one can mean back fees and penalties. Fix: call your city hall or county government in your first month and ask exactly what they need.

Believing you owe a newspaper publication. Why it hurts: you spend money publishing a notice Alabama doesn't require of LLCs. Fix: skip it — Alabama has no LLC publication requirement. If a formation service bundles a "publication fee," push back or use a different one.

How Jupid helps

Jupid forms your Alabama LLC for free — we handle both the mandatory name reservation and the Certificate of Formation, and you pay only the state fees, with no service markup, no surprise "compliance" subscription, and no phantom $100 Business Privilege Tax. After that, Jupid is your AI accountant, working in WhatsApp and iMessage the same way you already text. It connects to your business bank account, automatically categorizes your transactions (around 95.9% accuracy), keeps your deductions organized, and prepares your tax filings with CPA review before anything is submitted. For an Alabama LLC, the state side is mercifully light now — but clean books, the sales-tax and withholding filings if you have them, your income-tax return, and the Business Privilege Tax math (so you actually know whether you're under the $100 line) are the work that takes time year after year, and that's the work Jupid does for you. Start your Alabama LLC free with Jupid →

Frequently asked questions

Do I really have to reserve my LLC name before filing in Alabama? Yes. Alabama is one of the few states where name reservation is a required prerequisite, not an optional step. You file a Name Reservation Request with the Secretary of State before you can file the Certificate of Formation. Online it's $28 and approved instantly; by mail it's $25 and must clear first. The reservation lasts one year.

Does an Alabama LLC still owe the $100 minimum Business Privilege Tax? No. Alabama eliminated the $100 minimum for taxable years beginning after December 31, 2023 (Act 2022-252). If your LLC's calculated Business Privilege Tax is $100 or less, you owe $0 and are not required to file a BPT return at all. Only LLCs whose calculated tax exceeds $100 file Form PPT and pay.

How much does it cost to start an LLC in Alabama in 2026? About $236 online — the $200 Certificate of Formation fee, an ~$8 online convenience fee, and the mandatory $28 name reservation. By mail it's about $225 ($200 plus a $25 name reservation). The EIN is free, and most small LLCs now owe $0 in Business Privilege Tax.

Do I need a registered agent for an Alabama LLC? Yes. Every Alabama LLC must list a registered agent with a physical Alabama street address — either an Alabama resident or a business entity authorized in Alabama. It can be you if you live in Alabama. P.O. boxes are not allowed, and the address is public record.

Can a non-US resident own an Alabama LLC? Yes. Alabama has no citizenship or residency requirement for members or managers. You'll need a commercial registered agent in Alabama and an EIN (which you can get without an SSN). If your LLC is a single-member foreign-owned disregarded entity, you'll also have to file Form 5472 with a pro-forma Form 1120 every year — the penalty for missing it is $25,000.

Does Alabama require LLCs to publish a formation notice in a newspaper? No. Unlike New York, Arizona, Nebraska, and Pennsylvania, Alabama has no newspaper publication requirement for LLCs. That's one cost you don't have to budget for.

Official sources

• Alabama Secretary of State — LLCs (Certificate of Formation, name reservation, fees)
• Alabama SOS — Business Entities (business search and Name Reservations)
• Alabama SOS — Fee Schedule (PDF) ($200 Certificate of Formation; name reservation fees)
• Alabama Department of Revenue — Business Privilege Tax (Form PPT, BPT-IN, the $100-or-less exemption)
• Alabama DOR — Important Changes to the 2024 Business Privilege Tax Filing Requirements (minimum eliminated; no return required when tax is $100 or less)
• Alabama DOR — Individual Income Tax (2%–5% graduated rates)
• My Alabama Taxes (MAT) (sales/use tax and withholding registration)
• IRS — get an EIN · Instructions for Form SS-4 · About Form W-7 · About Form 5472
• FinCEN — Beneficial Ownership Information
• Related on Jupid: Alabama LLC formation · Alabama LLC annual cost calculator · Alabama business name generator · best state to form an LLC · Wyoming LLC guide · Florida LLC guide

This guide is general information, not legal or tax advice. Fees, deadlines, and thresholds change — verify with the official sources above before you file.

Last updated: June 2026.