Alabama LLC Cost

The minimum cost for forming an LLC in Alabama is $225. This amount includes the mandatory fees for filing your Certificate of Formation and reserving your business name.

However, the total cost of starting an Alabama LLC can vary based on various factors, including your specific business needs and personal preferences.

In this Alabama LLC Cost guide, we'll walk you through all the main expenses associated with forming and maintaining an LLC in Alabama.

More than 84% of our readers form their LLC through a professional service to save time and avoid mistakes.

Northwest ($29 + State Fees)

How Much Does an Alabama LLC Cost

Below is a summary of the key requirements and associated fees of forming an LLC in Alabama.

	LLC Cost Summary
Requirement	Fee
Certificate of Formation	$200
Registered Agent	$0-$150+
LLC Name	$25-$57.75

Alabama LLC Filing Fee ($200+)

To officially establish your LLC in Alabama, you'll need to file the right formation document with the Secretary of State. 

This depends on whether your LLC will be based within Alabama (domestic) or outside of Alabama (foreign):

• Domestic LLCs: Must file a Certificate of Formation, which costs $200.
• Foreign LLCs: Must file an Application for Registration, which costs $150.

Your application must include an LLC name reservation certificate to ensure that your chosen business name complies with Alabama's naming regulations and is not already in use by another entity in the state.

If you opt to use an LLC formation service, the cost will be marginally higher as you’ll need to pay both Alabama’s state filing fee and a small service fee. These fees can vary widely, starting from $29 and increasing depending on the additional services you select.

Have a look at our in-depth review of the best and most affordable LLC Formation Services in 2024. 

Registered Agent in Alabama ($0-$150+)

In Alabama, every LLC must designate a registered agent, which can be either an individual or a business entity. Your LLC’s registered agent is responsible for receiving important legal and governmental documents on behalf of the business.

You have the option to serve as your own registered agent (at no additional cost), though we often recommend hiring a professional registered agent service as they can help to avoid non-compliance and maintain your privacy. 

The annual cost of hiring a registered agent service can range from $125 to over $300, depending on the provider and the level of service you require.

Alabama LLC Name ($25-$57.75)

Securing a name for your Alabama LLC can include certain costs, which we’ve explored in greater detail below. 

Reserving a Name

Before filing your Certificate of Formation, you will need to reserve your LLC's name. 

The fee for this process is $25 if submitted by mail or $27.75 if submitted online, which includes a convenience fee.

To reserve your name, you’ll need to complete and submit this Name Reservation Request form, which can be done by mail, courier, or online. 

Be aware that if you opt to submit online, the system will automatically include a name search in the process, eliminating the need for a separate search.

It’s also a good idea to conduct a quick domain search in order to ensure that your name will be available as a URL for your business’s website.

Doing Business As (DBA) Name

If you intend to operate under a name other than your LLC’s legal name, you’ll need to register a DBA name, also known as a Trade Name. The filing fee for a DBA is $30, and this registration must be renewed every five years.

Before registering a DBA name, it's important to first verify that it’s available by using the Alabama Secretary of State’s Business Entity Search website. 

Unlike most states, Alabama requires that you have actively used the trade name in the state before you can register it as a DBA.

You can submit your DBA application either online or by mail.

Optional Alabama LLC Formation Costs

There are several additional costs you may encounter when forming your Alabama LLC depending on your specific circumstances, which we’ve delineated below.

Operating Agreement for Alabama LLCs

While Alabama does not legally require LLCs to have an operating agreement, it’s highly recommended.

An operating agreement is an internal document that outlines the roles, responsibilities, and ownership structure of your LLC’s members or managers.

This document — which can be crucial in ensuring smooth operations and preventing potential future disputes — can either be drafted by you at no cost, or you can hire a business attorney or an online service to prepare it for you.

Expedited Alabama LLC Filing

If you’re in a hurry to get your LLC up and running, the Alabama Secretary of State’s office offers expedited processing of business formation documents for an additional fee of $100.

This service guarantees that your LLC formation documents will be processed within three business days following the day the Secretary of State receives them.

Note: Make sure to include the expedited fee with your initial filing submission, as the Secretary of State’s office cannot process expedited requests separately from the initial filing.

Local Business Licenses

Your LLC may be required to obtain one or more local business licenses to comply with the regulations of your city and county. The need for these licenses depends on the type of business you operate and where it's located.

The cost of local business licenses in Alabama can vary significantly, ranging from $15 to $1,000. It’s important to check with your local city or county office to determine which licenses are necessary for your business.

Certificate of Existence

A Certificate of Existence, also known as a Certificate of Good Standing, may be required by banks, lenders, or other entities to verify that your LLC is properly registered and authorized to do business in Alabama.

To obtain this certificate, you’ll need to submit an Application for Certificate of Existence to the Alabama Secretary of State’s office by mail ($25 fee). For faster processing, you can apply online for $27.75, which includes a small convenience fee.

Certified Copies of Business Documents

If you need certified copies of your LLC’s documents for legal, financial, or other purposes, you can request them from the Alabama Secretary of State.

This service costs $2 per page plus a $10 certification fee per document. Convenience fees are also applied for payments made by credit or debit card.

Ongoing Costs to Maintain an Alabama LLC

Maintaining an LLC in Alabama involves several recurring costs which are essential for keeping your LLC in good standing with the state and ensuring continued legal operation.

In the sections below, we’ve broken down each of the main ongoing costs for Alabama LLCs that you need to consider.

Business Privilege License

All LLCs in Alabama are required to obtain a Business Privilege License from the county Probate Judge or License Commissioner where the business is located. If your LLC operates in multiple counties, you may need to secure a license in each one, unless specific exemptions apply.

The cost of the Business Privilege License varies depending on factors such as the municipality’s population, your LLC’s capital investment, and the gross volume of business you receive. 

You can find more information on this step in your local county’s website. You can have a look at the Association of County Commissions of Alabama in order to locate this. 

Business Privilege Tax

Alabama LLCs are subject to the Business Privilege Tax (BPT), which must be filed annually before the third week of March. The tax is based on your LLC’s “taxable net worth” — which is calculated by multiplying your business’s net worth in Alabama (taking additions and exclusions into account) by an apportionment factor.

The tax rates are as follows:

• For taxable income less than $1, the tax rate is $0.25 per $1,000 of net worth.
• For income between $1 and $200,000, the rate is $1.00 per $1,000.
• For income between $200,000 and $500,000, the rate is $1.25 per $1,000.
• For income between $500,000 and $2,500,000, the rate is $1.50 per $1,000.
• For income of $2,500,000 or more, the rate is $1.75 per $1,000.

Starting in 2024, Alabama also introduced an exemption for LLCs with a calculated business privilege tax of $100 or less, meaning that if your LLC meets this criterion you will be exempt from paying the tax entirely. 

Registered Agent Maintenance

If you’ve opted to use a professional registered agent service, you’ll need to budget for the annual service fee, which typically ranges between $125 and $300. 

While not required, using a professional service can help ensure compliance with legal requirements and protect your personal information.

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Alabama LLC vs Other States

While Alabama offers a range of economic incentives to attract businesses, including tax credits, financing programs, and grants, it’s important to consider that the best state to form your LLC in is generally the one where you plan to conduct most of your business in.

This is because forming your LLC in the state where you operate simplifies compliance with local regulations, including taxes, licensing, and filing requirements, and can ensure that you do not end up having to pay registration and maintenance fees twice.