How To Form An LLC In Alabama [2023]

Overview

Let’s get started.

There are three ways to start an LLC in Alabama:

• Do it yourself
• Hire a professional service
• Or hire an attorney

First, let’s talk about how to DIY your LLC registration.

1. DIY LLC Formation

   There are 7 basic steps that you need to follow to start an LLC in Alabama.

   Step 1: Name your business.

   Your business name has to be unique. You can do a Google search for “Business Entity Records Alabama Secretary of State” and click on the top result. You can also check out the link in the description.

   This page shows a list of all the businesses registered in Alabama. A search bar allows you to type in the business name you want to use. If there are no other businesses with the same name, you’ll see a note that says, “No Matches Found”. Otherwise, it will show a list of duplicates meaning you should not use that name. 

   Aside from checking if there’s an existing business with the same name, check possible domain names and social media tags as well. The last thing you want is to register a business name and find out later that you have limited options in terms of your online presence. https://www.namecheckr.com/ is a great tool you can use for this step.

   Alabama laws also require you to add LLC or Limited Liability Company to your registered business name. You can’t use terms like “corporation” or anything else that could confuse people about what type of business entity you are.

   There’s one added step that makes the LLC registration process unique to this state. Unlike other states, Alabama requires you to reserve the name with the Secretary of State. 

   Don’t worry because this extra step only costs $25 but it would still take you a bit extra time as you would still have to fill out the Alabama LLC Name Reservation Request Form, which you can download using the link on the description.

   Once you’ve filled it out, just mail it to the Secretary of State and wait for up to a week for the request to be processed.

   Step 2: Get a registered agent

   LLCs in Alabama are required to have a registered agent who will serve as the primary point of contact for anything that has to do with your business.

   Although it’s possible to register your own name or the name of friends and family as the agent, I highly recommend getting a professional. The registered agent will be receiving and managing tax warnings, subpoenas and other critical legal papers on your behalf. 

   While you may have trusted friends and family members who are willing to help out, a professional registered agent has the training needed to sort potential issues and protect your company at all costs.

   Your registered agent also needs to be available during business hours and should have an actual physical address and not a PO Box. While you might be tempted to use your own home address as the registered location, it’s going to be part of the public record and might not be a wise move to expose your personal address. In this case, I recommend you use services like anytimemailbox.com (special link in description below). They will provide you with a physical business address, scan your mail and even forward it to your home. It’s a very useful service at a very low cost.

   Worried about the cost? Hiring a registered agent is not that expensive. You can even get a registered agent for free if you pay for a service to register the LLC for you. 

   I highly recommend ZenBusiness, a service that can help you register your LLC and includes a registered agent as part of the package at no extra cost.

   ZenBusiness also provides a dashboard where you can keep a close track of all documents and correspondence that the agent receives. Feel free to check out my special link on ZenBusiness if you are interested in signing up for their FREE service.

   Step 3: Filing the Alabama LLC Certificate of Formation

   The next step is filing the Alabama LLC Certificate of Formation. This is done through the Business Entities Division under the Secretary of State, as well as the Office of the Judge of Probate.

   It usually costs $200 if you’re a domestic LLC and $150 if you’re a foreign LLC. 

   What’s the difference?

   A domestic LLC means that you’re a resident of Alabama who wants to build a business in Alabama.

   On the other hand, a foreign LLC means that you live outside Alabama but would like to build a business or start a franchise of an existing business in Alabama.

   This part of the process can take up to two weeks and can be done either online or by mailing the completed form to the Secretary of State. The Judge of Probate takes 3 to 4 days to handle the request, then passes it on to the Secretary of State, who takes around 10 days to complete their end of the process.

   If you feel that two weeks is too long, you can expedite the process by paying a one-time fee of $100. This reduces the Secretary of State’s usual 10 days processing time to just 3 days.

   The good news is, Zenbusiness can help you with this process for FREE as well as the 2 previous steps by signing up to their Starter plan. No other formation service offers a great deal like this! This will save you a lot of time plus allow you to feel secure knowing that a professional is looking after your business.

   Step 4: Prepare an operating agreement

   Alabama doesn’t require LLCs to have an operating agreement. However, it’s best practice to have one in place especially if there are other members deciding for the business.

   An operating agreement outlines every critical process that needs to be followed especially when it comes to “big picture” issues. These issues may include:

   • Allocation of earnings and losses in case the company is dissolved
   • Decision-making process and voting rights
   • Transfer of membership interest, profits and losses
   • And any other concern that impacts the business overall

   And if you decide to use ZenBusiness to set up your LLC, they can help you with the operating agreement document for only $125. This will save you a lot of time and will ensure that you have all your documents in order for the registration process.

   If you find information like this useful for your business then feel free to like and subscribe to my channel for more helpful content like this.

   Step 5: Obtain an EIN

   Getting an Employer Identification Number or an EIN comes next. 

   An EIN is a federal tax ID used by the IRS and is used to identify your firm on tax filings. This is also the identifier used when you pay your Business Privilege Tax, open a bank account, or apply for permits and licenses.

   I know most processes where the IRS is involved can get tricky and confusing. Filling out these complicated forms also takes longer to complete than the previous steps. This makes having a registered agent who can handle all of this for you even more beneficial.

   Step 6: Open a business bank account

   To open a business bank account, you’re going to need an EIN, your business’s formation documents, a business license and your ownership agreement if you have one.

   While this step requires you to make a trip to the bank, you can start off with an online banking service like wise.com where you can apply from the comfort of your own home (I will leave a special discounted link in description for you again). You could always go to the bank later when you have more time.

   Step 7: Buy a domain name

   Now that you’ve got the physical aspects of the business covered, it’s time to take care of your digital presence. 

   Buy a domain name from Namecheap.com, they have the cheapest price and also provide domain name privacy for free. It will only cost you less than $10 per year so make sure to grab your website name before someone else takes it off you.

   There are still a few more important steps to take to fully complete your business setup but it may drag this video out too long so I have condensed down everything into an actionable step by step checklist where you can grab it from here for FREE..

2. Hiring a Professional Formation Service

   See all those steps I walked through on how to register an LLC in Alabama?

   You don’t need to worry about most of those steps if you have someone like ZenBusiness take care of the setup process for you.

   Again, ZenBusiness will do the whole LLC registration process for you which means you would not have to do any of the previous steps 1 to 5.

   Zenbusiness offers a one-of-a kind deal. At absolutely no charge for the first year, Zenbusiness will prepare and handle your state filings and help you check whether the business name you want is available or not. You only have to pay the state filing fees of $236. Going the DIY route means that you’ll have to pay $236 in fees anyway, so why not free up your time to work on your actual business and let ZenBusiness take care of what they do best? 

   ZenBusiness has an in-house team that takes care of the entire registration process, so you’re confident that you have professionals handling it for you. This is also why all of their plans have a “100% Accuracy” guarantee, which you don’t get with many other providers who outsource all their work. That makes the free service a no brainer deal!

   Now, if you want to expedite the filing process, you can upgrade to the $199 Pro package which includes faster filing, worry-free compliance where they will help submit your annual reports, and guided operating agreement. 

   For an even faster 1-2 day processing time with all the bells and whistles, you can go all the way to the $299 Premium plan which also provides you with a domain name, a website, and a business email. If you have chosen one of these plans and are ready to get started, then you can use this special link to go and create your LLC.

3. Hiring an Attorney

   Finally, the third way to register your LLC is by hiring an attorney. 

   Hiring an attorney who specializes in business formation makes sense because they can help you minimize risks while making sure you comply with every requirement.

   An attorney will also give you the most personalized service possible, but this comes at a cost. Building an LLC will cost you around $1000 to $1500 through an attorney, but this is more than worth it if your business is in a risky field or could have a lot of legal complications.

   I recommend signing up for Rocket Lawyer’s 7-day free trial and taking advantage of the free consultation and review of documents. This will save you thousands of dollars when compared to other attorneys. Once you’ve decided that this is a service you really need, then you can pay for their premium services for $39.99 per month. Link to these services is available in the description below.

   Of course, if your business is low-risk, your best option would still be to work with ZenBusiness.

Summary

Have you thought about which option works best for you?

If you think you can handle things yourself via the DIY route, then read this article that will help you choose the best bank account for you. 

But if you want the convenience of getting professional formation services and are interested in working with ZenBusiness, then I recommend you watch this in-depth tutorial and review that I made on their services. 

See you in the next article!