Cost to Start an LLC in Alabama

If you’re thinking of starting a limited liability company (LLC) in Alabama, it’s a good idea to know in advance how much it’s going to cost. LLC formation fees vary by state, so it’s helpful to do a bit of research and prepare yourself for the necessary steps. 

LLC Costs in Alabama

Alabama Certificate of Formation Cost

In Alabama, you form an LLC by filing an Alabama certificate of formation, which requires a $200 fee. It’s a simple process you can do online at the Alabama Secretary of State website.

If you need a certified copy of the Certificate of Formation, the fee is $10 plus $3 per page. If you need a Certificate of Existence, there is a $25 fee. If you’d like the state to hold your LLC name before you register, you can apply online here for $25 to reserve it for one year. 

Alabama Registered Agent Cost

In Alabama, you are required to have an Alabama registered agent, also known as an agent of service in process.  A registered agent is a person or business authorized to accept legal, tax, and financial documents on behalf of your business.  

In Alabama, you can be your own registered agent, or it can be another member of the LLC. An individual who is not a member or a professional agency can also serve as the registered agent for your LLC. 

Costs for a registered agent service range from $50 a year up to $300 or more. There are several online services, such as ZenBusiness and Northwest Registered Agent, to choose from.

Alabama Business Licenses and Permits Cost

Starting an LLC in Alabama requires obtaining the required licenses and permits from local, state, and federal governments. Fees for these vary, but most costs are minimal.

Federal regulations, licenses, and permits associated with starting your business include doing business as, health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific permits. 

You may also need state-level and local county or city-based licenses. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments to learn more. 

Business license fees depend on the type of business and the agency issuing the license or permit. On average, business licenses cost between $100 and $300+, plus renewal fees.

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package ($149 + state fees). They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

Alabama Operating Agreement Cost

In Alabama, your LLC is not required to have an Alabama operating agreement in place. But it’s highly recommended, as an effective operating agreement can help avoid disputes and lawsuits that could threaten the stability of your LLC. 

An LLC operating agreement is an important legal document that details who owns the business and provides essential information pertaining to member duties. An LLC operating agreement establishes the financial relationship between members and the basics of the working relationships between those members and the managers who oversee daily operations. 

The operating agreement is not filed with the state, but instead remains private. It’s advisable to hire an attorney to ensure your operating agreement is thorough and legally binding. 

Creating an operating agreement is free if you just draw it up yourself (here you can find free Alabama LLC Operating Agreement template). Alternatively, you can pay around $100 for guidance from an online business advisory.

This is an extremely important document, so it’s recommended that you use the services of a specialist or legal firm. If you choose to hire an attorney, the price will be around $500 for a single-member LLC and $2,500 for a multi-member LLC. 

Alabama LLC Formation Service Cost (Optional)

Forming an LLC in Alabama tends to involve a lot of red tape and paperwork, so for many entrepreneurs just starting out it’s a good idea to hire an experienced service provider. 

Some of the best services for forming an LLC in Alabama are ZenBusiness and Northwest Registered Agent. LLC Formation service will take care of all the key steps, keeping you updated while allowing you to focus on launching and growing your business.

The cost of professional services depends on your requirements and LLC formation plan. Most LLC service providers offer different plans/packages and there are many LLC services that offer free LLC formation.

Ongoing Alabama LLC Costs

Every state has a different fee structure and timelines for LLC documents and licenses. It’s important to stay up-to-date or your business could face significant penalties. The fees and timelines for Alabama are detailed below. 

Annual Fees

You’ll need to file an Alabama LLC annual report with your state to keep your LLC in good standing. The fee is $10 and you can file online with the state revenue department. In Alabama, annual reports are due on the 15th day of the 3rd month after the beginning of the taxable year.

Business License Renewal Fees

Some business licenses and permits must be renewed periodically, which may have a small associated fee. In Alabama, these include your business tax registration which is required to get your seller’s permit. 

There is no fee associated with obtaining this license and no renewal is needed. However, costs and renewal fees will apply to other licenses that are required for your business, such as a food service license for a restaurant.