How to Start an LLC in Alabama (2026)
Alabama requires a name reservation before filing the $200 Certificate of Formation. Confirm the current reservation and payment-service charges. Review agent, agreement, EIN, tax and licensing requirements using the steps below. For tax years beginning after December 31, 2023, an Alabama taxpayer whose calculated Business Privilege Tax is $100 or less is exempt from the tax and does not have to file Form BPT-IN, CPT or PPT. If the calculated tax exceeds $100, review the applicable initial and annual return requirements, classification and deadlines. An Alabama LLC has no separate SOS annual report.
The Certificate of Formation costs $200, plus the required name reservation and applicable service charges. Confirm the actual checkout total. For tax years beginning after December 31, 2023, an Alabama taxpayer whose calculated Business Privilege Tax is $100 or less is exempt from the tax and does not have to file Form BPT-IN, CPT or PPT. If the calculated tax exceeds $100, review the applicable initial and annual return requirements, classification and deadlines. An Alabama LLC has no separate SOS annual report.
- Filing fee
- $200
- Name reservation
- Required; confirm current charge
- SOS annual report
- None
- Business Privilege Tax
- Calculated tax ≤$100: exempt; no BPT return
- Income tax
- 2%–5%
- Processing
- Check current SOS queue
- Formation doc
- Cert. of Formation
Why Form an LLC in Alabama?
Plan for the $200 formation filing, required name reservation and any charges for the chosen service. Ongoing tax and licensing duties depend on the business and its classification.
- No separate annual report anymore — Alabama eliminated the Secretary of State annual report for LLCs (Act 2022-252, effective for tax years after 2023), folding that information into the yearly tax filing instead.
- Most small LLCs owe $0 in Business Privilege Tax — a full exemption applies when the calculated tax is $100 or less, which covers the vast majority of small LLCs.
- Fast processing — online filings typically process within hours to one business day.
- Unique federal tax deduction — Alabama is one of only a few states that lets you deduct your federal income taxes paid from your Alabama taxable income, quietly lowering the real cost of the state's 5% top rate.
- Genuinely low property taxes — a real ongoing-cost advantage if your business owns real estate in-state.
Alabama makes the most sense if you actually live or operate here — the same logic that applies to every state, but worth stating plainly since Alabama isn't marketed as a non-resident privacy or tax-shelter play the way Wyoming or New Mexico are.
Reserve the name before filing the Certificate of Formation. Budget for both the $200 formation fee and the actual reservation/service charge; confirm the current reservation instructions and checkout total.
Alabama LLC Cost Calculator
Toggle the options to see your one-time formation cost and your ongoing annual cost:
Formation fee subtotal
Certificate of Formation: $200. Enter the current reservation and service charges from the state payment screen.
Enter the reservation and service charges to calculate a subtotal.
Other optional filings, provider fees, licenses and taxes are excluded. This tool does not calculate Business Privilege Tax.
The 8 Steps to Start Your Alabama LLC
Here's the full path from name to taxes. Each step has its own detailed guide with a tool to make it easier — the mandatory first move is Step 1: Name Reservation:
Business Privilege Tax — Alabama's Combined Annual Filing
For tax years beginning after December 31, 2023, an Alabama taxpayer whose calculated Business Privilege Tax is $100 or less is exempt from the tax and does not have to file Form BPT-IN, CPT or PPT. If the calculated tax exceeds $100, review the applicable initial and annual return requirements, classification and deadlines. An Alabama LLC has no separate SOS annual report.
For tax years beginning after December 31, 2023, an Alabama taxpayer whose calculated Business Privilege Tax is $100 or less is exempt from the tax and does not have to file Form BPT-IN, CPT or PPT. If the calculated tax exceeds $100, review the applicable initial and annual return requirements, classification and deadlines. An Alabama LLC has no separate SOS annual report.
Check whether the Business Privilege Tax exemption applies before preparing an initial return. For tax years beginning after December 31, 2023, an Alabama taxpayer whose calculated Business Privilege Tax is $100 or less is exempt from the tax and does not have to file Form BPT-IN, CPT or PPT. If the calculated tax exceeds $100, review the applicable initial and annual return requirements, classification and deadlines. An Alabama LLC has no separate SOS annual report.
- ✓Optional formation assistance; confirm filing scope, service pricing and submission responsibilities.
- ✓Handles the mandatory name reservation for you
- ✓Confirm registered-agent eligibility, coverage, included periods and renewal charges.
- ✓Review address-use rules and privacy policies; a service does not remove all information from public filings.
Disclosure: LLC School may earn a commission via this link, at no cost to you. See our advertising disclosure.
Alabama LLC — FAQ
Ahmad Adil is the founder and CEO of LLC School. For filing and ongoing compliance, confirm the requirements with the responsible state agency. This is educational information, not legal or tax advice.
About Ahmad Adil → Compare States →LLC School Guide
Find answers in our website