Launching a business in Alabama can be a clever strategy. The state offers low operating costs, a streamlined regulatory environment, and growing sectors. These advantages are attracting both local and foreign entrepreneurs.
If you are thinking of starting your business in this Southern state, a Limited Liability Company (LLC) offers flexibility and protection.
This is an Alabama LLC formation step-by-step guide. We highlight the legal requirements, costs, and explain the role of Bizstartz in simplifying the process for non-U.S. residents.
Why Form an LLC in Alabama, Besides Southern Charm and Football?
Alabama has been gaining traction as a business friendly state. Here are a few pointers that explain the booming entrepreneurial activity for LLC formation in Alabama:
✅ Low Costs of Formation and Operations:
Alabama stands out for its low renewal, filing, and tax fees when compared to California and New York. With these advantages, startups and small businesses can further reduce their overhead costs.
✅ Business Privilege Tax Instead of Franchise Tax
Alabama’s Business Privilege Tax (BPT) is charged in place of a traditional franchise tax. Lower than most states, it is set at a minimum of $100 per year. Alabama’s business taxes are more affordable than states imposing flat-rate franchise taxes or a percentage-based franchise tax.
✅ No Residency Requirement
Alabama also permits non-U.S. residents to form and own LLCs. Citizenship or physical presence in the United States is not a requirement to register a company, which is appealing to many.
✅ Strategic Location in the Southeast U.S.
With easy access to greater southern metropolises, Alabama holds a strategic location. Businesses providing eCommerce or services will find it easier to tap into crucial markets.
Steps to Form an LLC in Alabama Starting with Naming Your LLC
1. Choose a Name for Your LLC
Your LLC’s name is not only used for administrative purposes. It is your brand identity, and Alabama law requires that it must be distinguishable from other registered business entities.
Rules for Naming an LLC in Alabama:
- Name must finish with: “LLC,” “L.L.C.,” or “Limited Liability Company.”
- Businesses cannot be identical or too closely matched to another business on record.
- Cannot include restricted words (e.g., “bank,” “insurance”) unless licensed.
🛠️ Bizstartz Pro Tip: Before name reservation, check availability with Alabama Business Entity Search Tool.
2. Reserve Your LLC Name (Mandatory in Alabama)
Name reservation for LLC is mandatory in Alabama, unlike other states where this step is optional.
- To reserve your business name,
- Fill out Name Reservation Request Form with Alabama Secretary of State. Apply online or by mail.
- A Name Reservation Certificate valid for 12 months is then issued.
💵 Cost: $28 (online), $25 (mail)
📌 Certificate of Formation filing is not possible until this step is completed.
🧩 Reservation can be automated by Bizstartz.
3. Appoint a Registered Agent in Alabama
A Registered Agent is an individual or business entity designated to receive legal documents, government mail, and legal documents on your business’s behalf.
Registered Agent Requirements:
- An actual physical address in Alabama is needed. (No P.O. boxes)
- Availability during normal business hours.
- Can be an individual (friends or family) or through a registered agent service.
🔒 Non-resident owners benefit from professional agents like Bizstartz for privacy and compliance.
4. File the Certificate of Formation
After reserving your business name and securing your Registered Agent, you may proceed to officially create your LLC by submitting the Certificate of Formation to the Alabama Secretary of State.
Included in Filing:
- Business name reserved.
- Registered Agent’s name and physical address.
- Principal address of your LLC.
- Name and signature of the LLC organizer.
📝 Filing Options:
- Online through the Alabama Secretary of State portal.
- Via mail (undoubtedly slower processing).
💰 Filing Fee: $200
🧾 Bizstartz expertly manages this entire process ensuring accuracy and completion for your filings.
5. Draft an LLC Operating Agreement
While there’s no legal requirement for an Operating Agreement in Alabama, it is highly advisable for multi-member LLCs or those involving foreign ownership.
What Are the Components of the Agreement?
- Ownership structure (member vs. manager-managed)
- Profit and loss distribution
- Roles and responsibilities
- Voting and decision-making processes
- Rules for adding or removing members
📂 In the absence of an Operating Agreement, your LLC will be governed by Alabama’s default statutes. These may be tailored to a generic approach and could be detrimental to your preferred business model.
🛠️ Here at Bizstartz, we ensure to draft fully tailored Operating Agreements that meet your business structure and goals.
6. Apply for an EIN (Employer Identification Number)
An EIN is also referred to as a Federal Tax ID and is necessary:
- To open a U.S. business bank account
- To file federal and state taxes
- To hire employees
- To apply for business credit
- To register for payment gateways like Stripe or PayPal
How to Apply:
- U.S. residents – Apply online via the IRS website
- Non-U.S. residents – Apply via Form SS-4 and submit by fax or mail.
⏳ Processing for non-residents can take 2-3 weeks.
💼 Even without an SSN or ITIN, Bizstartz can apply for an EIN on your behalf.
7. Register for Alabama State Taxes
Once the LLC has been formed, depending on the nature of the business activity, there may be state-specific tax registrations.
Alabama Taxes for LLCs:
- Business Privilege Tax (BPT) – Tax for LLCs charging a minimum of $100 a year.
- Sales and Use Tax – Applies to those actively selling goods in Alabama.
- Withholding Tax – Applies to those who hire the state’s employees.
📲 Use the My Alabama Taxes (MAT) portal to register for state taxes.
8. Open a U.S. Business Bank Account
With a business bank account, you are able to separate your finances, a requirement to protect LLC liability.
What You’ll Need:
- Certificate of Formation
- EIN
- Operating Agreement
- Passport for non-U. S. residents
- Proof of Address and Ownership
🏦 You can use remote-friendly banks like Mercury or Relay to register for a business account and you do not have to be present in the U.S.
9. Apply for Local Licenses and Permits
Certain local business licenses or permits may be required depending on your location in Alabama and your industry.
Common Examples:
- Retail license
- Home based business permit
- Food or health permits
Check with your county probate office or local city hall for requirements.
⚠️ You should be aware that local licensing non-compliance can lead to penalties or business suspension.
Total Cost to Start an LLC in Alabama
Here’s a breakdown of common costs:
| Service | Cost |
| Name Reservation | $25–$28 |
| Certificate of Formation Filing | $200 |
| Registered Agent (optional) | $49–$125/year |
| EIN (Free via IRS or paid service) | $0–$75 |
| Operating Agreement (optional) | $50–$150 |
| Annual Business Privilege Tax | $100 minimum |
Alabama LLCs Annual Requirements
Legal compliance-dependent issues: your Alabama LLC’s status, how to maintain it and keep non-compliance issues in check.
📌 Business Privilege Tax
- Due Every Year
- Calculated based on the net worth of the business
- Annual minimum payment of $100
📨 Maintain Registered Agent
- Make sure the agent is still active and properly recorded with the Secretary of State
🔄 Renew Licenses or Permits
- Some local business licenses may have an annual renewal requirement based on your region.
Can non-US residents form an Alabama LLC?
Yes! And it’s a common option. There are no citizenship or residency restrictions on LLC ownership in Alabama. Foreign business owners may:
- Control a 100% owned LLC
- Designate a Registered Agent located in the U.S.
- Secure an EIN
- Open a U.S. business bank account
- Register with Stripe, PayPal, Amazon Seller, and others
🌍 At Bizstartz, we assist global founders in creating LLCs in the United States without traveling or dealing with American red tape.
Why Form an Alabama LLC with Bizstartz?
For non-residents, we offer a quick, remote, and seamless LLC formation process without hassle.
What comes with our Complete Alabama LLC Service Package?
✅ Reserved & Verified Business Name
✅ Filing Formation Certificate
✅ Applying for EIN (with or without SSN)
✅ Drafting Operating Agreement
✅ Assisting in opening Bank of America account
✅ Providing Registered Agent Service
✅ Support for Compliance Reminders and Support Services
💼 Whether you’re a solo founder or launching a global brand, Bizstartz ensures your U.S. business is formed correctly and fully compliant.
Conclusions
American and foreign entrepreneurs alike will find that Alabama is an effective and affordable option to establish their LLC. The state has low costs, permissive ownership policies, and a robust business climate, making it an attractive location to establish a US business.
Ready to get started?
Let Bizstartz take care of every step, from name reservation to EIN and banking, so you can focus on growing your business.
👉 Launch Your Alabama LLC with Bizstartz Today
