Requirements for forming an LLC in Alabama
When forming a Limited Liability Company certain steps must be taken to keep the business in compliance on an ongoing basis.
Name requirements for LLCs
Limited liability corporations must have distinctive names ending with “Limited liability company”, “LLC” or “L.L.C.”. There are no restricted or prohibited name designations for Alabama LLCs.
LLC filing requirements
If you decide to incorporate an LLC in the “Cotton State”, then you must file a formation document called the Articles of Organization. Filing the Initial Business Privilege Tax-Return report and an Annual report with the Department of Revenue is also required within 3 and a half months from the date of incorporation. LLCs incorporated in Alabama may be asked to undertake filings at the county level, prior to incorporation.
Required information for the Articles of Organization
The Articles of Organization must contain the name and address of a registered agent who owns a physical Alabama address and who is available to manage legal and tax documentation. Inc. Plan (USA) can help you with the necessary filings and also with qualified registered agent service.
LLC taxes and fees
LLCs incorporated in Alabama (both foreign and domestic) are classified by the state law as being partnerships for Alabama tax purposes. Therefore, LLCs will not be charged based on their net income, but their members must include their distributive share of revenue in their own taxable adjusted gross income. Also, LLCs are subjected to a minimum privilege tax of $100, and an EIN is required for companies with employees.
Requirements for forming a C corporation in Alabama:
Each of the 50 American states has its requirements for incorporating. Essential requirements for C- corporations established in Alabama are as follow.
Name requirements for C corporations
The allowed name designations for businesses incorporated in Alabama are “Corporation” or “Incorporated” and their abbreviations “Corp.” or “Inc.”. However, there are some designations which are restricted and need special approval from the state authorities, like “Bank”, “Banking”, “Electric”, “Engineering”, “Insurance” or “Trust.” If you need help with choosing the right incorporation name check our free corporate name search section.
Filing requirements in Alabama
In order to form a corporation in Alabama, entrepreneurs must file a document of formation called Articles of Incorporation. Alabama state law requires the filing of an Initial Business Privilege Tax-Return report and an Annual report with the Department of Revenue within 2 and a half months from the date of incorporation. With 67 counties in Alabama, companies may be required to undertake filings at the county level, prior to incorporation.
Required information for the Articles of Incorporation
The Articles of Incorporation must include the names and addresses of the company’s managers, and also, the name and address of a registered agent with a physical address in Alabama. Also, shares and par value must be specified in the Articles of Incorporation. Filing extensions for the Annual reports is also permitted and is available for six months. Inc. Plan (USA) can help you with the necessary filings and also with qualified registered agent service.
Taxes and fees requirements
Both domestic and foreign Alabama corporations are subjected to an income tax of 6.5 % of net income and a minimum $100 privilege tax. However, if you are a multistate business conducting only sales activities without owning or renting realty or personal properties in Alabama and with a gross sales volume that doesn’t exceed $100 000, then you can choose an income tax at the rate of 0.25% of the sales’ volume. If you plan on hiring, Alabama law will ask you for a tax identification number (EIN).