$300 to form your Alabama LLC
$200 state filing fee · $50/yr franchise tax · $50annual report. 5-year cost of ownership: $700.
By Aissam Baidi · Reviewed against www.sos.alabama.gov · Verified 2026-04-28
How much does a Alabama LLC cost in 2026? A Alabama LLC costs $300 in year one ($200 filing fee for the Certificate of Formation plus $50 franchise tax). Ongoing cost is $100/year ($50 annual report + $50 franchise tax). Five-year total: $700. Standard processing takes about 1 business days; expedite for $0 extra. At $300, Alabama runs $145 above the US median of $155 for year-one LLC costs, mostly driven by higher state filing fees. Alabama sits in the mid-range for LLC formation costs, competitive enough for in-state operators with no major surprise fees beyond what's listed here. Sourced from www.sos.alabama.gov, verified 2026-04-28.
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Alabama vs the rest of the US
Year-1 LLC cost in Alabama is $300. That's $265 more than the cheapest state (Montana). Form there if you can register your business out-of-state.
All figures are year-1 LLC formation cost (state filing fee + first-year report fee + first-year franchise tax). Sourced quarterly from each state's Secretary of State office.
5-year cumulative cost projection
How Alabama's LLC cost compares against the popular "shop another state" alternatives over 5 years of ownership. Steeper line = higher recurring cost.
All 50 states + DC, by 5-year LLC cost
Heat-map of 5-year ownership cost across the US. Click any state to see its full breakdown. Cheapest in green, most expensive in dark red.
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5-year cost = year-1 (state filing + first-year report + first-year franchise tax) + 4 years of ongoing (annual/biennial report + franchise tax). Sourced quarterly from each Secretary of State.
Where would you save the most?
Filing in Montana instead of Alabama could save you about $665 over 5 years (95% lower total).
Cross-state filing requires foreign qualification in the state you actually operate from, which adds $50-$300/year in fees plus a registered agent in each jurisdiction. Run the math before deciding.
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Alabama LLC formation, decoded
16,500 LLCs formed in Alabama in 2025 • Top industries: automotive manufacturing, aerospace and defense, healthcare services
Alabama's business climate is increasingly dynamic and founder-friendly, driven by a diversifying economy with strong growth in advanced manufacturing, particularly automotive and aerospace, alongside a burgeoning bioscience sector and a lower cost of doing business.
Alabama is situated in the heart of the Southeastern United States, sharing borders with Mississippi to the west, Georgia to the east, Florida to the south, and Tennessee to the north, positioning it as a strategic hub for regional commerce.
Unlike many states, Alabama does not require a separate annual report for LLCs; instead, essential entity information is updated annually as part of the state's Business Privilege Tax return.
When forming your LLC in Alabama, prioritize online filing for near-immediate approval and ensure a clear understanding of the Business Privilege Tax, which serves as your primary annual state compliance mechanism.
Alabama charges $50 per year in franchise tax regardless of revenue. Over 5 years, that compounds to $200 in addition to your filing and report fees.
Full Alabama LLC cost guide
Alabama LLC Cost: $200 Filing + $50 Minimum Business Privilege Tax (2026)
Forming an LLC in Alabama costs $200 to file the Certificate of Formation with the Secretary of State, plus a mandatory $28 name reservation that must happen before you file, plus a $50 minimum Business Privilege Tax (BPT) due annually to the Alabama Department of Revenue. Year-one cost: $278. Five-year cost of ownership: $478. Alabama is one of the few states that requires you to reserve your LLC name as a separate, fee-charging step before the formation filing is even accepted, a quirk most founders learn about the hard way.
Reviewed by LLC Formation Cost Editorial Team, fact-checked against primary government sources • Last updated 2026-05-14 • 5 primary government sources cited
TL;DR
Alabama LLCs file a Certificate of Formation with the Alabama Secretary of State for $200 ($208 online with the $8 portal fee). Before that filing is accepted, you must reserve the LLC name for $28 online (or $25 by mail). The ongoing cost is the Business Privilege Tax, a net-worth-based privilege tax administered by the Alabama Department of Revenue, with a $50 minimum that almost all small LLCs hit. The BPT replaces what other states call a franchise tax or annual report fee. There is no separate Secretary of State annual report for LLCs; the BPT return functions as the annual report. Alabama processes online filings within 1 business day. There is no publication requirement. The state has a 5% personal income tax, so LLC pass-through profits are taxed at the member level.
Alabama LLC cost breakdown (2026)
| Line item | Cost | Source |
|---|---|---|
| Name reservation (mandatory, online) | $28 | sos.alabama.gov |
| Certificate of Formation | $200 | sos.alabama.gov |
| Business Privilege Tax (minimum) | $50/yr | revenue.alabama.gov |
| Business Privilege Tax (max) | $15,000/yr | revenue.alabama.gov |
| Registered Agent service (Alabama-resident required) | $50-$200/yr | n/a |
| Year 1 total (no add-ons) | $278 | |
| Year 2+ ongoing (DIY no RA) | $50 | |
| 5-year total (DIY) | $478 |
All figures verified 2026-05-14 from primary Alabama state sources.
What makes Alabama unusual
Three things separate Alabama from the rest of the country:
- Mandatory pre-filing name reservation. Alabama is the only state that forces you to reserve the LLC name for a fee before the Certificate of Formation can be accepted. Most states fold availability checks into the filing portal at no charge. In Alabama, you pay $28 to reserve, then $200 to file. Skip the reservation and your filing gets rejected.
- Business Privilege Tax instead of a flat annual report. The BPT is a sliding net-worth tax under Ala. Code § 40-14A, ranging from $0.25 to $1.75 per $1,000 of taxable net worth, with a $50 minimum and $15,000 cap. For most small LLCs the answer is $50, but the structure means a well-capitalized LLC pays more.
- No Secretary of State annual report. Many founders look for an SOS annual report and don’t find one. That’s correct, the ADOR BPT return doubles as the annual filing.
The state has no franchise tax in the traditional sense and no publication requirement. Sales tax (4% state plus local) and a 5% personal income tax on pass-through earnings are separate state-level concerns handled by the Department of Revenue.
Filing steps (DIY, no service)
- Pick a name and check availability, search at the Alabama SOS Business Entity Records. Names must include “Limited Liability Company,” “LLC,” or “L.L.C.”
- Reserve the name, $28 online via the SOS portal. This is not optional in Alabama. The reservation is valid for one year.
- Designate a registered agent, must have an Alabama street address. You can act as your own agent if you live in Alabama.
- File the Certificate of Formation, $200 with the Secretary of State. Online filings clear within 1 business day. You’ll attach the name reservation certificate to the filing.
- Get a federal EIN, free at irs.gov.
- Draft an operating agreement, not required by Alabama statute but standard practice. Single-member LLCs without a written agreement are easier to attack on veil-piercing arguments.
- Register with the Alabama Department of Revenue, get the State Tax ID via My Alabama Taxes (MAT) for sales tax, withholding, and the BPT.
- File the Initial Business Privilege Tax return, Form BPT-IN, due 2.5 months after formation. Pay the $50 minimum BPT.
- File the FinCEN BOI report, required under the Corporate Transparency Act within 30 days of formation. Free to self-file at fincen.gov/boi.
- Calendar the annual BPT renewal, Form PPT, due April 15 each year for calendar-year LLCs.
Online filings are processed within 1 business day at the SOS level. The BPT registration with ADOR is a separate workflow.
Page-unique facts
- Alabama is the only US state with a mandatory pre-filing name reservation fee for LLCs. Skip it and the Certificate of Formation is returned.
- The Business Privilege Tax replaces the annual report. There is no separate SOS annual filing. The BPT is administered by the Department of Revenue, not the Secretary of State.
- The BPT minimum is $50, the maximum is $15,000. Most small LLCs pay $50. LLCs with substantial Alabama-situated net worth (real estate, equipment, in-state receivables) can climb the schedule.
- Initial BPT is due 2.5 months after formation. A common stumble: founders form in March and discover a BPT-IN return due in late May before they’ve even opened a bank account.
- Series LLCs are not recognized in Alabama. Real estate investors who use series structures elsewhere have to form separate LLCs or use a parent-subsidiary structure.
FAQ
Do I really have to reserve the LLC name before filing in Alabama?
Yes. Alabama is the outlier here. Ala. Code § 10A-1-5.11 requires a name reservation certificate to accompany the formation filing for an LLC. The reservation costs $28 online (or $25 by mail) and is valid for 365 days. Without it, the Secretary of State will reject the Certificate of Formation. Source: Alabama Secretary of State Business Services, verified 2026-05-14.
What is the Business Privilege Tax?
The BPT is Alabama’s annual privilege tax on entities with limited liability protection, including LLCs. It’s calculated on the entity’s taxable net worth apportioned to Alabama, at a rate of $0.25 to $1.75 per $1,000 of net worth (the rate depends on Alabama net income). The minimum is $50 and the maximum is $15,000. The BPT is filed on Form PPT for ongoing years and Form BPT-IN for the initial return. Source: Alabama Department of Revenue Business Privilege Tax, verified 2026-05-14.
Is there an annual report fee in Alabama for LLCs?
No separate annual report. The Business Privilege Tax return doubles as the annual filing. You file Form PPT each year with the Alabama Department of Revenue. There is no Secretary of State annual report or fee for Alabama LLCs after the initial formation. Source: revenue.alabama.gov.
How long does Alabama LLC formation take?
Online filings via the SOS portal are processed within 1 business day. Mail filings typically take 3-5 business days. There is no separately priced expedite fee for online filings because the standard online turnaround is already next-business-day. Source: Alabama Secretary of State Business Services, verified 2026-05-14.
Does Alabama require an operating agreement?
No. Alabama’s LLC Act (Ala. Code Title 10A, Chapter 5A) does not require an LLC to adopt an operating agreement, and the operating agreement is not filed with the state if you do adopt one. That said, single-member Alabama LLCs without a written operating agreement are easier targets for veil-piercing arguments, and banks will usually still ask to see one before opening a business checking account. Source: Alabama Code Title 10A.
When is the initial Business Privilege Tax due?
The initial BPT (Form BPT-IN) is due 2.5 months after formation. For an LLC formed January 15, the BPT-IN is due March 31 (the last day of the 2.5-month window). Miss it and the state assesses a late filing penalty plus interest. After that first year, you switch to the recurring PPT return due April 15. Source: Alabama Department of Revenue, Business Privilege Tax instructions, verified 2026-05-14.
State quirk: the name-reservation toll booth
Alabama’s mandatory $28 name reservation is one of the most counterintuitive pre-filing requirements in the country. In every other state, the formation portal checks name availability for free as part of the filing itself. In Alabama, the name reservation is a separate transaction on the Secretary of State’s site, with its own confirmation certificate that must be attached to the Certificate of Formation when it’s submitted. The reservation is good for one year, but you can’t re-reserve indefinitely to “park” a name, the state will close down a reservation account that looks like name-squatting. The legal basis is Ala. Code § 10A-1-5.11, originally part of the 2009 Alabama Business and Nonprofit Entities Code overhaul. It exists because Alabama’s name database is maintained separately by the Office of the Secretary of State rather than integrated into a single filings portal, and the reservation fee covers that maintenance.
Common mistake in Alabama
The most common Alabama LLC mistake is skipping the $28 name reservation and trying to file the Certificate of Formation directly. The filing gets rejected, the founder has to refile, and depending on timing they may also miss the 2.5-month deadline for the initial Business Privilege Tax return. The second most common mistake is assuming the BPT is optional for inactive or pre-revenue LLCs. It isn’t. The $50 minimum applies whether the LLC has done business or not.
Sources
- Alabama Secretary of State Business Services, last verified 2026-05-14
- Alabama Department of Revenue Business Privilege Tax, last verified 2026-05-14
- Alabama Code Title 10A (Business and Nonprofit Entities), last verified 2026-05-14
- My Alabama Taxes (MAT) portal, last verified 2026-05-14
- IRS Publication 3402, Taxation of Limited Liability Companies, last verified 2026-05-14
- IRS Apply for an Employer Identification Number Online, last verified 2026-05-14
About the author
Aissam Baidi is the founder and researcher behind llcformationcost.com. He verifies Alabama LLC fees directly from sos.alabama.gov and revenue.alabama.gov on a quarterly cycle. Connect on LinkedIn.
Not legal advice. Estimates based on publicly available data from each state’s Secretary of State office. Consult a licensed attorney in your jurisdiction.
Alabama LLC compliance checklist
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Ask anything about Alabama LLCs
Pre-answered for the questions founders ask first. Tap one to read the full answer, or write your own.
What's the actual filing fee in Alabama?
Alabama charges $200 to file the Certificate of Formation with www.sos.alabama.gov. Expedited service is available for an additional $0, reducing turnaround to about 1 business days vs. the standard ~1.
Does Alabama have a franchise tax?
Yes. Alabama levies a $50/year franchise tax on LLCs regardless of revenue. Year-one is also $50. Over 5 years that compounds to roughly $250 in franchise tax alone.
What's the annual report situation in Alabama?
Alabama requires a annual report at $50.
Do I need a registered agent in Alabama?
Yes. Every Alabama LLC must designate a registered agent with a physical Alabama street address (no P.O. boxes), available during business hours to accept legal mail. You can serve as your own agent for free if you live in Alabama, but most founders use a commercial service ($100-150/year) to keep their home address off the public record.
What's unusual about forming an LLC in Alabama?
Unlike many states, Alabama does not require a separate annual report for LLCs; instead, essential entity information is updated annually as part of the state's Business Privilege Tax return.
Alabama-specific Operating Agreement preview
Five substantive sections with Alabama-specific clauses (filing form, franchise tax, publication requirements, governing law). Use as a starting point with your attorney, or upgrade for the full 12-section document.
OPERATING AGREEMENT OF [COMPANY NAME], LLC
Article I. Formation
This Operating Agreement is entered into as of [date], by and among the undersigned members of [Company Name], a Limited Liability Company organized under the Alabama Limited Liability Company Act. The Company was formed by filing the Certificate of Formation with the Alabama Secretary of State on [filing date]. The Company's principal office is located at [address], Alabama.
Article II. Members & Membership Interests
The members of the Company are listed on Exhibit A. Each member's capital contribution and percentage interest are set forth therein. Members may be admitted only by [unanimous / majority] consent of existing members. Alabama law does not mandate a written operating agreement, but the parties agree that this writing governs.
Article III. Management
The Company shall be [member-managed / manager-managed]. Alabama default rules apply to any matter not addressed here. The Company shall set aside reserves for the annual Alabama franchise tax of $50. The Company shall timely file the annual report ($50) with the Alabama Secretary of State to maintain good standing.
Article IV. Distributions & Allocations
Profits, losses, and distributions shall be allocated among members in proportion to their percentage interests, except as otherwise agreed in writing. Distributions shall be made [quarterly / annually / at the discretion of the [members / managers]]. The Company shall maintain capital accounts in accordance with Treas. Reg. § 1.704-1(b).
Article V. Dissolution & Alabama-Specific Provisions
The Company shall dissolve upon [vote of majority members / occurrence of specific events]. Upon dissolution, the Company shall wind up its affairs and distribute remaining assets in accordance with Alabama law. This agreement is governed by Alabama law and any disputes shall be resolved in [forum].
7 more sections in the full document
Tax matters, indemnification, transfer restrictions, dissolution mechanics, signature pages, exhibits A & B (member roster + capital contributions), and amendment procedures. Plus state-specific signature-line text per $Alabama convention.
Not legal advice. This template is a starting point for discussion with a licensed Alabama attorney. Operating Agreements should be reviewed by counsel for your specific situation.
Alabama LLC cost vs popular alternatives
A common decision is whether to form in your home state or an out-of-state filing state (Delaware, Wyoming, New Mexico). Out-of-state formation usually requires foreign-LLC registration in your home state too, adding both filing costs.
| State | First-year cost | Annual renewal | Franchise tax | Processing days | Publication required |
|---|---|---|---|---|---|
| Alabama | $300 | $100 | $50/yr | 1 days | - |
| Delaware | $390 | $300 | - | 14 days | - |
| Wyoming | $160 | $60 | - | 14 days | - |
| New Mexico | $50 | $0 | - | 14 days | - |
| Florida | $263.75 | $138.75 | - | 5 days | - |
Fees verified 2026-04-28 from each state's Secretary of State.
Frequently asked questions about Alabama LLCs
How much does it cost to form an LLC in Alabama in 2026?
Alabama charges $200 to file the Certificate of Formation. An ongoing annual report fee of $50 keeps the LLC in good standing. Plus a $50 franchise tax annually. Verified 2026-05-14 from www.sos.alabama.gov.
Does Alabama require an annual report?
Yes. Alabama requires a annual report at $50.
What is the processing time in Alabama?
Standard processing in Alabama takes about 1 business days. Expedited processing is available for an additional $0, reducing turnaround to about 1 business days.
Does Alabama have a publication requirement?
No. Alabama does not require LLC formation to be published in newspapers.
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Open the AI advisorNot legal advice. Estimates based on publicly available data from each state's Secretary of State office. Consult a licensed attorney in your jurisdiction.