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How to Form An LLC in Alabama

Starting a business can be exciting but also stressful. You’re taking your success into your own hands. That’s a load of pressure to put on your shoulders. The details can be overwhelming. We recommend that you hire an attorney to help you through the process. You don’t want to go into the situation blind, even with a lawyer’s help. Knowing the basics can get you moving quicker and assuage some of those worries.

Step  1

Choose a name.  Right now you’re probably thinking, “Really? Thanks for that valuable tidbit.” It may seem like an obvious starting point, but the entire process hinges on this crucial first step. A few requirements for your name:

  • Your name must contain the words Limited Liability Company. It can be abbreviated as LLC or L.L.C.
  • Words such as bank, doctor, engineer or other licensed professionals will require additional paperwork to be included in your name.
  • Any words that might lead to confusing your LLC with a federal or state entity (FBI, Treasury, etc.) are not allowed.
  • You must confirm that the name is not taken. Follow this link to do a name search.
  • FINALLY you can reserve your name through the state using this link. It costs between $25 and $28 to reserve your name.
  • BONUS TIP: Search your LLC online. Pick out a name for your website. Reserve a URL even if you don’t plan to build a website immediately. The growth of ecommerce in almost every field just about guarantees that you will need a website in the future.  

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Step 2

Before filling out the paper work, you will need to choose a Registered Agent. This person will agree to accept all of the legal documents on behalf of the LLC.

A registered agent must be one of the following:

  • A resident of Alabama
  • A business entity in Alabama
  • Out-of-state business with a location in Alabama

Once you have designated a Registered Agent, decide who will be members of your LLC. There are no set limits on the number of members. Keep in mind that each member must claim the LLC on their personal taxes.

 

Step 3

Now that you’ve identified the key players, lay the framework and ground rules for your company. This operating agreement must include the following:

  • The name of the company
  • The duration of the LLC. More than likely, you won’t know how long the LLC will last. You can designate the corporation as “perpetual” to avoid having to set any time constraints.
  • List of the names and addresses of each member of the corporation
  • The purpose of the business
  • The businesses mailing address
  • The percentage of ownership for each member
  • Procedures for the addition and removal of members
  • Procedures for dissolving the LLC

There isn’t a set format for an operating agreement but we strongly suggest you have your legal council look over the document before submitting your paperwork.

 

Step 4

Once you have completed the operating agreement, it’s time to get your Employer Identification Number (EIN). This number is essential for filing taxes and paying employees. Think of this as the Social Security number for your business. An EIN can be obtained online through the IRS website or by mail. You must have a Social Security number to apply.

 

Step 5

That’s everything you need to begin filing. It’s quite a long process but hang in there with us; we’re getting down to the fifth and final step.

Filing for your LLC.

All the paper work you need can be found on the Secretary of State website. This is the easy part. The form is only four pages long. Once you’ve completed the Certificate of Formation, submit the form to the Judge of Probate’s office. In order for the Certificate of Formation to be accepted, you must also submit the following:

  • One original and two copies of the Certificate of Formation
  • The Name Reservation Certificate
  • A filing fee of $50 must be included. Cash will not be accepted. Check or money order only.
  • A second check or money order made out to the Secretary of State for $100.

Once you’ve completed all of these tasks, you will receive a stamped copy of your Certificate of Formation. Two weeks after filing, you will be able to verify your business has been registered by using the same business entity search tool on the Secretary of State website.

Did you get all that? The process takes quite a bit of work but in the end, you will have registered your business as an LLC. Now that you are finished with that, it’s time to start growing your business. We can help! Follow this link to speak to a representative in our business services department. We offer all of the financial services your new LLC will need ranging from business loans all the way to payroll services.


*Please note the information listed in this post is a brief overview based on our research and may not cover every step for every specific business. Refer to www.sba.gov or a licensed business attorney in your area for detailed questions and advice.   




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