Form an LLC in Alabama: Total Cost & Filing Steps (2026)

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)

1. 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."
2. Reserve the name, $28 online via the SOS portal. This is not optional in Alabama. The reservation is valid for one year.
3. Designate a registered agent, must have an Alabama street address. You can act as your own agent if you live in Alabama.
4. 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.
5. Get a federal EIN, free at irs.gov.
6. 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.
7. Register with the Alabama Department of Revenue, get the State Tax ID via My Alabama Taxes (MAT) for sales tax, withholding, and the BPT.
8. File the Initial Business Privilege Tax return, Form BPT-IN, due 2.5 months after formation. Pay the $50 minimum BPT.
9. File the FinCEN BOI report, required under the Corporate Transparency Act within 30 days of formation. Free to self-file at fincen.gov/boi.
10. 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

1. Alabama Secretary of State Business Services, last verified 2026-05-14
2. Alabama Department of Revenue Business Privilege Tax, last verified 2026-05-14
3. Alabama Code Title 10A (Business and Nonprofit Entities), last verified 2026-05-14
4. My Alabama Taxes (MAT) portal, last verified 2026-05-14
5. IRS Publication 3402, Taxation of Limited Liability Companies, last verified 2026-05-14
6. 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.

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Not legal advice. Estimates based on publicly available data from each state's Secretary of State office. Consult a licensed attorney in your jurisdiction.

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This is a syndicated post. Original article + interactive calculator: https://llcformationcost.com/alabama-llc-cost/