What is an LLC?

An LLC (Limited Liability Company) is a type of business structure that provides limited liability protection for its owners. It is similar to a corporation, but offers more flexibility and fewer formalities. In Alabama, forming an LLC requires filing articles of organization with the Secretary of State's office.

1. Choose a Name for your LLC

When starting a Limited Liability Company (LLC) in Alabama, one of the most important steps is to choose an appropriate name. The name must be distinguishable from any existing LLCs and must include “Limited Liability Company” or one of its abbreviations. Additionally, words like “bank”, “trust” or any other word that may require additional licensing by the state should be avoided. When choosing a name, it is also important to research if the desired name is available and not already taken by another LLC.

The availability of a specific name can be checked with the Alabama Secretary of State website which displays lists of all registered business names within the state. It's also suggested that you check to make sure that the domain availability here. When deciding on a name be sure to think of how easy potential customers will find your business online. Once you've found an available business name that meets all legal requirements and has internet domain availability, you can register your new LLC with the Alabama Secretary of State website.

• Online Application – $28

• PDF Application (Domestic – Foreign) – $10 (add $25 to expedite) and must be sent in the mail to: P.O. Box 5616, Montgomery, AL 36103

2. Choose your Registered Agent

A registered agent is a person or business entity that agrees to accept legal papers on behalf of an LLC if it is sued. In Alabama, the registered agent must be located in the state, and must have a physical street address (no P.O. boxes). The registered agent may be an individual resident of Alabama or a corporation authorized to transact business in Alabama. It’s important to choose the right registered agent; otherwise you could lose your limited liability protection and become personally liable for any issues that arise with your LLC.

When selecting your registered agent, make sure they are reliable and easily accessible during regular business hours in case they need to receive important documents related to your LLC. Ensure that the person/entity has agreed to serve as your LLC's registered agent before filing any paperwork with the state.

3. File your Articles of Organization

Writing the Articles of Organization is an essential step in forming an LLC in Alabama. To begin, you must include the name of your LLC and a statement that it is being formed as a limited liability company. The Articles must then include the name and address of each organizer and their respective roles within the company.

When filing with the state, you will need to provide an address for your LLC's registered agent who will accept legal documents on behalf of your business. You must sign and date all copies of the document before submitting them to the Alabama Secretary of State for approval. Once approved, you will be issued a certificate that serves as proof that your LLC has been officially established in Alabama.

• Domestic – Use the Certificate of Formation (Form SOSDF-8)

• Foreign – Use the Application for Registration

4. Create an Operating Agreement

An Operating Agreement is a document that outlines the organization and operating procedures for your LLC. It should include information such as the members' contributions, management roles, voting rights, distributions of profits and losses, and any other rules or regulations governing the business.

Having an Operating Agreement in place sets out expectations between all parties involved in running the business. This will ensure that everyone understands their role within the company and how decisions are made. The document also serves as a legal reference point; if any disputes arise between members they can refer to this document to come to an agreement. An Operating Agreement also allows you to create different classes of membership in case you have multiple owners or investors with different levels of involvement in your LLC. Without one, disagreements could become difficult to navigate and possibly result in court proceedings or dissolution of your LLC.

• Single-Member LLC Operating Agreement

• Multi-Member LLC Operating Agreement

5. Pay Filing Fees

In Alabama, LLCs must pay filing fees to the Secretary of State in order to register their business. The total cost for filing is based on the number of members included in the company. The filing fees are as follows:

• Domestic – *$100

• Foreign – $150

*Judge of Probate’s Office – There may be an additional fee depending on the Probate County in which you reside. Be sure to contact your local Probate County Office to ensure there aren’t any additional fees.

Expedited – An additional $100 can be added for the application process to be expedited.

6. Get your (EIN) Employer Identification Number

An Employer Identification Number (EIN) is a nine-digit number assigned by the Internal Revenue Service (IRS). This number is used to identify and track businesses, such as LLCs, for taxation and other regulatory purposes. LLCs are usually required to obtain an EIN when filing their taxes; however, in some cases, like single-member LLCs that don't have employees or won't be operating a business bank account, they may not need one.

To get an EIN in Alabama requires completing Form SS-4 which can be done online or via mail. The form needs to include details about your business such as its name, address and type of entity. Once the form is submitted you will receive your EIN within four weeks if approved by the IRS. You'll need to keep this information handy for future filings with the IRS and other agencies connected to your business operations. Additionally it's important to remember that each state has different requirements so make sure you research those before starting your application process.

Conclusion

In conclusion, starting an LLC in Alabama is a relatively simple process that can be accomplished online. An LLC is a business structure that combines the best of corporations and partnerships. It offers limited liability to its owners, while still allowing them to take advantage of pass-through taxation and gain access to other perks like those given to corporations.Once you have these things taken care of then you can take on the tasks of registering with the Alabama Department of Revenue and getting a bank account.