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How to Start an LLC in Alabama (May 2024 Update)

Meow Technologies, Inc.

Meow Technologies, Inc.

Starting a business can be an exciting yet daunting task, especially when it comes to choosing the right business structure for your company. Of the options available, many entrepreneurs opt to form a limited liability company (LLC) due to the legal protections and tax benefits offered. If you plan to launch your startup in Alabama, this comprehensive guide will walk you through each step required and key considerations when establishing an LLC in the state.

Selecting a Business Name

The first step when forming your Alabama LLC is to decide on a name. You'll want to choose something memorable, descriptive, and available as a domain, while following the state's naming requirements. An LLC's name must include phrases like "Limited Liability Company," "LLC," or "L.L.C." somewhere in the business name to identify it as such.

You also can't select a name too similar to an existing entity registered in Alabama or one that could confuse consumers about your services. And unless properly licensed, you can't use words like "bank," "university," or "law center" that imply credentials you don't have.

Before settling on the final name, check both the Secretary of State's database and your preferred domain registrar to see if the exact spelling is available. You can reserve a business name with the state by filing a Name Reservation Request form for a $28 online fee or $25 by mail.

Appointing a Registered Agent

As an LLC in Alabama, your business must designate a registered agent on record. This appointed person or company serves as your business's point of contact within the state for receiving official or legal correspondence.

A registered agent must have an in-state physical address (no P.O. boxes allowed) and be available during normal business hours to receive documents. While you can serve as your LLC's registered agent, this does expose your personal address to the public and could lead to disruptions if you need to be available to sign for deliveries frequently. Using a third-party registered agent service can be more convenient.

Filing the Certificate of Formation

To legally form your Alabama LLC, you must file a Certificate of Formation with the Secretary of State. This document solidifies the existence of your LLC as a registered business entity within the state.

It requires you to provide your intended LLC name (with "LLC" indicated), registered agent information, and business structure details. You'll also need to attach any additional documents like your Name Reservation certificate.

You can submit the Certificate of Formation by mail with a $200 check or through the Secretary of State's website for $208 paid online. Mailing can take 1-2 weeks for processing while online filing is instant. Whichever option you choose, file early to get your LLC approved and operating sooner!

Drafting an Operating Agreement

Though not mandated, having an operating agreement for your Alabama LLC is highly recommended. Think of it like a roadmap for running your business smoothly and avoiding financial or legal disputes among members down the road.

An operating agreement outlines important aspects like member responsibilities, how profits/losses get distributed, the process for selling ownership shares, voting procedures, and what happens if you decide to dissolve the business. Even single-member LLCs can benefit from having these details mapped out in writing.

While not submitted when forming your LLC, keep the signed operating agreement with your essential business paperwork should any questions arise. Use free online templates to create an appropriate operating agreement for your LLC structure and customize it to your circumstances.

Getting an EIN from the IRS

Nearly all LLCs need to get an employer identification number (EIN) which serves as the business's tax ID number for federal filing purposes. Apply online at no cost and receive your EIN instantly so you can use it when opening business bank accounts or submitting tax paperwork.

Single-member LLCs can use the owner's Social Security Number instead if preferred but should still consider getting an EIN to keep personal and business finances more separated. LLCs with multiple members or elected corporate tax status do require applying for an EIN.

Next Steps for New Alabama LLCs

Handling the essential filing and reporting steps above means your Alabama LLC is set up for success. But before diving into operations, here are some key next steps new business owners should address.

Open a Business Bank Account

Keeping your LLC's finances separate from your personal funds is crucial for maintaining liability protections. Designate a business-only bank account using your new EIN and make it a rule not to commingle accounts.

For more information, take a look at our article on the key benefits of business checking accounts.

Get Specific Licenses or Permits

Look into what business licenses, sales permits, or industry-specific credentials are necessary for your LLC based on its location and activities. Alabama doesn't require a statewide general business license but check locally.

Purchase Sufficient Insurance

Talk to a business insurance broker about recommended coverages to safeguard your new venture from unforeseen risks and lawsuits common to your trade. General liability insurance is a common starting point.

Stay Compliant with State Rules

Keep up with annual reporting deadlines for your LLC each year to avoid penalties for non-compliance. This includes filing your Alabama Business Privilege Tax Return due April 15 and paying a minimum privilege tax of $100.

Forming an LLC can take as little as one day in Alabama if you understand the steps involved and key details needing attention when starting your business. Here's to successfully launching your company!

Meow Technologies is a financial technology company, not a bank or FDIC-depository insured institution. Likewise, Meow Technologies is not an investment adviser and none of the information presented herein should be relied upon as financial advice or a recommendation to make any financial decision nor should it be considered to be tax or legal advice. The information is the opinion of Meow Technologies for educational purposes and may not be suitable for all companies. Products, like the one described herein, are offered through Meow Technologies and are not advisory services which are only offered through Meow Advisory, LLC.** The FDIC’s deposit insurance coverage only protects against the failure of an FDIC-insured bank.**

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*Disclaimer: Meow Advisory LLC is a registered investment adviser. Registration as an investment adviser does not imply any level of skill or training.
For accounts opened through Atomic Brokerage LLC: Meow Advisory LLC has an engagement with Atomic Brokerage LLC (“Atomic Brokerage”), a registered broker-dealer and member of FINRA and SIPC , to bring you the opportunity to open a brokerage account. Brokerage services for customers of Meow Advisory LLC are provided by Atomic Brokerage. For more details about Atomic Brokerage, please see the Form CRS, General Disclosures, and the Privacy Policy. Check the background of Atomic Brokerage on FINRA’s BrokerCheck.
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**Disclaimer: Meow Technologies is a financial technology company, not a depository, bank or credit union, and your account at Meow is not, itself, an FDIC-insured product.

Meow currently partners with three banking providers. Banking services are provided by Third Coast Bank SSB; Member FDIC, Grasshopper Bank, N.A; Member FDIC, and FirstBank, a Tennessee corporation; Member FDIC.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by Grasshopper Bank, N.A, you deposit your funds into a deposit account at Grasshopper Bank, N.A. which sweeps those funds into deposit accounts across a network of Federal Deposit Insurance Corporation (“FDIC”)-insured banks, for up to the current standard maximum deposit insurance amount (“SMDIA”) of $250,000 per eligible depositor, per destination institution, for each ownership capacity or category, subject to applicable terms and conditions, including Grasshopper's ICS Deposit Placement Agreement. Grasshopper Bank, N.A. uses a third-party vendor and agent to help administer this sweep process. Visit https://www.intrafi.com/network-banks/ for a list of the banks and savings associations with which we/Grasshopper, N.A. have a business relationship for the placement of deposits at destination institutions, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by Grasshopper, N.A. or you). The current maximum deposit insurance amount for your funds is up to $125 million in FDIC insurance through the sweep network of Grasshopper Bank, N.A, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and restrictions and refer to the applicable rate sheets for additional information.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by Third Coast Bank SSB, you deposit your funds into a deposit account at Third Coast Bank SSB. If you also hold funds in a sweep program with Third Coast Bank SSB, Third Coast Bank SSB sweeps those funds into deposit accounts across a network of FDIC-insured banks, for up to the current SMDIA of $250,000 per eligible depositor, per receiving bank, for each ownership capacity or category, including any other balances you may hold at that receiving bank directly or indirectly through other intermediaries, including broker-dealers. Third Coast Bank SSB uses a third-party vendor and agent to help administer this sweep process. Visit Third Coast Bank SSB for a list of the banks and savings associations with which we/Third Coast Bank SSB have a business relationship for the placement of deposits at receiving banks, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by Third Coast Bank or you). The current maximum deposit insurance amount for your funds is up to $50 Million in FDIC insurance through the sweep network of Third Coast Bank, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and conditions and refer to the applicable rate sheet for additional information.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by FirstBank, a Tennessee corporation, you deposit your funds into a deposit account at FirstBank, which sweeps those funds into deposit accounts across a network of FDIC-insured banks, for up to the current SMDIA of $250,000 per eligible depositor, per destination institution, for each ownership capacity or category, subject to applicable terms and conditions, including FirstBank's ICS Deposit Placement Agreement. FirstBank uses a third-party vendor and agent to help administer this sweep process. Visit IntraFi for a list of the banks and savings associations with which FirstBank has a business relationship for the placement of deposits at destination institutions, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by FirstBank or you). The current maximum deposit insurance amount for your funds is up to $125 million in FDIC insurance through the sweep network of FirstBank, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and restrictions and refer to the applicable rate sheet for additional information.

***FDIC insurance coverage is only available to protect you against the failure of an FDIC-insured bank that holds your deposits (and does not protect you against the failure of Meow or other third party). Your account with Meow and all services provided to you are subject to the Meow Terms of Service (“Account Agreements”) and other applicable terms and no other representations or warranties, express or implied, are provided to you except as expressly set forth in those written Account Agreements. If you have any questions regarding your account, please contact team@meow.com.

FirstBank Funds Availability Notice

FirstBank’s general policy is to allow you to withdraw funds deposited in your account on the first business day after the day we receive your deposit. Funds from electronic deposits will be available on the day we receive the deposit. In some cases, we may delay your ability to withdraw funds beyond the first business day. Then, the funds will generally be available by the SECOND business day after the day of deposit.