What is the difference between an LLC and a corporation?

An LLC offers more flexible management and pass-through taxation. A corporation has a formal board/officer structure and can issue stock. LLCs are typically simpler and less expensive to maintain.

Do I need an operating agreement for my LLC?

While not always legally required in Alabama, an operating agreement is strongly recommended [§ 10A-5A-1.08]. It defines member roles, profit sharing, and procedures for adding/removing members or dissolving the LLC.

How long does it take to form a business in Alabama?

Processing times vary. Check with generally filed with the Alabama Secretary of State (certificate of formation); confirm with a lawyer[src:https://www.sos.alabama.gov/business-entities|Alabama SoS] for current processing times and expedited filing options.

What is a registered agent and do I need one?

A registered agent is a person or company designated to receive legal documents on behalf of your business. Every LLC and corporation in Alabama must maintain a registered agent with a physical address in the state [§ 10A-1-5.31].

Topic guideUpdated 2026-02-27

Alabama Business Formation — LLC, Corporation & More

How to form an LLC or corporation in Alabama, filing fees, annual reports, and entity comparison.

Choosing the right business entity is one of the most important decisions you will make. Alabama recognizes several entity types, each governed by specific statutes §10A-5A-2.01.

LLC Formation

The most popular entity for small businesses. To form an LLC in Alabama:

Choose a unique name (check availability with generally filed with the Alabama Secretary of State (certificate of formation); confirm with a lawyer)

File Articles of Organization with generally filed with the Alabama Secretary of State (certificate of formation); confirm with a lawyer (fee: a state filing fee (confirm the current amount with the Secretary of State or a lawyer)) §10A-5A-2.01

Designate a Registered agent in Alabama §10A-1-5.31

Create an Operating Agreement §10A-5A-1.08 (not always required by law, but strongly recommended)

Obtain an EIN from the IRS

Corporation Formation

Choose a unique corporate name

File Articles of Incorporation (fee: $200)^{[Alabama SoS]}

Appoint directors and officers

Adopt bylaws

Issue stock certificates

Hold initial board meeting and document minutes

Annual/Periodic Filing Requirements

Every taxpayer subject to the Alabama business privilege tax must file a privilege tax return annually; for tax years beginning after December 31, 2023, taxpayers whose privilege tax is calculated to be $100 or less are not required to file the return. Corporations are no longer required by law to file an annual report with the Secretary of State..

Entity Comparison

	LLC	Corporation	Sole Proprietorship
Liability Protection	Yes	Yes	No
Formation Filing	a state filing fee (confirm the current amount with the Secretary of State or a lawyer)^{[Alabama SoS]}	$200^{[Alabama SoS]}	None
Annual Filing	Required	Required	None
Taxation	Pass-through	Double (C) or Pass-through (S)	Personal
Management	Flexible	Board/Officers	Owner

✓An LLC offers the best combination of liability protection and tax flexibility for most small businesses. Consult an attorney or CPA before choosing your entity type.

Prepare for Your Consultation

Quick checklist (Small Business)

Gather these before your first consultation.

Business formation docs

(articles of org., EIN, operating agreement)

Contracts and agreements

(client contracts, vendor agreements, leases)

Licenses and permits

(business license, permits, tax registrations)

General preparation tips only. Specific needs depend on your state and business type.

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