For a side-by-side comparison of all entities, see our Entity Matrix.

For general benefits of forming a business entity, see Why Form an Entity?

Details Specific to Alabama Incorporation:

Startup Legal provides state-specific business advice on incorporation and LLC formation.  Some unique attributes of Alabama incorporation include the following:

Corporate Directors:

• For profit corporations should have at least three directors.  A corporation with fewer than three shareholders may have as many directors as shareholders.  

• The number of directors for a nonprofit corporation cannot be less than 3.

Business Licensing:
Most businesses in Alabama must obtain a license with their city or county after becoming a corporation, LLC or partnership.  

Annual Reports:
Entities formed in Alabama are required to file an annual report with the state.  The filing fee is $10. 

State Taxes:
There are two taxes on businesses in Alabama: 1) the state income tax, and 2) the business privilege tax.   The income tax rate is 6.5%.  The minimum business privilege tax is $100

 

Alabama Tax Summary:
Alabama Income Tax	6.5%
Minimum Business Privilege Tax	$100

The business privilege tax rate is determined using taxable income and net worth of the corporation.  The rates are as follows.

 

Business Privilege Tax Rates
Taxable income:	Tax Rate:
$0-$1	$0.25 for every $1,000 of corporate net worth
$1-$200,000	$1 for every $1,000 of corporate net worth
$200,000-$500,000	$1.25 for every $1,000 of corporate net worth
$500,000-$2,500,000	$1.50 for every $1,000 of corporate net worth
$2,500,000+	$1.75 for every $1,000 of corporate net worth

 

For information on incorporating in Alabama as opposed to other states, see Where to Form an Entity?

 

Why Use Startup Legal?:

To our knowledge, we are the only incorporation service that provides an all-inclusive startup package.  We offer expert counsel, a full set of customized corporate documents and instruction on how to follow future corporate formalities (proper legal compliance is essential in the event of an audit or law suit).  Additionally, we take care of all necessary filings with the state and federal government.  

Startup Legal was founded as a result of the frustration and delay its principals encountered when forming their own California law practice.  As entrepreneurs, the Startup Legal founders realized that the startup process can be extremely taxing on new business owners.  Incorporating the business, filing with the proper regulatory agency, setting up banking and credit card accounts, establishing the tax treatment of your new entity, and learning how to follow corporate formalities can be overwhelming.  All of these tasks can take valuable time away from what new business owners should be doing-- which is running their business.  At Startup Legal, we aim to take as much of this administrative burden as possible off your shoulders.

We pride ourselves on providing the most comprehensive service in the business.  To compare our service with our competitors, see About Us. 

 

Alabama all-inclusive startup packages*:
LLCs	$1215
For Profit Corporations	$1225
Nonprofit Corporations	$1365
Partnerships (LPs or LLPs)	$1215

*Includes all state filing fees and services listed at the top of this page for businesses operating in Alabama.  Fees for businesses operating outside Alabama may be slightly more.

 

Preliminary Considerations:

Before you form your entity we advise that you take some time to think about the following factors.  You may also want to call or email us to discuss these issues.

1. Select a name.  Names of corporations should contain the word "Corporation" or "Incorporated," or the abbreviation "Co.," "Corp.," "Inc."  Names of LLCs should include the words "Limited Liability Company" or the abbreviation "L.L.C."  The name must be distinguishable from the names of other corporations or LLCs organized, reserved or registered as a foreign entity under the laws of Alabama.  

2. In what state should your business have its legal home (Where to form an entity?)

3. Who will be your managers or directors?  In a corporation, Directors are elected by the owners of the business.  Directors act on behalf of the shareholders and elect officers to manage day to day operations of the business.  Usually a President, Chief Financial Officer or Treasurer and a Secretary are elected at the inception of the corporation.  In an LLC, managers can be elected by LLC interest holders.  

4. Who will act as corporate officers (President, VP, Chief Financial Officer, Secretary)? The President usually takes charge of day to day business operations.  The Chief Financial Officer usually tends to financial matters and maintains accounting records.  The Secretary usually tends to administrative matters such as calling meetings and making sure that annual corporate formalities have be satisfied. 

5. How many shares will the corporation authorize to be issued?  And how many of those shares will be designated for original owners, and in what percentage? (In the case of LLCs and Partnerships, how will ownership be divided?)

6. Do you plan on offering investments in your company in the future?  Certain entities may be more restrictive for raising capital in the future.  Consultation may be necessary before you decide on the proper entity.

7. Will you need to obtain particular licenses in the future that require registration as a particular type of entity?  Certain businesses must be registered as Professional Corporations, C Corporations or Limited Liability Partnerships.  To avoid having to form an entity that would later have to be dissolved or converted, it is important to check on such licensing requirements before beginning the incorporation process. 

 

Overview of the Process:

By clicking the link below, you can begin to form your new business immediately.  The following is a brief outline of the Startup Legal process.

1. Fill out the form on the following page.  This should take 5 to 10 minutes if you have thought through the preliminary questions listed above.

2. Within one business day after submitting our online form, we will contact you for an initial consultation.

3. After your consultation, we will file all necessary forms with the state in which you wish to incorporate.  (Documents will be filed within one business day of your approval.)  State approval generally takes 4 to 6 weeks.  

4. As we wait for state approval, Startup Legal will prepare all corporate documents and federal tax applications, so that your business may open a bank account as soon as we receive approval from the state.

5. Startup Legal will mail you a personalized corporate binder with all necessary startup documents, including a simple guide for following future corporate formalities.

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