The business name chosen for the new Alabama Corporation must be different from all other business entity registered and reserved Alabama business entities. It must end with either “Incorporated” or “Corporation” (or an abbreviation thereof)-or, if it is to be a banking corporation, “Bank,” “Banking,” or “Bankers.” The name cannot state or imply that the corporation is organized for some purpose other than the one specified in its articles of incorporation.
It is necessary that the new corporation’s name be reserved with the state filing office before filing articles of incorporation. This costs $10 and last for up to 120 days.
State Incorporation Timelines
The filing time for Alabama LLCs is 8 weeks, and can be expedited in 21 business days.
State Incorporation Filing Fees
Alabama LLCs filing fee is $163, and can be expedited by paying an additional $100.
Articles of Incorporation and Operating Agreement
New Alabama corporations must file an original and two copies of your articles of incorporation with their local county probate judge before they can start conducting business as a corporation. Once the judge finds that the articles are in compliance with state law, he or she will issue (publish) one certified copy of the articles, return one to the LLC, and forward the third within 10 days to the Corporate Section of the Alabama Secretary of State’s office. Filing requires a $40 fee payable to the Alabama Secretary of State, and another $35 payable to the county probate judge, for a total of $75.
The articles must be delivered by at least one of the incorporators, who must sign and deliver the articles to the judge. The following information must be included in the articles of incorporation:
- Name and address of incorporator(s)
- Brief statement of corporate purpose, which may be the general statement, “the transaction of any or all lawful business for which corporations may be incorporated under the Alabama Business Corporation Act.”
- The address of the corporation’s principal office
- The address of the corporation’s initial registered office
- The name of the new corporation’s initial registered agent at that office
- Whether the corporation will be of perpetual or limited duration
- The share classes of stock that the corporation is authorized to issue, including the number of shares in each class
- The name and address of each alien (out of state) affiliate
Alabama state law also allows (but does not require) optional items to be included in the articles of incorporation for those corporations who wish to formally specify additional information, such as:
- Shareholders’ rights to adopt initial bylaws
- Provisions managing the business and regulating the corporation’s affairs
- Provisions regulating the powers of the corporation, its board of directors, and shareholders
- A provision eliminating or limiting the liability of a director to the corporation or its shareholders for money damages in certain situations
Alabama law does not use the concept of par value for stocks, therefore, you do not need to state a par value for your shares.
Every Alabama Corporation must have a registered agent in the state-someone designated to receive official state administrative and legal correspondence. The registered agent must be either an adult Alabama resident, or a corporation with a business office identical to the registered office. The registered office may be at any of the corporation’s places of business.
Bylaws describe the corporation’s basic managerial and legal operating principles. An Alabama corporation must keep a copy of its bylaws at its main executive office, but is not required to file them with the state. The initial bylaws must be adopted by the board of directors, unless the articles of incorporation specify that shareholders have this right. Bylaws normally address:
- Shareholders and directors meetings
- The authority, number, and tenure of directors
- Voting procedures
- The duties, responsibilities, and tenure of officers
- How stock is issued
- How and when annual financial information is provided to shareholders
A director must be a natural person of at least 19 years of age, but they do not have to be an Alabama resident-or even a shareholder-unless so stipulated in the articles of incorporation or the corporate bylaws. Either one of those documents may also specify a minimum and a maximum number of directors, but they are not required to be listed by name in the articles. Directors are elected annually to serve one-year terms.
The bylaws may either describe the corporation’s officer positions and duties or authorize that the board of directors make these appointments. These duties must include the responsibility for preparing minutes of meetings and for authenticating corporate records. Unless the bylaws provide otherwise, an officer may simultaneously hold more than one office in a corporation.
The Alabama Secretary of State requires that Alabama corporations file an annual report between January 1 and March 15 each year that specifies:
- The corporation’s name and the state or country of original incorporation.
- The address of the corporation’s registered office in the state.
- The name of its registered agent at that office.
- The nature of the corporation’s business.
- The names and addresses of the corporation’s president and secretary.
An Alabama corporation is also required to send annual financial statements to all shareholders within 120 days after the end of each fiscal year.
Ongoing Filing and Compliance
Annual Report is due annually on April 15th Fiscal Year: 3½ months after beginning of tax year
Alabama’s corporate tax structure consists of a flat rate of 6.5% on all corporate income. Among states with corporate income taxes, Alabama’s rate ranks 30th in the nation. Alabama also assesses a business privilege tax, which is an annual tax on corporate shares based on the net worth of the corporation.
The Alabama Secretary of State recognizes subchapter S status for corporations. A “subchapter S” corporation (frequently referred to as an “S corp”) is treated as a “pass-through” entity for tax purposes in the same way as a sole proprietorship or partnership. The S corp does not file a tax return on its own behalf; instead, all tax-related data for the S corp is filed as part of the owner’s individual income tax.