The LLC’s business name must be different from all other business entity names registered or reserved with the Corporate Section of the Alabama Secretary of State’s office.
The LLC’s name must include the words “Limited Liability Company” or one of the abbreviations “L.L.C.” or “LLC”. The LLC name must end with "Limited Liability Company," "LLC" or "L.L.C." The word “limited” may be abbreviated as “Ltd.,” and the word “Company” may be abbreviated as “Co.” Names cannot contain words pertaining to a city. The name is not allowed to include words or phrases that could give the impression that the LLC has been organized for some purpose other than that specified in its articles of organization. The name must not be the same as or deceptively similar to a name already in use, or a registered or reserved name.
Names for domestic LLCs are not reserved by the Alabama Secretary of State’s office.
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.
Articles of Organization and Operating Agreement
In order to forming your new Alabama LLC, you have to file an original and two copies of the LLC’s articles of organization with the local county probate judge. Once the judge finds that the articles are in compliance with state law, the judge 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. This process requires $75, a $40 fee payable to the Alabama Secretary of State is required for filing, and an additional $35 payable to the county probate judge. All the members named in the articles are required to sign the article, or alternatively, an organizer.
Your new LLC’s articles must list:
The LLC’s name,
The LLC’s duration (either perpetual or for a specified time period)
The LLC’s purpose (either specific or “any or all lawful conduct for which a limited liability company may be organized”)
The location and mailing address of the LLC’s registered office
The name of the LLC’s registered agent
Names and addresses of the initial member(s)
Name and address of the LLC’s organizer (if any)
Whether the LLC will be member-managed or manager-managed
If manager-managed, names and addresses of the manager(s)
The rights, if any, of the member(s) to admit additional members
Terms and conditions for admission of new members
Any circumstances under which the resignation of one or more members will require dissolution of the LLC
Any other provisions for the LLC’s operation desired to be included by the member(s)
The LLC’s second most important document is its operating agreement, which can be changed by the members as specified in the agreement itself (or by state law if the operating agreement or the articles don’t address it). Having an operating agreement is not legally required by the state, but it’s a vitally important internal document that sets forth how the LLC will run. The operating agreement needs to list the LLC’s members, how much each one has invested, how any profits will be distributed, and how much relative weight each member has when voting.
The operating agreement may also include requirements for meetings (notice, quorum, voting rules, etc.) and similar functions, but it doesn’t have to. Often, it can restate or expand upon operating measures already contained in state law. It also may include restrictions on the members’ authority to change or repeal the operating agreement or a provision thereof. If there is more than one member, the operating agreement must initially be unanimously approved in writing.
Alabama LLCs must have at least one member. Each member must be an individual person. A member can acquire an interest in the LLC when it is formed, or by some other method laid out in the operating agreement. Becoming a member usually requires a contribution of cash or property to the LLC, or it may take to form of services rendered to the LLC. However, a person may be admitted as a member of the LLC without acquiring a membership interest if the articles of organization or operating agreement allow it and all the members agree.
Unless the operating agreement states otherwise, a member can withdraw from the LLC at any time after giving 30 days’ written notice to the other members. If a member’s withdrawal is in violation of the operating agreement or is due to wrongful conduct by the member, that member can be held personally liable for any financial damages caused by the withdrawal from the LLC, including the cost of paying another person to perform services promised by the withdrawing member.
LLCs must list the name and address of a registered agent with a physical address (no post office boxes) in Alabama. The registered agent must be available during normal business hours to accept important legal and tax documents for the business.
Ongoing Filing and Compliance
Alabama LLCs must keep the following types of records available for inspection at their office:
Members’ and managers’ (if any) names and addresses
A copy of the articles of organization with any amendments
A copy of the operating agreement, along with any amendments
Copies of federal, state, and local income tax returns for the past three years
Financial statements for the LLC’s the three most recent years
It is recommended that a copy of the minutes of the various proceedings and committees meetings of the owners or members.
Filing compliance is done every year basis, and is due: April 15th Fiscal Year: 3½ months after beginning of tax year.
It must be noted that LLCs elected to be taxed as corporations follow corporation rules.
An LLC is dissolved when any one of the following conditions occurs:
Event(s) specified in the articles of organization or operating agreement
Agreement to dissolve by all members
Event that makes it illegal for the LLC to continue
When there is no remaining member, unless (a) the holders of all financial rights agree in writing, or (b) the LLC’s legal existence and business is continued and one or more new members are appointed
Judicial decree ordering dissolution
An LLC by its nature offers some tax advantages over a corporate structure, including access to more deductions, since the LLC is not required to be a separate tax entity like a corporation. Instead, an LLC is considered a “pass-through entity” for tax purposes, meaning LLC owners report business profits and losses on their individual tax returns.
The Alabama tax rate for income from an LLC varies, based on the amount of Alabama taxable net income per reporting period.