Alabama LLC Cost (2026): $228 to Form and the $100 Privilege Tax Rule
Alabama front-loads its LLC costs. At about $228 online, it is one of the more expensive states to form in, and part of that comes from a step most states do not have: you must reserve your LLC name before you can file. After formation, though, Alabama got much cheaper for small businesses in recent years, because a change to the Business Privilege Tax means most small LLCs now owe nothing and file nothing for it.
Step One: The Required Name Reservation
In Alabama, a name reservation is not optional. Before you file the Certificate of Formation, you reserve the LLC name with the Secretary of State. The reservation costs $28 online or $25 by mail, and the reservation certificate is attached to your formation filing.
That extra step also means an extra wait if you file by mail, so online is the practical choice for both filings.
Northwest Registered Agent
Alabama’s business entity records show your registered agent address publicly. $39 formation + about $228 in state fees, free registered agent for year one, then $125/yr.
$39 formation fee · Free registered agent for 12 months · Your address stays off public records · No data selling · No hidden fees
Form Your LLC with Northwest ($39) →Lowest 3-year cost we found: Northwest $289 vs Bizee $298 vs ZenBusiness $497 (service fees; state fees extra). Northwest also puts its address on your public filings instead of yours where the state allows.
The $200 Certificate of Formation
Once the name is reserved, you file the Certificate of Formation with the Alabama Secretary of State. The state fee is $200. Combined with the $28 online reservation, the minimum to form an Alabama LLC online is $228, which puts Alabama well above neighbors like Mississippi and Georgia.
The certificate lists the LLC name, the registered agent and its Alabama street address, the organizers, and whether it is member-managed or manager-managed.
The Business Privilege Tax and the $100 Exemption
Alabama has no annual report with the Secretary of State. Instead, LLCs deal with the Alabama Department of Revenue’s Business Privilege Tax, which is based on the LLC’s net worth in Alabama. Rates run from $0.25 to $1.75 per $1,000 of net worth.
The key change came with Act 2022-252. For tax years after 2023, an LLC whose calculated privilege tax is $100 or less is fully exempt: it owes no tax and does not have to file the privilege tax return. The initial privilege tax return is also only required when the tax would exceed $100. A new LLC with modest net worth therefore usually pays $0 after formation.
Larger LLCs with substantial Alabama net worth still calculate and pay the tax, and it can grow meaningfully with the balance sheet. The three-year table below assumes a small LLC under the exemption threshold.
City and County Business Licenses
- Local licenses: Alabama cities and counties issue their own business licenses, with fees set locally. For many small businesses, this is the main recurring cost after formation.
- Income tax: by default, LLC profit passes through to the owners, who report it on their Alabama income tax returns.
- Sales tax: if you sell taxable goods, you register with the Department of Revenue, and many localities levy their own sales tax on top.
Alabama 3-Year Cost
| Scenario | Year 1 | Year 2 | Year 3 | 3-Year Total |
|---|---|---|---|---|
| Northwest Registered Agent | $267 ($200 + $28 name reservation + $39, RA free) | $125 (no SOS report + $125 RA) | $125 (same) | $517 |
| ZenBusiness (Starter) | $327 ($228 + $0 + $99 RA) | $199 ($199 RA) | $199 (same) | $725 |
| DIY, self as registered agent | $228 ($200 certificate + $28 name reservation) | $0 (privilege tax under $100) | $0 (privilege tax under $100) | $228 |
A small DIY Alabama LLC costs $228 in state fees over three years, almost all of it at formation. The $289 extra with Northwest Registered Agent is registered agent service after year one, which keeps your home off the state’s public records.
Form your Alabama LLC for $39 + $228 state fee.
Northwest Registered Agent: $39 formation, free Year 1 registered agent, compliance reminders, and your home address kept off public records.
Form My Alabama LLC for $39
Prefer a $0 upfront starter plan? Compare ZenBusiness (registered agent $199/yr).
When an Alabama LLC may not be worth it yet: the $228 upfront is the hurdle, not the upkeep. If you are still validating an idea, waiting is reasonable. Once you have revenue or contracts, the low ongoing cost makes the upfront fee easier to justify.
Why I Choose Northwest Registered Agent
After forming 3 LLCs myself and helping clients through the process, I keep coming back to Northwest Registered Agent. Here is why:
- Remarkable Customer Support: Quick, human responses every time.
- Caring & Privacy-Focused: Genuine service with full respect for your privacy.
- Lightning-Fast Formation: Often faster than promised.
- Incredible Value: $39 includes a free business address, mail scanning, and more.
- Clear & Transparent: No hidden fees or surprises.
Ready to form your business? Choose Northwest today!
Frequently Asked Questions
How much does it cost to form an LLC in Alabama?
$200 for the Certificate of Formation plus a required name reservation ($28 online), about $228 total. With Northwest Registered Agent the first-year total is $267, including a free first year of registered agent service.
Does Alabama require an LLC annual report?
Not with the Secretary of State. Alabama LLCs deal instead with the Business Privilege Tax through the Department of Revenue.
Do small Alabama LLCs pay the Business Privilege Tax?
Usually not. For tax years after 2023, an LLC whose calculated privilege tax is $100 or less is exempt and does not file a return.
Is a name reservation required to form an Alabama LLC?
Yes. Alabama requires you to reserve the LLC name before filing the Certificate of Formation. It costs $28 online or $25 by mail.
