How to Start a Business in Alabama (2026 Guide)

To start a business in Alabama, choose a legal structure, reserve your business name with the Alabama Secretary of State ($25), file a Certificate of Formation ($200 for an LLC or a corporation), get a free EIN from the IRS, and register with the Alabama Department of Revenue for the taxes and licenses that apply to you. The state filing cost for a new LLC or corporation is about $225 before any optional services.

Sole proprietors and general partnerships can skip the state formation filing, but they still need local licenses and, in most cases, a state tax account. This guide walks through each step with the official Alabama links and fees as of October 2026.

Updated October 2026.

Best Business Formation Services in Alabama (2026)

Here are our top picks for forming a business in Alabama, ranked. Mainstay Filing comes first for its flat yearly price; the two Alabama registered agent services below it are options if you only need an agent.

1. Mainstay Filing

Mainstay Filing is our top pick in Alabama. It costs $199/year + state fee at cost and covers lLC formation filing, registered agent for the year, EIN application, annual report preparation and filing. The price stays the same every year, with no add-on menu.

2. AL Registered Agent.org

AL Registered Agent.org is a Alabama registered agent service at $99/year. It provides $99 per year, flat; in-state street address for the registered office; legal documents served on the company are scanned and sent to the owner online. It’s a fit if you only need a registered agent rather than full formation help.

3. Alabama Registered Agent.co

Alabama Registered Agent.co is a Alabama registered agent service at $99/year. It provides in-state street address for the registered office; legal documents served on the company are scanned and sent to the owner online. It’s a fit if you only need a registered agent rather than full formation help.

What it costs to start a business in Alabama

Step 1: Which business structure should you choose in Alabama?

Your structure decides how you are taxed, how much paperwork you file, and whether your personal assets are protected. Most new Alabama owners pick one of four options.

• Sole proprietorship: one owner, no state formation filing, no liability shield. Income goes on your personal return.
• General partnership: two or more owners sharing profits and debts. Alabama lets partnerships file a statement with the Secretary of State, but liability stays personal.
• Limited liability company (LLC): owners (members) are generally shielded from business debts. Taxed as a pass-through by default, with the option to elect S corporation treatment.
• Corporation: owned by shareholders and run by a board. Better suited to outside investment, but it carries more formalities, such as bylaws, board meetings and minutes.

For most small, owner-run businesses the LLC is the practical middle ground. If you are weighing it closely, our guide to starting an LLC in Alabama covers the formation filing in more depth.

Step 2: Name your Alabama business and reserve it

Alabama is one of the few states that requires a name reservation before you file formation documents. The Secretary of State’s LLC page says you must obtain a Certificate of Name Reservation first, and the current fee schedule lists the reservation at $25. You can request it with the domestic name reservation form or online.

An Alabama LLC name must contain “Limited Liability Company,” “L.L.C.” or “LLC.” Corporations need a corporate designator such as “Corporation,” “Incorporated” or an abbreviation. The name also has to be distinguishable from names already on file, so search the Alabama Business Entity Records database before you apply. Our Alabama business name search guide explains how to read the results.

Stuck on ideas? Try the Namechk business name generator, then use Namechk to see whether the matching .com and social handles are free. Securing the domain early saves a rebrand later.

Do you need a DBA in Alabama?

Alabama has no statewide DBA or assumed-name filing for most businesses; any DBA requirements are handled locally, so ask your county probate office. Owners who want state-level protection for a brand name can register it as a trademark or service mark with the Secretary of State, which the fee schedule lists at $30.

Step 3: Appoint a registered agent

Every Alabama LLC and corporation must name a registered agent with a street address in Alabama. The agent accepts lawsuits and official notices for the company during business hours, and the address becomes part of the public record.

You can act as your own agent if you have an Alabama address and are reliably there. Many owners use a service instead to keep their home address off public filings. Mainstay Filing includes a registered agent for the first year in its formation package. Changing an agent later costs $100 at the Secretary of State, so it pays to choose carefully. See our Alabama registered agent guide for the requirements.

Step 4: File your Certificate of Formation

With the name reservation in hand, file the Certificate of Formation with the Secretary of State. LLCs use the domestic LLC Certificate of Formation; corporations file their own Certificate of Formation. Both cost $200 under the Alabama fee schedule, and you attach the name reservation certificate.

You can file online through the Secretary of State’s online services or by mail to the Business Entities Division, P.O. Box 5616, Montgomery, AL 36103. Online filing may add a processing charge, so check the total at checkout.

After the state approves the filing, set up your internal documents. An LLC should adopt an operating agreement even though Alabama does not ask to see it. A corporation adopts bylaws, appoints directors and issues shares. For a line-by-line cost breakdown, see Mainstay’s Alabama LLC cost guide.

Step 5: Get an EIN from the IRS

An Employer Identification Number is your federal tax ID. You need one to hire employees, open most business bank accounts, and file partnership or corporate returns. Single-member LLCs with no employees can sometimes use the owner’s SSN, but most banks still ask for an EIN.

The application is free on the IRS website and the number is issued at the end of the online session. Avoid sites that charge for it unless the fee is part of a broader service you actually want.

On federal reporting: FinCEN’s final rule, effective August 14, 2026, keeps companies created in the United States exempt from beneficial ownership (BOI) reporting, per FinCEN’s BOI page.

Step 6: Register for Alabama state taxes

The Alabama Department of Revenue (ALDOR) handles most state business taxes through the My Alabama Taxes portal. Common registrations include:

• Sales tax license: needed if you sell taxable goods or services. ALDOR says you register your retail business through My Alabama Taxes, and the license is mailed to you. There is no charge, and licenses are renewed online each year.
• Withholding tax: required once you pay Alabama wages.
• Business privilege tax: every LLC and corporation formed or registered in Alabama is subject to it. For tax years beginning after December 31, 2023, ALDOR says businesses whose calculated tax is $100 or less owe nothing and do not have to file the return (Forms BPT-IN, CPT or PPT). Larger businesses file by the federal return due date.

Alabama’s state sales tax rate is 4%, and most cities and counties add their own rates, so check the local rate where you sell.

Hiring in Alabama

Employers must report every new hire to the Alabama Department of Workforce within seven days. The department launched an updated new-hire portal in December 2025 that all employers must register in. You also open a state unemployment insurance account with the department. Alabama has no state minimum wage, so the federal $7.25 rate applies.

Step 7: Get your Alabama business licenses and permits

Alabama’s general business license is a privilege license. According to ALDOR, the state and county license is issued by the probate judge or license commissioner in the county where you do business, and you generally need one in every county where you operate. Cities issue their own licenses separately, so check with the city clerk too.

Regulated work needs more. Contractors, cosmetologists, healthcare providers, real estate agents and food businesses all answer to state boards or the county health department. Federal permits apply to activities such as alcohol, firearms and commercial transport.

Step 8: Open a bank account, get insured and get online

Keep business money separate from day one. A dedicated business checking account protects the liability shield of an LLC or corporation and makes taxes far easier. Banks typically ask for your filed Certificate of Formation, EIN and operating agreement or bylaws.

Insurance is the next layer. General liability covers most customer-facing businesses; professional liability suits consultants and service firms; and workers’ compensation becomes a question as soon as you hire. A licensed agent can confirm Alabama’s coverage rules for your headcount and what your lease or contracts require.

Finally, claim your domain and build a simple website so customers can find you.

What do you file after your Alabama business is formed?

Alabama’s ongoing filings are lighter than many states’, but they are easy to miss.

• LLCs have never filed a Secretary of State annual report in Alabama, and the corporate annual report (Schedule AL-CAR) was repealed by Act 2024-213 effective October 1, 2024.
• Many small LLCs and corporations therefore have no recurring state filing at all, as long as their calculated privilege tax stays at $100 or less.
• LLCs and corporations file the business privilege tax return with ALDOR when the tax owed exceeds $100.
• Sales tax and withholding returns follow the schedule ALDOR assigns, and sales tax licenses renew online each year.
• Privilege licenses renew through your county.

FAQs

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