Start an Alabama LLC

Step 1: Name your Alabama LLC

Pick a name for your LLC. If you’ve already been brainstorming the perfect name for your LLC, there are a few things to keep in mind. An Alabama LLC needs to adhere to the following requirements:

• Your name must include the words “Limited Liability Company” or the abbreviations “LLC” or “L.L.C.”
• Your name must not be in use by another business in the state of Alabama.
• Some words require special permission to use (e.g., “insurance” or “engineer” would require proof of specific licenses).
• Your LLC name can’t contain words suggesting it was formed for an illegal purpose.

How can you tell if the name you’d like to use for your LLC is already taken? To find out, search for your preferred name using the Alabama Secretary of State’s Business Entity Search tool. If you’re unfamiliar with these systems, never fear. Take a look at our guide to Alabama business entity searches, and we’ll walk you through the process.

Submit a name reservation request form for your LLC in Alabama

Unlike other states, Alabama requires you to submit a “Name Reservation Request Form for Domestic Entities” with your Certificate of Formation, the official paperwork that creates your LLC in AL.

If you’ve found the right name but aren’t quite ready to officially form your Alabama LLC, you can go ahead and submit that name reservation form prior to filing the Alabama LLC Certificate of Formation. This will reserve the name with the state for up to a year.

Previously, Alabama forced new businesses to file this name reservation form with the state a few weeks before even forming their business. However, as of 2021, this form can be submitted along with your Certificate of Formation instead of submitting it ahead of time.

Federal and State Trademarks

Even if the Alabama Secretary of State approves your business name, that’s no guarantee that someone else hasn’t already claimed it with a federal or state trademark. To really check to see if your business name is free of trademarks can be difficult because there’s no central place to check. Some businesses even employ an attorney specializing in trademarks to see if they’re in the clear.

You can take some measures yourself, like searching the trademark database on the United States Patent and Trademark Office website. This can help you see if someone’s already claimed a federal trademark on the name you want.

State trademarks are applicable only within the borders of a state. The Alabama Secretary of State website has a trademark search engine where you can see if anyone has a state trademark on your desired limited liability company name. If you want, you can also apply for your own state trademark by completing an application and paying a small fee.

In addition to checking these databases, it’s wise to do an internet search for your business name, including checking domain names and social media sites.

Getting Your Alabama LLC Domain Name

When you’re pondering the right business name. It’s a good idea to consider whether you can secure a matching domain name.

We have a tool to help you do a preliminary domain name search, and our domain name registration service can help you secure the online name that will best serve your Alabama LLC.

Filing a DBA in Alabama

If the name you pick for your LLC doesn’t always convey the vision you have for your business, you can file an Alabama DBA, or “Doing Business As” name application with the state. This allows you to operate your business under a name other than the LLC’s official name, all while filing state formation and compliance documents under the official registered LLC name.

Step 2: Appoint a registered agent in Alabama

Select a registered agent for your LLC. If you’re starting a business for the first time, you may not be familiar with the term “registered agent.” The state of Alabama requires appointing and maintaining a registered agent, who can be a person or business entity that accepts service of process (such as subpoenas) on behalf of your Alabama limited liability company.

Because of the nature of their role, registered agents need a physical street address in the state of Alabama (a P.O. box won’t work). This location is referred to as your “registered office.” If the registered agent is an individual, they must be at least 18 years old and an Alabama resident. If the registered agent is a business entity, it must be authorized to do business in Alabama.

Additionally, your Alabama registered agent must be available to receive official paperwork in person at the registered office during standard business hours (Monday to Friday, 9 a.m. to 5 p.m.).

Being your own registered agent

Many business owners assume they will serve as their own registered agent, using their business location as the registered address. Unfortunately, there are reasons this choice might not prove advantageous in the long run:

• If you’re sued, you’ll be served paperwork at your place of business or your house. This could create embarrassment in front of your employees and customers.
• You’ll be required to stay at your registered office during standard business hours. This can be a tricky requirement if you plan to travel for work, let alone take a long vacation at any time in the future. Even the occasional sick day could cause a problem.

Consider a registered agent service for your Alabama LLC

Thankfully, there’s an easy and affordable solution: You can hire commercial registered agent services to perform this role for your limited liability company. We offer registered agent services in Alabama, offering the consistency and accountability you need.

As your registered agent service, we’ll receive any documents on your behalf and scan them to our online portal, where you can review and respond to them instantly. Forget worrying about always being available: Let us take on that responsibility, allowing you to focus on growing your business.

Step 3: File an Alabama Certificate of Formation

File the paperwork to form your LLC with the state. When forming an LLC in Alabama, one document makes your business official, a Certificate of Formation. Of all the red tape you’ll have to overcome, this is the paperwork that matters most.

The Certificate of Formation form will ask you for some basic information about your LLC, including:

• Name of your new LLC (be sure to attach the Name Reservation Certificate we discussed in Step 1)
• The name and address of your registered agent
• The name of the person who prepared the form 
• The effective date of the LLC

In the past, starting an Alabama LLC required sending a copy of your application for a Certificate of Formation with the probate judge in the county where you’re starting your business. Thankfully, this requirement is now officially gone from Alabama law with the passage of Act 2020-73, which went into effect January 1st, 2021.

The same act also changed the “Name Reservation Request Form for Domestic Entities” requirement, so all you need to do is to fill it out and file it along with your Certificate of Formation.

Filing official government documents like this can be intimidating and/or confounding for many people, which is why we’re here. With our business formation plans, our professionals handle the filing for you to make sure it’s done quickly and correctly the first time.

Keep all your Alabama LLC formation documents in one place

If you do take advantage of our services, all of your LLC’s documents will be uploaded to your ZenBusiness dashboard, where you can keep it and other important paperwork digitally organized.

In addition, our customized business kits give you somewhere to make sure your physical paperwork like your operating agreement, member certificates, contracts, compliance checklists, transfer ledger, etc. are safely stored.

Step 4: Create an Alabama Operating Agreement

Write an operating agreement to govern your LLC. An operating agreement can be critical in helping LLCs succeed, both in the early stages of the business and throughout the company’s existence. In basic terms, this document lays out the rules by which the company will operate, including LLC members, management procedures, and the roles and responsibilities of specific members.

Alabama doesn’t ask new LLCs to submit their operating agreements to the state. But having a comprehensive operating agreement for your Alabama LLC can be extremely helpful, especially when changes and challenges arise.

This is true even if you’re the only member of the LLC. Here are just a few ways that an operating agreement can help you and your new business:

• Helping substantiate your LLC as separate from your personal assets. This could come in handy if your business incurs debt or legal liabilities. Having an operating agreement in place is further evidence to the courts that you and the LLC are separate entities.
• Preventing and resolving conflicts among LLC members by clearly specifying how decisions will be reached in the event of disagreement. In the absence of these clear rules, arguments can drag on destructively.
• Setting clear protocols for adding or removing members. If someone wants to leave the business or a new partner wants in, you’ll have a fair process in place.
• Designating specific roles and ownership privileges and outlining specific ownership stakes. Without one, all members are assumed to have equal ownership by default.

Alabama LLC Operating Agreement Template

Moreover, without an operating agreement in place, your LLC will be governed by the state’s default rules. These default rules may not reflect the reality of your business. If you’re unsure as to how to start creating an operating agreement for your Alabama LLC, we offer a customizable template to help get you started.

Step 5: Apply for an EIN

Get an EIN. While you’ve filled out plenty of paperwork for Alabama’s government, you’ll probably still need to register your business with the federal government. The Internal Revenue Service (IRS) has a numeric system for tracking business entities, creating ID numbers for companies to use for tax purposes.

This nine-digit number is called an Employer Identification Number (EIN), and you’ll more than likely need one, even if your LLC has only one owner. If you have other members (owners) in your LLC or hope to employ anyone, you’ll need to get an EIN as soon as possible.

Even if you don’t technically need an EIN to meet your tax obligations, it could be a good idea to get one for the following reasons:

• You may need one to do business banking: Most financial institutions will require an EIN if you intend to open a business bank account connected with your LLC.
• You may need one to obtain financing: If you ever need a business loan or hope to take on outside investment, you’ll have to have an EIN to receive any capital.
• EINs can prevent identity theft: If you don’t have an EIN for your business, you’ll need to provide your own Social Security number instead. Putting your Social Security number on so many forms could prove problematic.

You can get your Alabama LLC’s EIN through the Internal Revenue Service website, by mail, or by fax, but if you’re unfond of dealing with that particular government agency, we can get it for you. Our EIN service is quick and eliminates the hassle.

Open a business bank account for your Alabama LLC

Once you’ve secured your tax ID number, you’ll be able to open a business bank account. Having separate accounts for your business and your personal banking is critical not only for taxes, but for liability purposes.

Mixing the two can not only make your taxes more difficult, but it could also be used against you if someone takes you to court to challenge whether you and your LLC are truly separate entities.

LLC bank account payments and invoicing

The good news is that we offer a discounted bank account for new businesses. It allows unlimited transactions, online banking, a debit card, and more. When you want to authorize others in your business to use the account, we offer a banking resolution template to simplify the process.

For further help managing your new business’s finances, try ZenBusiness Money. It can help you create invoices, receive payments, transfer money, and manage clients all in one place.