How to Register My Business in Alabama

by Jennifer Kiesewetter in August 23rd, 2021
bird's eye view photography of high-rise buildings and train station

TLDR

  • As of 2019, Alabama is home to 396,432 small businesses, making up 99.4 percent of all companies. Since then, startups and small business growth have accelerated, with 33 percent more new businesses opening in 2020 than in 2019.
  • To successfully register your startup in Alabama, you'll need to satisfy several federal, state, and local requirements.
  • You must determine your organization's legal ownership structure. Your chosen business entity determines the next steps in registering your startup.
  • You’ll need to select a registered agent. According to SCORE, a “registered agent is simply a person or entity appointed to accept service of process and official mail on your business's behalf.” You can designate an individual or an entity as your registered agent or your entity itself can serve as the registered agent.
  • When you register in Alabama, you must first determine if your startup is domestic or foreign. A domestic entity is an entity originally registered in Alabama and a foreign entity is an entity formed outside of Alabama. The filing requirements can often be different for domestic and foreign entities. For example, foreign corporations require a $150 filing fee whereas domestic corporations require a $200 filing fee. After you submit the required forms to register your startup with the state, you’ll also need to obtain a federal employer identification number (FEIN) for banking and tax filings. Additionally, you’ll need to check with the state of Alabama and your local city and county to see if there are any additional business registrations required, such as a business license.  
  • When you’re ready to register your startup, Alabama, like other states, requires you to choose a unique business name. To confirm if your startup’s name is distinguishable from any other registered companies, you can use Alabama’s business entity search tool. 
  • Depending upon your chosen entity for your startup, you will have filing fees due when registering your business. For example,  if you register as an LLC, corporation, or limited partnership, you’ll pay a fee of $200. As a foreign entity, your filing fee is typically $150.
  • You must also understand what annual registrations and fees are required of your startup, such as an annual report and privilege tax amounts, which will differ per entity.
  • Alabama also offers several programs and certifications, allowing you to showcase minority ownership of your startup.

Known for its iron, steel, barbeque, and, of course, college football, Alabama offers much for its residents, including its entrepreneurs. As of 2019, Alabama is home to 396,432 small businesses, making up 99.4 percent of all companies. Since then, startups and small business growth have accelerated, with 33 percent more new businesses opening in 2020 than in 2019.

Early startups have significant support in Alabama as well. From Alabama Launchpad to the partnership between national startup accelerator gener8tor and the MidCity Accelerator Foundation Inc. As you’re launching your startup and you’re exploring where to locate your new business, this article will explore registering your business in Alabama.

How to Register a Business in Alabama

To successfully register your startup in Alabama, you'll need to satisfy several federal, state, and local requirements. However, before registering your startup, it’s a good idea to research the market and potential competitors, map out your financing, plan for operations and personnel, and create a business plan.  Founders can consult resources provided by the U.S. Small Business Association to help them with the planning stage.

Once you’ve identified some of your operational basics, it is then time to register your start-up. Read on to learn more about registering your business in Alabama.

Determine Your Startup’s Entity Structure

In addition to creating a business plan, before you register your startup in Alabama, you must also determine its legal ownership structure. For example, in Alabama, you may choose to register as a(n):

  • Corporation
  • Limited Liability Company (LLC)
  • General Partnership (GP)
  • Limited Partnership (LP)
  • Limited Liability Partnership (LLP)
  • Limited Liability Limited Partnership (LLLP)
  • Sole Proprietorship

Your chosen business entity determines the next steps in registering your startup. For example, if you choose a corporation, a certificate of Incorporation with the Secretary of State’s office.

On the other hand, suppose you choose an LLC for your business structure. Then, you would file your certificate of formation with the Secretary of State’s office.

Identify Your Registered Agent

You’ll also need to select a registered agent. According to SCORE, a “registered agent is simply a person or entity appointed to accept service of process and official mail on your business's behalf.” You can designate an individual or an entity as your registered agent or your startup itself can serve as the registered agent.

Alabama’s Secretary of State’s office provides forms to change the name and address or resignation of your startup's registered agent. Every entity in Alabama must have a registered agent. It’s not optional.

Alabama’s Secretary of State also provides a list of approved registered agents that you can use.

Submit Your Formation Forms

When you register in Alabama, you must first determine if your startup is domestic or foreign. A domestic entity is an entity originally registered in Alabama and a foreign entity is an entity formed outside of Alabama. 

The filing requirements can often be different for domestic and foreign entities. For example, foreign corporations require a $150 filing fee, whereas domestic corporations require a $200 filing fee.

Additionally, depending on your chosen entity, you’ll file different forms with Alabama’s Secretary of State. These forms can be downloaded from the Secretary of State’s website.

If you are a sole proprietor, you don’t have to register your startup with the state of Alabama to begin operations. However, as discussed below, you may want to file for a fictitious business name (of doing business as name), so you don’t have to use your personal name.

What to Do Next

After you submit the required forms to register your startup with the state, you’ll also need to obtain a FEIN for banking and tax filings. Additionally, you’ll need to check in with the state and your local city and county to see if there are any additional business registrations required, such as a business license.  

Founders can check the business licensing requirements on Alabama’s Department of Revenue’s website. For local permits, depending upon your startup, you may need to obtain an alarm permit, a health permit, a building permit, a signage permit, or a zoning permit.

Where Do I Register a Business Name in Alabama?

When you’re ready to register your startup, Alabama, like other states, requires you to choose a unique business name, differing from any other registered businesses in the state.

To confirm if your startup’s name is distinguishable from any other registered businesses, you can use Alabama’s business entity search tool

Additionally, if you’re not quite ready to file your formation forms, you can reserve a business name by paying $25. This same form applies to all businesses, for-profit and non-profit.

How to File a DBA

In Alabama, founders can also file for fictitious names, often referred to as “doing business as” or DBA names. However, unique to Alabama, the law requires that startups are already operating using the selected business name before registering the DBA. In other states, the opposite is true; startups cannot use their DBA name until it’s registered.

Because of this law, in Alabama, founders only need to register a DBA if they are a foreign entity wanting to operate under a different name. Additionally, sole proprietorships and general partnerships don’t need to register for a DBA. This rule only applies to foreign corporations, LLCs, and limited partnerships.

If the DBA registration applies to your startup, you can file a name reservation form with Alabama’s Secretary of State.

How Much Does It Cost to Register a Business in Alabama?

Depending upon your chosen entity for your startup, you will have filing fees due when registering your business. For example,  if you register as an LLC, corporation, or limited partnership, you’ll pay a fee of $200. As a foreign entity, your filing fee is typically $150.

Also, depending upon your entity, you may be liable for Alabama’s various taxes, such as the state corporate tax, sales and use taxes, and if you have employees, employment taxes. To better understand your state tax obligations as a startup, you should consult with an accountant familiar with Alabama tax laws.

After submitting your registration forms, you need to learn about any required state or local licenses, such as a business license. You must also understand what annual registrations and fees are required of your startup, such as an annual report and privilege tax amounts, which will differ per entity.

How Do You Register as a Minority-Owned Business in Alabama?

Alabama offers several programs and certifications, allowing you to showcase the minority ownership of your startup. For example, the Office of Minority Business Enterprise, part of Alabama’s Department of Economic and Community Affairs, administers a certification program for minority and women-owned startups. These certifications are valid for two years.

Also, the Governor’s Office of Minority Affairs (GOMA) has established the “Minority and Women’s Business Initiative to ensure that minority and women business owners have a direct line of communication for assistance in doing business with the State of Alabama.” Through its support of minority and women-owned businesses, the GOMA also works with other Alabama governmental agencies. These include the Alabama Department of Economic Community Development (ADECA), the Alabama Department of Transportation, the Alabama Department of Commerce, and the Alabama Department of Finance—Purchasing Division.

According to the GOMA, “Alabama’s minority and women’s business community -- along with a growing entrepreneurship sector -- serves as the backbone of our state’s economy. GOMA serves to ensure that the voices of these communities are being heard, and that needed assistance and access to opportunities are provided.”

Next Steps: Tax Registration

Another step for startups and founders is, for tax purposes, to register their business with Alabama’s Department of Revenue (ADOR). Corporations, LLCs, LLPs, and partnerships must register with ADOR to conduct business in Alabama.

Standard forms and taxes include sales and use tax, income tax withholding, and unemployment tax. In addition, depending on your startup, you may have to register for and pay additional state taxes.

To register, founders will need the following information:

  • Startup’s name
  • Address
  • Owner information
  • Start date of business
  • FEIN
  • NAICS code

Founders can easily access tax documents and other online sources through My Alabama Taxes (MAT).

We can help!

At AbstractOps, we help early-stage founders streamline and automate regulatory and legal ops, HR, and finance so you can focus on what matters most — your business. If you're looking for help registering your Alabama startup, we can get your documentation ready, overall shepherding this process to ensure it's done right. Drop us a note at hello@abstractops.com.

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