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Advantages of Incorporating a Business in Alabama

Are you concerned about your decision to register a new business in Alabama? Do you wonder if it is a right decision or not? You don’t have to be concerned as Alabama provides a really good platform that aids in faster and higher business growth. Whether you form an LLC or register a Corporation, there are plenty of benefits in store for you.

Business Growth Incentive for New Businesses

We can help you register a new company in Alabama, so that you are able to benefit from advantages that include Tax credits, incentives, and Abatements that the state offers to new businesses. These will ensure long term growth and profitability for Corporations, LLC, Partnerships etc.

Let’s take a look at some of the advantages:

Advantage#1: Tax Credits and Abatements

There are a lot of benefits in being a startup company in Alabama. The state offers a wide range of Tax credits and Abatements to small and medium sized businesses. These incentives are a part of the larger benefit that your business can derive from and includes the following:

Sales and Use Tax Abatement

Businesses will be required to follow proper procedures to ensure they qualify for this Abatement. A business can get an abatement in state as well as local non-educational portion of construction related sales and use taxes. A startup company in Alabama will also get Abatement (post qualification) on the general state sales tax (4%) and the state manufacturing machinery and equipment tax (1 and 1/2%). Local tax that has not been earmarked for education can also be abated. Apart from this, if a business incorporates personal and real property into their qualifying project then they can derive abatement on property tax for a maximum period of 20 years.

There are several other abatements that a business can benefit from including Chapter 9B Abatements, Chapter 9G Abatements, and Chapter 9C Brownfield Development Abatements among others.

Tax Credits

If you register a new business in Alabama then you can take advantage of various tax credits being offered by the state. Some of the important tax credits they offer include:

  • Alabama Small Business and Agribusiness Jobs Act Credit: A small business that employs 75 or less employees may qualify for Income Tax Credit equal to $1,500. This tax credit is available to businesses under Section 40-18-390 through Section 40-18-394, Code of Alabama 1975.
  • Dual Enrollment Credit: Any business that makes contributions towards educational expenses associated with the Career-Technical Dual Enrollment Program may be qualified for tax credit of 50% on total contributions.
  • Investment Credit: Businesses can benefit from investment credit for approved projects that help in creating new jobs in the state. This credit amounts to 1.5% of qualified capital investment annually.

Advantage#2: Enterprise Zone Program

The Enterprise Zone Program provides tax incentives to businesses that locate and expand within a designated Enterprise Zone in accordance to The Alabama Enterprise Zone Act, 1987. It simply means, when you register a new company in Alabama, it has to be situated in an “Enterprise Zone” like Greene, Lowndes, Monroe, Coosa, Bullock, and Winston among others.

Apart from a variety of state-level tax incentives, your business may also qualify to receive local tax as well as non-tax incentives for expanding within the said designated Enterprise Zone.

Download Alabama Enterprise Zone Procedures Manual​​.

Are there any Disadvantages of Incorporating in Alabama?

If you are wondering what disadvantages there are, then the truth is if you register a new business in Alabama there are very few. One of them is that if you register a Corporation in Alabama it will be monitored by federal, state as well as local agencies. As a result, you might have to handle larger amount of paperwork and ensure they are in accordance with state regulations. On the other hand, if you form an LLC then it may get dissolved if it goes bankrupt or a member dies unlike with Corporations, which can exist forever.

The most important thing to note is that the benefits or advantages that businesses can derive in the state of Alabama outweigh the disadvantages. If you are planning to establish a startup company in Alabama then it is the best business decision you can make!

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