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!

Order LLC now  Order INC now

Why form a Corporation in Alabama? This is a state that has shown tremendous business growth prospects in recent times and today there exist more than 382,524 new small businesses in the state. The primary industries in the state include food, apparel, lumber and wood, textiles, and industrial machinery and there are several industries like aviation and automobiles that are expanding at a rapid rate.

Business growth in Alabama has been due to a variety of incentives and programs offered by the state and counties. Apart from this, there are several designated enterprise zones and a business situated in such a zone will receive sales and use tax exemptions. Overall, these are some of the factors that are responsible for creating a favorable business climate.

What are you planning to FORM today? LLC or a CORPORATION?

The procedure for company formation in Alabama may seem like an exhausting one but when you hire a top Alabama Registered Agent like us, we will ensure, the entire procedure is simple and quick.

How to: Alabama LLC Registration and Formation

An LLC can be formed in accordance to the Alabama LLC Act of 2014, Title 10A – Alabama Business and Non-Profit Entities Code, Chapter 5A – Limited Liability Companies. The procedure for registration and formation of LLC is as follows:

Step#1: Hire a registered agent

If you form an LLC, you will be required to designate and maintain a Registered Agent as per Chapter 1 – GENERAL PROVISIONS, Section 10A-1-5.31. The agent could be a foreign or domestic entity and should have the authorization for transacting business in the state of Alabama. We would take this opportunity to share with you the fact that we are one of the Top Registered Agents in the state and have been responsible for over 11,494 company formations in Alabama.

We are in compliance with all regulations in the State of Alabama.

Step#2: Choose LLC Name

If you are planning to form an Alabama business LLC then the first step is to identify a name for your business and register it. According to 2012 Code of Alabama, Title 10A, Section 10A-1-5.06, the name of your limited liability company should contain words like “Limited Liability Company” or abbreviations like “LLC” or “L.L.C.” One of the important things to note is that you will be required to file appropriate application for registration of your name.

How would you know that the name chosen by you is unique? In order to find out, you can conduct name search from here.

Note: Without the “Certificate of Name Reservation”, you will not be able to file Application for Registration of LLC.

Step#3: Application for Registration

LLC company formation in Alabama is possible only after you have registered an LLC name. You will also have to file the Certificate of Name Reservation along with the “Foreign Limited Liability Company Application for Registration”. The form has to be filed in original along with two copies. It can be mailed and submitted in person with the Business Entities Division of the Secretary of State along with the required fee.

You can select the ONLINE submission option or we can complete the entire process on your behalf.

Alabama Corporation Registration and Formation

If you are planning to form a Corporation in Alabama then the procedure for registration and formation is as follows:

Step#1: Hire a Registered Agent

In the state of Alabama, you will need to assign and maintain a Registered agent as required by 2012 Code of Alabama, Title 10A, Chapter 1 – GENERAL PROVISIONS, Section 10A-1-5.31. If you are planning to form a Corporation in Alabama, a registered agent will ensure the process of filing of certificate of authority or certificate of formation takes place in accordance to the law. We would take this opportunity to share with you the fact that we are one of the top registered agents in the state and have been responsible for over 11,494 company formation in Alabama.

We are in compliance with all regulations in the State of Alabama.

Step#2: Name Reservation

If you are planning to form a Corporation in Alabama, then the first step is to identify a name for your business and register it. According to 2012 Code of Alabama, Title 10A, Section 10A-1-5.04, the name of your corporation should contain words like “Incorporated” or “Corporation” or abbreviations like “Inc.,” or “Corp.” Foreign business entities are required to reserve their names by sending an application of filing to the Secretary of State in accordance with Section 10A-1-5.22 of 2012 Code of Alabama.

How would you know that the name chosen by you is unique? In order to find out, you can conduct name search from here.

Note: Without the “Certificate of Name Reservation”, you will not be able to file Certificate of Formation (Domestic Corporation) or Certificate of Authority (Foreign Corporation).

Step#3: Certificate of Formation/Certificate of Authority

Once you are ready to register your business or form a Corporation in Alabama, you will be required to file Certificate of Formation (Domestic Corporation) or Certificate of Authority (Foreign Corporation) along with the name reservation certificate. The form can be mailed and submitted in person with the Business Entities Division of the Alabama Secretary of State along with the required fee.

You can select the ONLINE submission option or we can complete the entire procedure on your behalf.

If you have any questions regarding Alabama Incorporation or LLC Formation, you can simply visit the Alabama Business formation page.

Order LLC now  Order INC now

Whether you have decided to form an LLC or a Partnership or register as a Corporation, it is essential to obtain an Alabama company license to begin operation. You may require permits as well in different counties. The question is how do you determine what license or permit is required for your type of business and more importantly, do you require a license at all?

Business license is important and a necessity when it comes to operating within the state. In order to determine the type of license or permit, your business requires, it is important that you determine the type of federal, state, county, or city requirements that need to be met. You need to also determine whether the business you are trying to establish, will be allowed in the area or city you are proposing to register in.

Types of Business License in Alabama

According to 2006 Alabama Code – Section 40-12-40, an individual, company, firm, association, or corporation engaged in any occupation, vocation, business, or profession will need to procure a state or county Business License or Permit prior to beginning operations in the state. It is important to understand that state/county business privilege licenses are issued via the local county probate offices.

Business license in Alabama can be classified under three categories and they are:

Business Privilege License

A business privilege license is required by each individual, company, firm, or corporation that is engaged in any type of occupation, business, profession, or vocation as described in Title 40, Chapter 12, Code of Alabama 1975. Some of the businesses that require this Business License include Abstract Companies, Advertising Agencies, Automobile Dealers, Credit Agencies, Gasoline Stations with pumps, Machinery repair shops, Real Estate Brokers and Agents, Restaurants, Cafes, Cafeterias, Tourist camps, and Warehouses among others.

How to get this license

This type of Alabama company license is issued by the Commissioner of Licenses or Department of Revenue, County Probate Office or County Licensing Commission. The license needs to be renewed each year. You will need to pay the license fee which is due on October 1 of each year and it will be valid for a period of one year, ending on September 30. If you are unable to renew by end of October then delinquency will prevail on November 1. The fee varies from county to county and based on the type of business.

For example: Advertising Companies situated in a county with a population of 200,000 or more have to pay a Business License fee of $226.00 and if it is situated in a county where the population is less than 30,000 then the License fee will be $23.50.

Store License

This is a type of Business License in Alabama that is applicable to any store or stores or any mercantile establishments that are owned, maintained, operated, and controlled by an Individual, Corporation, Firm, Co-Partnership, or an Association, which is either Foreign or Domestic, and in which merchandise, goods, or wares of any type are sold. The store could be a retail or wholesale store.

How to get this license

This type of Alabama company license is issued by the Commissioner of Licenses or Department of Revenue, County Probate Office or County Licensing Commission. The license needs to be renewed each year. You will need to pay the license fee due on October 1 of each year and it will be valid for a period of one year, ending on September 30. If you are unable to renew by end of October then delinquency will prevail on November 1. The fee varies from county to county and based on the type of business.

For example: An Automobile Accessory Dealership store that sells motor vehicle accessories, including motor vehicle parts, air conditioning units, automobile bumpers, automobile radios, motor vehicle batteries and tires, seat covers, parts & accessories for self-propelled tractors etc., will pay annual license tax and/or fee based on the county population. If the Automobile Accessory Dealership is situated in a county with a population of 100,000 or more they will have to pay a business license fee of $61.00 and if it is situated in a county where the population is between 2,000 and 5,000 then the license fee will be $16.00.

Municipal Business Licenses

There are specific businesses, which require a Municipal Business License but this license can only be issued after such businesses have acquired a permit or certificate from the Regulatory Agency or Board. This type of business license in Alabama is required by Act 2006-586 for business entity and occupations.

How to get this license

This type of Alabama company license is issued by the Municipal Board or Agency for each type of business. The fee of Municipal License varies according to type of business/entity, board or agency managing it, and the county it is situated in. For example: Alcoholic Beverages (Clubs, Restaurants, etc) require certification issued by Alcoholic Beverage Control Board (ABC Board) prior to applying for Municipal License while Ambulatory Health Care Services-Onsite Pharmacy require certification from the Pharmacy Board prior to applying for Municipal License.

Hence, it is important that you identify beforehand whether your business requires a Business Privilege License, Municipal License or a Store License. This will ensure quick processing of your business license in Alabama and once you have the license, you are ready to begin operations in the state.

Order LLC now  Order INC now

Business Information & Rankings

• Alabama ranked 5th Most Entrepreneurial State (Entrepreneur Magazine, 2005).
• Alabama ranked 16th in the Tax Foundation’s 2005 State Business Tax Climate Index.
• Alabama ranked 12th in Small Business-Friendly States (National Policy Research Council, 2004).
• Mobile, AL ranked 5th Most Entrepreneurial Mid-Size city (Entrepreneur Magazine, 2005).
• Huntsville, AL ranked 8th for Best Places to do Business (Forbes, 2004).

Cost of living

Crime Rate

Alabama is ranked 34th in the nation in terms of crime. (FBI, 2003)

Fees & Taxes

Business Inventory Tax
Alabama does not have a business inventory tax.

Business Privilege Tax
The tax applies to all corporations, limited liability entities, including disregarded entities, which do business in Alabama or are organized under the laws of Alabama. The tax accrues as of January 1 of every taxable year and is due March 15.

Corporate Income Tax
Rate – 6.5%. Qualified taxpayers may elect alternative tax of 0.25% of gross sales in Alabama during the tax year.

Municipal Sales Tax
Applicable and assessed by some municipalities.

Personal Property Tax

Ad Velorem/Property Taxes
All non-exempt property in Alabama is classified and assessed at 20% of fair and reasonable market value for manufacturers. The rate of tax per one thousand dollars of assessed value is $6.50 (includes $3.00 for schools). Local levies also apply.

State Sales and Use Tax
Base Rate: 4%
Machinery Rate: 1.5%

Reduced rates applicable for sales of machines and their parts used in mining, quarrying, processing, compounding and manufacturing.

Unemployment Insurance
Alabama’s unemployment insurance tax rate for new employers is 2.7 percent for 3 years.

Special Licenses, Permits and Registrations
State law in Alabama requires that all businesses must obtain local business licenses. Alabama requires that many occupations also obtain special licenses before they can operate a business.

Didn’t find answer to your question? Email as at info@incparadise.com

Once your company is set up, you will need:

1. Tax ID (EIN) – free over the Internet or phone.
2. Yearly Requirements and Fees for Alaska companies
3. Company Minutes & Stock Certificates – are included in incorporation. You will have access to documents generated on your client account.

Alaska additional services

• Registered Agent
• Annual Report
• EIN (Tax ID)
• More Additional Services