Doing Business As or DBA in Alabama

There are over 400,000 small businesses in the state of Alabama and this includes home-based firms, LLC’s, general partnerships, and sole proprietorships among others. The state is also home to several top companies including Vulcan Materials Company, Regions Financial Corporation, BASFIN Corporation, Alfa, and Qualitest Pharmaceuticals among others. Some companies prefer to use a traditional business name while others prefer applying for an Alabama DBA online. If you are planning to start a new company in this state then you can choose to use your legal name (owners full name), a business name (e.g., Alabama Pharma), or get a DBA in Alabama. Each state has its own DBA laws and hence the guidelines related to fictitious name registration in the state are also different from those of other states. Let’s start by trying to understand what a DBA really is.

What is DBA in Alabama?

If you are thinking of establishing a startup then you need to first choose a name for the company as it will be the cornerstone of your company image or brand. Whether you start a limited liability company, sole proprietorship, C or S Corporation, or even a partnership, the chosen company will be identified by its name. A business name can be classified in three ways and they are:

• Business owners’ names like Anjie David LLC.
• Traditional business names like Alabama Trading Inc.
• Trade name or filing a DBA in Alabama like Nathan’s Hikes

When do you need a DBA in Alabama?

If you are thinking of applying for an Alabama DBA online then you will be happy to know that you can do so without worrying about the type of structure chosen for your company. You or any company can choose to file a trade name owing to numerous reasons including expansion of a company into new product areas or starting a sister organization. Let’s look at why any company would want to get a DBA in Alabama:

• New line of business: If you already own a business but want to start a new line of business that should not reflect the current business name then filing a DBA in Alabama would be a great alternative. The product or services you plan to promote may or may not be connected to the current catalog of product or services being offered by the existing company. Let us look at an example to get a clear picture:

  Example: You currently own a business specializing in PC assembling, installation, and repair. The name of this company is Prattville Computers LLC. Now, you are planning to sell laptops and gaming consoles to expand your business. You could file an Alabama DBA online application for this new portion of your business.

• Franchise and Sole Proprietors: It is extremely common amongst sole proprietors and franchise owners to file or get a DBA in Alabama. Franchise owners prefer a DBA or a trade name for establishing their identity as a local Alabama business. Sole proprietors prefer to use a DBA as the process of registering a trade name is neither complex nor expensive.
• Several Benefits: There are many benefits of applying for an Alabama DBA online. One of the major advantages is that it provides business credibility to a company especially to small businesses like general partnerships and sole proprietorships. A DBA can also be used for opening a business bank account.

Filing DBA in Alabama LLC and Corporation

A DBA (doing business as) is a type of business name that is often known as a fictitious name or an assumed name. In the state of Alabama, this is also known as a trade name. If you are planning to form a sole proprietorship, a limited-liability company or a corporation then ideally you need to apply for a business name reservation. Alternatively, you can simply opt for filing a DBA in Alabama. This trade name will be known as the DBA or assumed name for the said company. There is a specific process behind filing an assumed name and includes conducting a trade name search in Alabama. The process as well as fee will also be different for registering a trade name as compared to reservation of the standard business name for a LLC and a corporation.

Do Alabama Trade Name Search

If you have chosen a trade name for your Alabama LLC or corporation then the first step would be to ensure this name is compliant with state DBA laws as well as other business name statutes. One of the key areas to focus on prior to applying for registration of the DBA is conducting a trade name search in Alabama. This is also known as the Business Entity Records Search and is facilitated by the website of the Alabama Secretary of State. It is important to note that applying for an Alabama DBA online is possible only if the search indicated availability of the said name. This simply means that the proposed name is not in use currently and can be registered. The Business Entity Records Search provides only one option for conducting this search and that is using the name of the entity.

Search by Entity Name

If you want to get a DBA in Alabama then conducting a search using an entity name is the most common approach. This search will allow new businesses, both domestic corporations and foreign LLC’s to check if their chosen name is available. The variable that can be used for conducting this search are:

• Name
• Type of business (LLC/Corporation)
• Place of Formation
• Principal City
• Status

Register Your Alabama DBA

Once you have conducted a trade name search in Alabama successfully, the next step is to register such a name. You will be required to complete the Application to Register or Renew Trademark, Service Mark or Trade Name form. You will be required to provide information pertaining to classification of your business in terms of the industry like agriculture, forestry, and fisheries or retail trade – miscellaneous. You will also be required to select the classification of goods and services like Beverages, Beverage Syrup, and Beer or Transportation and Storage.
This form and information required will be applicable for both LLCs and corporations – domestic and foreign. It is important to double check all information provided prior to filing a DBA in Alabama. You will need to ensure that this registration form is duly notarized by a Notary Public. The filing fee is $30. Alternatively, we can help you to register a DBA in Alabama or a trade name through a process which is easier and faster.

Do you want to get a DBA in Alabama?

Managing Alabama DBA

After applying for an Alabama DBA online, you can start using this as the business name within the state. There are certain state rules and regulations pertaining to a DBA or a trade name including that of renewal of a DBA, changing, or canceling of the trade name in the jurisdiction where the business is operating from. Let’s look at the various processes applicable for managing a trade name including how to get a DBA in Alabama renewed.

How to renew Alabama DBA?

Once you have filed an Alabama DBA online application, the trade name can be renewed only once in every five years. You will be required to complete and file the “Application to Register or Renew Trademark, Service Mark or Trade Name” form. It has to be submitted with the Alabama Secretary of State, Trademarks Division along with a fee of $30.

How to change Alabama DBA?

After filing a DBA in Alabama, if you want to change the trade name at any given point in time then is it possible? Yes, it is possible but you will be required to contact the Alabama Secretary of State’s Trademarks Division. You can call them at (334) 242-5325 to understand the process for the same.

How to cancel Alabama DBA?

Once you have filed an Alabama DBA online application, if you decide after some time that you want to cancel the said trade name then is it possible? According to 2006 Alabama Code – Section 8-12-13 — Cancellation, it can be canceled by the office of the Secretary of State if not renewed on time. If you want to cancel the trade name prior to renewal then you will have to call the Trademarks Division at (334) 242-5325 and request deregistration.

Need Any Assistance in Filing Alabama DBA?

The process of applying for an Alabama DBA online will require you to provide complete and accurate information while being compliant with state trade name laws as well as federal trademark laws. The process of conducting a trade name search in Alabama and adhering to all naming rules and guidelines can be quite confusing as well as complex. IncParadise can gladly assist you with this process. We have expertise and knowledge regarding the Alabama state DBA laws and Federal Trademark regulations.

Sole Proprietorship in Alabama

Alabama is home to more than four hundred thousand small businesses including sole proprietorships operating from commercial spaces as well as in residential areas. Most home-based businesses in the state prefer to file a sole proprietorship in Alabama as opposed to other types of entities like corporations or limited-liability companies. There are several other reasons why first time business owners prefer this type of business entity. These include a robust industrial infrastructure in the state and an excellent business climate. Alabama is also known to have a low tax burden and availability of a highly motivated workforce which makes it just the right place to conduct business in any industry or sector. You can form a sole proprietorship in Alabama online and start leveraging state benefits right from small business loans to varied repertoire of tax credit programs.

What is a sole proprietorship in Alabama?

In order to be informed on how to start a sole proprietorship in Alabama, you need to first try and understand what this type of business entity constitutes. A sole proprietorship is considered to be an unincorporated business that is owned and operated by one individual. This form of entity is often known as a sole trader and some of the top examples of such businesses include photographers, bakery owners, graphic designers or freelance programmers, dental clinics, and pet rescues among others. It is easy to start a sole proprietorship in Alabama as it has several advantages over other forms of businesses including less paperwork, documentation, lower taxes, and overall minimal cost of operation.

Pros and cons of sole proprietorship in Alabama

Although a sole proprietorship is the most basic of all entity structures, it has a certain advantage over several other bigger structures. This type of non-registered single-individual run business also has its disadvantages. Hence, it is important to identify the pros and cons to help you determine whether you should form a sole proprietorship in Alabama online or go with some other business structure.

Pros

Every type of business structure has a set of advantages that makes the entity different from other structures. If you start a sole proprietorship in Alabama there are several advantages:

• The biggest advantage of a sole proprietorship is that it is inexpensive and easy to form this entity
• You will be able to protect the business name in a sole proprietorship as the legal name will be your personal name unless you want to use an Alabama DBA
• Ownership is a great advantage as being the only owner, you will have complete control over the company operations
• Once you file a sole proprietorship in Alabama, you will be able to participate in key state incentive programs including jobs tax credit
• Forming a sole proprietorship means you will have simpler income tax obligations
• Banking operations would also be simpler vis à vis corporations or other form of entities

Cons

Each type of business structure has disadvantages or limitations including a sole proprietorship entity. Let’s look at some of the disadvantages:

• If you opt to file a sole proprietorship in Alabama then you will not be able to enjoy liability protection, which is a core strength area of an LLC (Limited Liability Company).
• It is often difficult for sole proprietorships to get financing through private investors or any form of business credit.
• This type of business may witness an increase in debts and unnecessary expenses
• A sole proprietor may be required to file self-employment taxes on their earnings

Steps to Start Sole Proprietorship in Alabama

If you are wondering how to start a sole proprietorship in Alabama then there are several processes to consider. There are different processes associated with forming a new business and making it operational. There are annual maintenance requirements of the state as well, which every new company in the state has to be compliant with. Let’s look at the various important processes and steps involved.

1. Prepare a business plan

If you have decided to file a sole proprietorship in Alabama then one of the immediate tasks is to identify the risks associated with forming this business and mitigating them. This is possible by creating a detailed plan that takes into account different functions and aspects of the business. This type of strategic plan is most commonly known as a business plan. It is not just a way of identifying risks but is also a roadmap that will indicate growth prospects, and factors that can contribute towards making the business sustainable and profit oriented. The most common elements including in any sole proprietorship business plan are:

• Executive Summary
• Company Description
• Concept behind the specific business/activity
• Long and short-term Objectives
• Competition Analysis
• Market analysis
• Product and Services
• Target audience
• Operating plan
• Marketing Plan and Sales Tactics
• Financial Plan and Projection

2. Choose an Alabama business name

The name of a business is as important to a sole proprietorship as is the name to an individual. It serves the same purpose. A business is known by the name. The name plays a key role in various aspects of the overall process of forming a company and conducting the business right from marketing and branding to opening a bank account or communicating with the state and the customers. The name will also be useful for registering a domain name and setting up a website. So, here are some important tips that will get you started.

• It is important to think of a name that is easy to spell and remember
• Try to choose a name that is not similar to that of a competitor
• Follow the naming guidelines of the state of Alabama
• You can take help of online business name generators
• Your company can use your name (e.g. – James Long Sandwiches) or you can opt for an Alabama DBA
• While choosing a name, take into consideration your products, services, and customers (e.g. – James Alabama Bakery)
• Be sure to check for availability as a domain name for your website
• Try to secure trademark protection for your chosen business name

3. File fictitious business name

If you are thinking of the processes connected to how to start a sole proprietorship in Alabama then the first step would be to file a fictitious business name. A fictitious business name is also known as a DBA (doing business as). In the state of Alabama, it is also known as a trade name.

Do you want to start a sole proprietorship in Alabama?

4. Get EIN

If you want to start a sole proprietorship in Alabama, you will be required to file personal income tax as well as any other state taxes. A sole proprietorship is a single owner company and hence the owner or individual has to file income taxes using his or her Social Security Number (SSN). There is another option, which is to opt for an Employer Identification Number (EIN) as this can be quite beneficial in the long-term. According to the IRS (Internal Revenue Service), there are certain criterias that come into play when applying for an EIN and they are:

• If a sole proprietorship business starts hiring employees
• If such a company plans to open a business bank account
• If you or the owner has a Keogh plan
• If you are required to file excise tax returns
• If you change the entity structure like from a sole proprietorship to a limited-liability company If you file Chapter 7 (liquidation) or Chapter 11 (reorganization) bankruptcy

5. Obtain necessary licenses and permits

If you are wondering how to start a sole proprietorship in Alabama then one of the important areas to focus on is the type of licenses that your company may require. Licensing of a sole proprietorship business is primarily for ensuring that such a company maintains safety standards where the public is concerned. If you file a sole proprietorship in Alabama, then you will need to apply for proper licenses and permits to make your business operational.

Business licensing in the state of Alabama can be categorized as under:

• Business Privilege License
• Professional licenses
• Municipal or local licenses
• Regulated licenses
• Zoning permits

6. Open a bank account for your Alabama business

One of the easiest entity structures that you can form is a sole proprietorship but you need to ensure that it remains compliant with all Alabama business requirements. One such requirement apart from an Alabama DBA is that of a business bank account. This type of banking account, also known as a checking account is considered to be separate from a personal savings account. The primary advantages of a business bank account is to help you in management of all types of business finances, filing of taxes, and limiting your personal liability.

7. Report and pay taxes

If you start a sole proprietorship in Alabama then you will be the owner of the company in the books of the Internal Revenue Service (IRS). Hence, you will be required to file the owner’s individual tax returns on state income tax. The individual income tax rate varies in the state from 2 percent to 5 percent and certain jurisdictions have to also collect local income taxes. If you form a sole proprietorship in Alabama online then you may be required to file Alabama Business Privilege Tax (ABPT). If your company has employees then you will have to file withholding tax as well. Apart from these, depending on the industry or location of the company, a sole proprietorship may be subjected to a variety of local taxes including sales tax.

Know more about starting an Alabama Sole Proprietorship!

If you are faced with several queries on how to start a sole proprietorship in Alabama efficiently and operate it with ease then our “Frequently Asked Questions” can provide the right answers. We have created this section to provide quick access to helpful information that will assist in good decision making.

Do you have to register a sole proprietorship in Alabama?

If you are planning to file a sole proprietorship in Alabama then it will not be considered as a legal entity structure. This is the very reason why you will not be required to register the company with the Alabama Secretary of State. However, if you want to file an Alabama DBA then you will have to submit a DBA registration form with the Office of Secretary of State, Trademarks Division.

What is the difference between a sole proprietorship and an LLC in Alabama?

It is important to choose the right business structure as this will determine the sustainability, growth, finances, and operations of the said business. The two popular entity structures that most first time business owners prefer are sole proprietorships and limited liability companies (LLC’s) due to their simplicity and flexibility. You can even form a sole proprietorship in Alabama online and later on if required convert the structure to that of an LLC.

How much does it cost to start a sole proprietorship in Alabama?

You are not required to file a sole proprietorship in Alabama with the office of the Secretary of State. This simply means that there will be no business registration costs although formation costs will take into account filing an Alabama DBA or trade name. If you file online then the cost is $31.20 and if you submit by mail then the fee is $30. There is a renewal fee of $10 each year as well. Apart from this, the costs will vary according to the type of business licenses and permits required and taxes being filed. The sole proprietorship may also incur other expenses like renting or leasing of office space, utility bills, and employee salary

What taxes do sole proprietors pay in Alabama?

A sole proprietorship is a type of entity structure where the owner as well as the business are not seen as different entities. Hence, the primary tax will be that of personal income tax where the rate will vary from 2% to 5%. Other state taxes may also be applicable based on business activity, employees, and location. The Alabama business privilege tax has to be filed by all registered as well as disregarded entities like a sole proprietorship

Do sole proprietors need a business license in Alabama?

Yes. If you are planning to form a sole proprietorship in Alabama online then a business license will be mandatory to conduct transactions in this state. The most important of them is the privilege license, which you will need to obtain in every county you are planning to conduct your business in. Apart from this, you may also require municipal or local licenses, zoning permits, and professional licenses.

Should I convert my sole proprietorship to LLC in Alabama?

Once you start a sole proprietorship in Alabama, you may feel that a limited liability company suits your business objectives better. In such a situation, it is important to reason out if converting to an LLC is really necessary. A sole proprietor or sole trader is considered as a self-employed individual and hence there is always that risk of personal liability towards business debts and any other obligations. A limited liability company on the other hand will provide you with liability protection and since it’s a pass through entity, you will be filing personal tax returns just like in a sole proprietorship.

Ready to Start a Sole Proprietorship Business in Alabama

If you have taken a decision to file a sole proprietorship in Alabama then this is a good decision in terms of simplicity of structure and ease of formation. You will not be required to register your company with the Secretary of State unlike several other forms of businesses. However, you will be required to maintain different types of state annual maintenance compliances in order to enjoy a good standing with the state.

Business License in Alabama

One of the most important aspects of any new business formation is choosing the right structure and reserving a company name. Once this is done, you can register your company according to the state laws but will you be able to operate such a company? Yes, but first you will need to apply for and obtain an Alabama privilege license or an operational permit. If you conduct business without proper business licenses then it will be deemed as unlawful and this may lead to penalty for violation of state or local ordinances requiring licenses and permits. You may have to pay a hefty fine and can even be imprisoned according to 2020 Alabama Code – Section 11-51-93.

Who needs an Alabama business license?

An Alabama business license can be defined as a mandatory permit or approval, which is normally issued by a state or government agency authorizing a domestic or foreign entity to operate within a specific city, county, or jurisdiction. In order to understand whether your company needs to apply for and obtain Alabama business licenses and permits, it is important to understand why licenses and permits are essential. The state issues different types of licenses based on certain criteria as the primary objective is to hold businesses accountable for any action as well as behavior while ensuring safety and protecting the health of the public (consumers).

What business license do I need in Alabama?

Some states in the USA have a general license for all forms of businesses but Alabama does not have any statewide general license. Instead, the state requires individuals, firms like LLC or corporations engaging in any trade, commerce, business, occupation, or profession for the sole purpose of profit or gain will be required to apply for an Alabama privilege license. It is one of the few states where a privilege license exists. Apart from this you may also be required to apply for and obtain an Alabama business license based on specific activity, the location of the business, and municipal licenses among others.

Obtain Applicable Federal Licenses

If you are planning to start an LLC or a corporation in Alabama then you would need to apply for several different Alabama business licenses and permits depending primarily on the business activity. One of the important licenses that some businesses may require are Federal licenses. The federal government has formed regulatory agencies in each state, which are responsible for issuance of licenses and permits for certain regulatory activities. If your company is engaged in any activity that has been regulated by the federal government then you have to obtain a license or permit for the same from the state regulatory agency. You will need to conduct appropriate Alabama business license search for regulated business activities. Let’s look at an example to understand the same.

Example: If you start a food establishment and plan to serve alcohol in the premises then this will come under regulated activity. You will need to check with the Licensing and Compliance Division of the Alabama Alcoholic Beverage Control (ABC) Board for the type of license required by your establishment and the corresponding fee. If you want to sell Beer (Retail – on or off premises) then the Alabama business license fee will be $150. Now, if you want to expand into Lounge Retail Liquor – Class I then you will need to apply for a separate Lounge Retail Liquor License for on-premises and off-premises consumption pursuant to AL Admin Code R 20-X-12-.04. The fee for this type of Alabama business license and permits is $300.

Obtain a Professional License

If you start a business where-in the primary business activity is defined as a profession then you will need to apply for a professional certification or license prior to conducting business or transaction in the state.

What is a professional license in Alabama?

A professional license is a type of permit, registration, license, certificate, temporary license or permit, qualification, or temporary registration. This type of Alabama business license and permits can be issued to individuals as well as firms. It is also referred to as a non-transferrable authorization that is required for carrying out a specific activity. You will need to conduct an Alabama business license search and identify the required license as well as the State Licensing Board responsible for issuance of that license. Different professional licenses will be issued by different agencies. For instance, the Alabama State Board of Public Accountancy provides licensing and fee information for Certified Public Accountants (CPA), Public Accountants (PA), and CPA/PA Firms.

Which professions required licensing in Alabama?

If you start a business, you may not need to apply for a professional license. Again, there are some businesses that may even require both Alabama privilege license as well as a professional license. Here is a list of professions that will require you to apply for and obtain a professional license in the state.

• Accountancy
• Architecture
• Behavior Analysis and Therapy
• Communication Disorders and Sciences
• Counseling and Rehabilitation Education
• Dental Hygiene
• Engineering Programs
• Forestry
• Geology
• Health Care Management – Long Term Care Administration
• Human Nutrition and Dietetics
• Interior Design
• Law
• Mortuary Science and Funeral Service
• Nursing
• Occupational Therapy
• Physical Therapy
• Physician Assistant
• Psychology
• Public Health
• Radiologic Science
• Recreation Professions
• Social Work
• Teacher Education

Other Alabama Business Licenses

Whether you start a small company, startup, large enterprise, or even a home-based business, the licensing requirements in the state will vary according to the activity and the location of your company. Apart from the Alabama privilege license, you may even require permits and licenses in the county you are conducting your business in. Let’s look at the various other forms of Alabama business license and permits that may be required by any company operating in the state.

City or county for local licensing in Alabama

The most common type of business license required by businesses is the county license also known as municipal license or local license. Depending on the city or county where your business is established, you can conduct an Alabama business license search to identify the permits required. It is also important to note that if the municipality where you are conducting your business, has a business license ordinance, then you will be required to obtain a license or permit. Once you obtain an Alabama business license you will need to renew them as well. Most municipal business licenses are due on January 1 each year and hence you need to renew them to avoid penalties.

Building & Zoning Permits

One of the important forms of Alabama business license and permits is the building or zoning permit. Each county or city in Alabama has their own local ordinances, which define the need for such permits. Some cities and counties may have separate building code ordinances as well. The issuance of license and zoning permits vary from one county to another depending on these ordinances. Let’s look at an example:

Alabama home-based licenses

Over the years, the small businesses sector has witnessed a steady growth with many home-based businesses mushrooming across the USA. Alabama has also seen a rise in the number of startups becoming operational from the home or residence of an individual. Such businesses are often in the form of sole proprietorships but some have even formed partnerships and LLC’s (both single and multi-member). Once you have gone through the planning and new business formation stage, it is important to focus on the business licensing aspect. It is important to note that a startup from home may also require an Alabama privilege license as it is mandatory for every individual or firm that is engaged in a business activity, profession or occupation as mentioned in Title 40, Chapter 12; Code of Alabama 1975. A home-based business may also be required to obtain an Alabama business license or a professional license along with municipal and local licenses depending on the primary business activity and the location of the company.

Need any Assistance in Obtaining Your Alabama Business License?

If you are planning to start a small business or a medium enterprise in the state of Alabama then certain compliances need to be met to ensure the business becomes operational. You will need to apply for state and local Alabama business licenses and permits to enable you to transact in the state with ease. The Alabama business license or permit application, fees, and renewal processes will vary according to the type of license and municipality your business is operating from.

Alabama Business Entity Search

A business name is a powerful driver of business or customers if given the right direction. You will need to choose a name that not only reflects the brand identity but also helps impress investors. This is one of the many reasons why it is important to conduct an Alabama business name search. This type of search will not only reveal availability of your chosen name but also open the doors to creativity. You will be able to see other names or names of various LLCs and corporations in the state thus providing a platform to choose the right name. Business names can vary from simple (Pizza Hut) to extremely creative (Nike). The sky’s the limit but you need to also maintain compliance with Alabama business name rules.

• First and foremost is to choose a name that people can spell and pronounce
• It is also important to follow the Alabama LLC or Corporation name rules and guidelines
• Choose a name that is easy to remember
• Ensure that the chosen company name is consistent with your brand
• Be careful and ensure your company name is not similar to that of a competitor
• You can be creative with a company name
• Always conduct an Alabama business entity search prior to finalizing the name
• Try to make the entity name web-friendly as this ensures availability of domain
• Last but not the least; you can use online business name generators for identifying a name

What is an Alabama business name search?

Once you have chosen the entity structure, the next important step would be to identify a business name. The name of a company will define the future of the business and increase customer’s brand recall value. If you have chosen a name following the naming guidelines then conducting an Alabama business entity search becomes necessary. This type of entity search is available in all states of the USA although the governing or facilitating authority will be different. The governing authority for an entity name search is facilitated by the office of the Alabama Secretary of State.

Naming your Alabama LLC

If you have taken a decision to form a limited liability company then there are several processes that you need to follow in order to successfully establish your business. One of the most important processes is that of naming your LLC, as a business name helps in creating an identity among the customers as well as competitors. If you think of an effective business name then it will influence the decision of your prospective customers. When choosing a name, you can conduct an Alabama LLC name search to get some ideas as well as to check availability of the chosen name in the state. Let’s look at the two important aspects to consider when it comes to naming your limited liability company.

General Alabama LLC naming rules

One of the most important areas to focus on during naming of your limited liability company is Alabama business name rules and regulations. The business naming guidelines are regulated by 2022 Code of Alabama, Title 10A – Alabama Business and Nonprofit Entities Code, Chapter 1 – General Provisions, Section 10A-1-5.06 – Name of Limited Liability Company or foreign limited liability company. The general rules for an LLC name are:

• It should have words like Limited Liability Company or abbreviations like LLC or L.L.C. pursuant to AL Code § 10A-1-5.06 (2014)
• The business name should be distinguishable from any other name in the Alabama Secretary of State database
• It is important to note that the reservation of certain names are prohibited pursuant to AL Code § 10A-1-5.12 (2014)

Alabama LLC business search

Once you have identified a name for your limited-liability company then the next step will be to conduct an Alabama LLC name search. The Alabama Secretary of State offers an online portal that will enable LLC name search through the entire state database or business entity records. There are different ways to conduct the search and the main method is:

• Search by Entity Name: This is the most common form of Alabama business name availability search. This search will help both new domestic as well as foreign LLC’s to check if their chosen name is available. You can search using variables like searching with the chosen name, type of company (LLC), place of formation (county), principal city, and the status of the company that has a similar name like exists or dissolved. Let’s look at an example to understand this process.

  Example: If you want to start a business skilled in Computer Consulting/Computer Software Development then the name should be appropriate to the services being offered. If you chose a name like “Software Architects LLC” and conducted an Alabama LLC name search in the state database then it will show an active company with such a name operating out of Albertville, AL. Now, if you change the name to “Software Specialists LLC” then the Alabama business entity search shows “no matches”. This means the new name is available and you can reserve it.

• Business Entity Search By Agent or Officer or Incorporator
• Entity ID
• Reservation ID

Are you planning to form an LLC in Alabama?

Naming your Alabama Corporation

One of the most popular forms of businesses is a traditional corporation also known as a C Corp. If you are thinking of starting a domestic corporation in the state then it is important to start by identifying a corporate name. You will have to reserve this name pursuant to AL Code § 10-2B-4.01 (2022) prior to incorporating your business. A corporate name is a powerful driver of brand identity and recognition and hence it is important to follow Alabama business name rules as suggested by the state. There are several ways to pick out a name for your company thanks to the online business name generators available. Once you come up with a name, you will also need to conduct an Alabama Corporation name search to check for availability of the said name. This process will facilitate reservation of your corporate name. Let’s look at the important aspects to consider when it comes to naming your business corporation.

General Alabama C & S Corporation naming rules

If you are planning to form a domestic or foreign corporation then you will need to reserve a name prior to applying for incorporation. If you want an S Corporation then the naming guidelines will vary according to the entity structure chosen. An S corporation (S corp) is tax designated and you can form a limited liability company and then elect S Corp status or form a corp and then opt for S Corp status. Either ways, you will need to conduct an Alabama business name availability and the name reserved for your LLC or corporation will be the name for the S Corporation.

• It should have words like “Corporation,” “Incorporated,” or abbreviations like Corp. or INC pursuant to AL Code § 10A-1-5.04 (2014)
• The name should be unique and should not imply that the said corporation has been organized for any purpose other than what is outlined in the articles of incorporation.
• According to Alabama business name rules, use of certain words or names are prohibited pursuant to AL Code § 10A-1-5.03 (2014) like Bank, Banking, Engineer, etc.

Alabama Corporation Business Search

Once you have identified a name for your corporation in compliance with state naming rules and guidelines, the next step is to look for Alabama business name availability. This is facilitated by the online portal of Alabama Secretary of State also known as business entity records search. There are different ways by which you can conduct this search and the main method is:

• Search by Entity Name: This is the most popular method of conducting Alabama Corporation name search. This search can be used by both domestic and foreign corporations. You can search using variables like search using a chosen name, the type of entity structure (Corporation), place of formation (county), principal city, and the status of the company like it exists or has been dissolved. Let’s look at an example to understand this process.

  Example: If you want to start a business focusing on the Architecture industry then try to choose a name that is in-sync with the services offered or the industry. If you choose a name like “Bay Area Architects Inc.” then follow it up with an Alabama Corporation name search. The process will search the entire state entity database and show a dissolved company with such a name. Since the company is dissolved, you will be able to reserve this name. Now, if the corporation was active then you would have had to choose another name and conduct an Alabama business entity search again and if available, reserve it.

There are other search options available, which are:

• Search for business entity By Agent or Officer or Incorporator
• Search using Entity ID
• Search using Reservation ID

Are you thinking of Incorporating in Alabama?

Need any Assistance in Alabama Business Name Search?

A corporate or an LLC name is the top branding vehicle as consumers, competitors, partners, and vendors will associate the business name with your products and services. An Alabama business name search will facilitate the entire process of reservation of a name without which you will not be able to proceed with company formation or incorporation. Business name reservation also facilitates several other important sub-processes like opening a business bank account and issuance of licenses.

Alabama LLC Annual Filing Requirements

You can form different types of limited liability companies in the state including single-member and multi-member entities. It is important to remember that the annual requirements of a domestic LLC may be different from that of foreign LLC’s and Alabama Corporation annual requirements. Once you start a limited liability company in this state then the following important annual requirements will need to be considered

Annual Report

An annual report is required by new and existing businesses in most states and is governed by the state statutes. This report requires entities to provide updated information to the state or submit any changes like ownership changes, change of address and registered agents. Some states may also require LLC’s to provide additional information regarding assets, revenue, and paid-in capital. There is no requirement of standalone Alabama LLC annual report although the state requests entity information to be provided annually using the business privilege tax return.

Business Privilege Tax

One of the most important annual requirements in the state of Alabama is the business privilege tax also known as ABPT. This has to be filed annually by most forms of entities operating in this state. This form of privilege tax is governed by the Alabama Administrative Code, Title 810 – Alabama Department of Revenue, Chapter 810-2-8 – Alabama Business Privilege Tax and Corporate Shares Tax. A domestic limited liability company registered with the Alabama Secretary of State as well as foreign LLCs qualified to do business in this state will be subjected to the Alabama business privilege tax (ABPT) filing requirements pursuant to AL Admin Code R 810-2-8-.10.

Employer Taxes

One of the important annual requirements in Alabama apart from the business privilege tax is the employer taxes. This is also known as State Withholding Tax or payroll taxes. There are several states that impose this type of tax and Alabama is one such state. The employer taxes or state withholding tax is a specific amount of money that an employer is required to withhold by law from the wages being paid to every employee. The employer usually does not pay the taxes and is only responsible for collection and remittance of the tax withheld. The Alabama Administrative Code, AL Admin Code R 810-3-71-.01 states that employers or withholding tax agents are required to deduct, withhold, and pay the withholding tax each calendar quarter. This has to be paid to the Department of Revenue.

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Alabama INC Annual Filing Requirements

A C Corporation or a business corporation is a favored structure in the state of Alabama. There are several advantages that this type of entity structure enjoys vis-à-vis other forms of businesses. Once you have incorporated, there would be several state level requirements that your business is required to fulfill and they are categorized under Alabama Corporation annual requirements. You will need to maintain compliance with all annual requirements to remain in good standing with the state and this is applicable for both domestic and foreign entities. Let’s look in detail at the various annual requirements of an Alabama Corporation.

Annual Report

An annual report is an important document that contains comprehensive and updated information pertaining to a business corporation formed or operational in any state in the USA. In the state of Alabama, there is no requirement related to filing an annual report by corporations and instead such entities have to file an Initial Business Privilege Tax Return.

Business Privilege Tax

There are several important Alabama Corporation annual requirements that every entity needs to be compliant with. One of the important annual requirements is that of the business privilege tax also known as ABPT. This is also termed as an initial business privilege tax return and is normally due after the said corporation or taxpayer starts conducting business in the state of Alabama.

Corporation Taxes

Different states have different types of annual requirements governed by the state business laws. Similarly, the Alabama Corporation annual requirements are governed by the Alabama Administrative Code with the filing of taxes annually being governed by Title 810 – Alabama Department of Revenue. When you incorporate in the state, you will be required to maintain compliance by filing tax returns including business privilege tax and other applicable corporation taxes. This will ensure you enjoy a good standing in the state. There are different types of corporation taxes that you may be required to file with the most important being the Corporate Income Tax with a flat rate of 6.5 percent. Apart from this, you may also be required to file state sales and use tax as well as withholding taxes.

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Need any Assistance in Alabama LLC or INC Annual Filings?

The annual compliances or requirements normally encompass annual reports and taxes although sometimes business license renewals are also considered a part of Alabama LLC annual requirements or that of a corporation. The state of Alabama currently doesn’t require corporations or LLCs to file an annual report although it may be required in the near future.

Alabama LLC or Corporation

Once you form or register a new business in the state of Alabama, you can benefit from their incentive and grant programs. It is necessary to identify the right business structure as each structure has its own advantages and disadvantages. You can form a for-profit, non-profit, and even foreign entity. There are several angles to be considered while choosing an entity structure. For example, you must consider whether the chosen entity provides any legal advantage like protection against legal liability. You will also need to consider possible tax consequences, cost to form Alabama Corporation or LLC, annual maintenance cost, licensing costs, and state laws.

Which business entity should I choose for Alabama business?

There are several factors that play a key role in helping you make an important decision regarding the type of entity structure to be registered in the state. The cost to form an Alabama LLC will always be different from the cost to incorporate in Alabama or registering any other form of business. The paperwork required during the formation process will also vary according to the chosen structure. The two most popular structures in the state of Alabama are that of a C Corporation and an LLC. Let us look at some of the finer aspects of these structures.

• Risk to personal assets – Whatever form of business you choose to register, there will always be a risk for a lawsuit. One of the biggest advantages of corporations and LLC’s is limited liability protection. This ensures the owners of such entities are not held responsible for any debts of their company vis-à-vis a sole proprietorship or general partnership.
• Startup costs – The chosen business structure plays a key role when it comes to the overall startup costs as well as operational costs. The cost to form an Alabama corporation or an LLC along with the annual maintenance cost is a decisive factor and should be considered.
• Ownership – Ownership is an important factor as well because the involvement of multiple owners in structuring a business can make the process and operations quite complicated. For example, S corporation and C corporation structures require a board of directors.
• Administrative complexity – Different types of business structures have different levels of administrative complexity. These include initial paperwork, filing fees, licensing paperwork and fee, and Alabama annual report filing fee.

Pros and Cons of forming an LLC or Corporation in Alabama

When you choose the structure of a business then it is important to keep in mind that this decision will have an impact on various aspects of your business including day-to-day operations as well as annual maintenance. Whether you are looking to form an LLC or a corporation, it is important to first identify the pros and cons of each entity including the initial registration cost and Alabama LLC annual fee.

Pros of an LLC or Corporation

• The cost to form an Alabama LLC is the same as that of incorporation
• A business or professional corporation can issue stock
• A limited-liability company enjoys pass-through taxation on the profits
• There is no Alabama annual report filing for LLCs and Corporations
• You can start an LLC with a single owner also known as single-member LLC
• A limited-liability company enjoys flexibility in-terms of management
• Venture capitalist (VC) firms and other investors find corporations more lucrative for investment as compared to other entity structures
• A business corporation enjoys perpetual life
• There is less initial paperwork for a limited-liability company as compared to other structures
• An LLC or corporation can elect for S Corporation tax status

Cons of an LLC or Corporation

• In a limited-liability company, you will not be able to pay yourself salary or wages
• The registration of a C Corporation requires a lot of paperwork
• The overall cost to form an Alabama corporation is higher when compared to a sole proprietorship
• It is difficult for a limited liability company to raise capital vis à vis a C corporation
• A business corporation undergoes double taxation on its profits
• Depending on the state of formation, LLC members may be subjected to self-employment tax

Alabama LLC Cost

In the state of Alabama, one of the most favored structures is that of a Limited Liability Company due to the several advantages it has over other entity structures. If you are thinking of forming an LLC then it is important to identify the formation cost of forming an Alabama LLC. An LLC has different state requirements and costs attached to its formation and operations. Let us take a look at the various costs that you may incur.

Cost for forming an Alabama LLC

The cost to form an Alabama LLC takes into account one-time as well as recurring costs. These are:

• The LLC initial registration process and fee may be different from that of other entities. The first step towards registration is to file the domestic entity name reservation form after conducting a name availability search
• According to state laws, you will need to hire and maintain a registered agent for service of process. The cost or fee would vary according to the RA service chosen by you.
• The third and most important area is the formation cost of an Alabama LLC. You will have to file a Certificate of Formation pursuant to AL Code § 10A-5A-2.01 (2022). The filing fee is $236.

Annual maintenance cost for an Alabama LLC

Once you have registered a limited-liability company in Alabama; it is important to ensure that your company maintains compliance with all state requirements. The costs involved as a part of annual maintenance include:

• Annual Report – There are no requirements of Alabama annual report filing and hence no fee attached
• Taxes – A limited liability company is considered as a “Pass-through Entity”. Hence it will not be required to file any taxes but each member has to file personal income tax. Apart from this, an LLC will also be required to file a Business Privilege Tax Return. This type of cost to form an Alabama LLC is a recurring cost as the taxes have to be filed each year.
• Business Licenses – One of the important formation costs of an Alabama LLC is that of business licenses and permits. This is a recurring cost as licenses and permits have to be renewed each year. The fee for licenses will vary according to the type of license.

Form your new LLC in Alabama with Ease!

Alabama Corporation Cost

A C corporation is also known as a traditional corporation. This type of entity has several advantages over other business structures like sole proprietorships. One of the salient aspects of a C corporation is its ability to raise funds or capital, which is a necessity if you are planning to start a new business. If you incorporate, then the cost to form an Alabama corporation and make it operational will include initial or one-time costs as well as recurring costs.

Cost of forming a Corporation in Alabama

The cost to incorporate in Alabama will be controlled by several factors. The cost will vary depending on whether you want to register a foreign company or a domestic entity. Here are important costs related to incorporation in this state:

• The first step towards incorporation is to file the name reservation form for a domestic entity. You will need to ensure compliance with Alabama naming guidelines and also conduct a name availability search. You can also register an Alabama DBA (Doing Business As), which is also known as a trade name.
• According to the 2022 Code of Alabama, AL Code § 10A-1-5.31 (2022), you will need to hire and maintain a registered agent for service of process. The cost or fee would vary according to the service chosen by you.
• The most important initial cost to form an Alabama corporation is that of the incorporation process itself. You will have to file the Certificate of Incorporation pursuant to AL Code § 10A-2-2.03 (2022). There is a fee of $200 for the same.

Annual maintenance cost for Alabama Corporation

Apart from the initial cost to form an Alabama Corporation, there will be other costs associated with annual maintenance of your company. The costs involved are as follows:

• Annual Report – There are no requirements of Alabama annual report filing for a C Corporation and hence there is no fee applicable.
• Taxes – Each state has its own taxes and in Alabama, a C Corporation will be required to file Corporate Income Tax at a rate of 6.5 percent. You may also be required to file state sales and use tax towards certain services or for selling specific products. Taxes are a part of recurring costs to incorporate in Alabama.
• Business Licenses – Once you incorporate in Alabama, you will need to apply for and obtain business licenses and permits. These licenses will ensure you are able to operate your business in this state. This is an integral component of cost to form an Alabama corporation. It is a recurring cost as licenses have to be renewed each year.

Register a Corporation in Alabama Efficiently!

Need any Assistance in Forming Your Alabama LLC or Corporation

Alabama is home to a very pro-business environment and the state provides support and resources to help small businesses become operational. You can choose from a variety of entity structures in the state although an LLC or a C Corporation are often favored over other entity structures. The registration processes and costs may vary according to the entity chosen including whether it is a foreign or domestic business. We, at IncParadise can provide valuable assistance through handling any requirements you may have related to incorporation or new business formation in the state.