How to Incorporate in Alabama (May 2024 Update)

If you’re starting a new business or formally structuring an existing company in Alabama, you might be considering incorporating. Forming an Alabama corporation establishes a separate legal entity and can help protect your personal assets. It also adds legitimacy, provides access to investment opportunities, and makes your company eligible for special tax treatments.

Incorporating isn’t necessarily quick or easy though. Alabama has specific state requirements for the incorporation process, including documenting your business appropriately and holding organizational meetings. This guide will take you through the key steps for incorporating in Alabama so you can launch your business smoothly and start operating legally as an Alabama corporation.

Choose an Available Corporate Name

The first step when incorporating in Alabama is selecting your corporation’s name. Under Alabama law, a corporate name must include a term like “Corporation”, “Incorporated”, or “Limited”, or an abbreviation like “Corp.”, “Inc.”, or “Ltd.”. Your chosen name also can’t be the same as or deceptively similar to a name already registered with the Secretary of State.

It’s a good idea to search the Alabama business entity database as you brainstorm names. You want to make sure the Secretary of State won’t reject your filing because another active or reserved name is too close to yours. As an extra precaution, jot down one or two alternative names as backups.

One unique requirement in Alabama is that you must formally reserve your corporate name before you incorporate. You can quickly reserve a name online for $28 or through the mail for $25. Either way, you’ll get back an official Certificate of Name Reservation to submit with your incorporation paperwork.

Designate an Alabama Registered Agent

Nearly every state requires corporations to appoint registered agents—Alabama included. A registered agent is an individual or business entity that agrees to receive service of any legal or tax documents on your corporation’s behalf.

Your registered agent must have an Alabama street address where they can accept deliveries during normal business hours. You also can’t name your corporation as its own registered agent. Otherwise, there are no specific residency or eligibility requirements.

Many business owners serve as their own registered agents initially to save money. However, this means your home or office address will be on public record. Using a third-party registered agent service can help you keep your personal address private.

Draft and File Your Articles of Incorporation

To legally form your Alabama corporation, you must draft and file Articles of Incorporation with the Secretary of State. Often called a Certificate of Formation in Alabama, this one-page document identifies key details about your company:

• Corporate name
• Registered agent’s name and complete street address
• Principal office address
• Purpose of the business
• Total number of shares your corporation is authorized to issue
• Incorporator’s name and address

You’ll also need to submit your Name Reservation Certificate from Step 1 along with the Articles of Incorporation.

The filing fee for forming an Alabama corporation is $200, with an additional $200 expedited processing fee if you want faster approval. You can file online through the SOS website or mail your documents to the appropriate county probate judge’s office. Either way, be sure to include the required copies and payment.

Draft Corporate Bylaws

Formal bylaws aren’t mandated in Alabama, but creating them is highly recommended. These internal documents lay out operating rules related to meetings, directors, officers, shares, records, etc. Bylaws provide structure and consistency as your corporation grows.

If you’re unsure what to include, consider using legal software or hiring a business filing service. Their templates cover all the basics, with sections for shareholder and director meetings, voting procedures, electing or removing officers and directors, issuing dividends, amending bylaws, and more. You’ll just need to edit the details to match your corporation.

Hold an Organizational Board Meeting

The next step for starting an Alabama corporation is holding an initial organizational meeting. This first board meeting is when you’ll officially adopt bylaws, appoint directors, elect officers, and authorize issuing shares.

Be sure to record thorough meeting minutes that summarize the actions taken and decisions made. Accurate minutes showing you’ve upheld corporate formalities can help provide legal protections for your corporation later on.

Obtain an Employer Identification Number from the IRS

Nearly all corporations need Employer Identification Numbers, or EINs for short. The IRS issues these 9-digit identification numbers solely for tax reporting purposes. Think of an EIN as equivalent to a Social Security Number for your business.

In Alabama, you’ll need an EIN before you can open a bank account, apply for business licenses, hire employees and process payroll, or file tax returns for your corporation. Requesting an EIN is free and only takes a few minutes online.

Stay Compliant with Annual Reporting

After your corporation is legally formed, you must maintain your active status by meeting Alabama’s filing requirements each year. This includes submitting an annual Combined Privilege Tax Return and Report along with paying an annual privilege tax based on your corporation’s net worth.

There's also a new federal requirement to submit a Beneficial Ownership Information (BOI) Report for your corporation if applicable. Failure to stay compliant with annual filings can put your corporation at risk for penalties or involuntary dissolution. Consider setting reminders so you don’t accidentally miss important deadlines.

Get Other Required Business Licenses

In addition to incorporating with the Secretary of State, your Alabama corporation will likely need city and county business licenses to operate legally. Research the specific permits, registrations, and other regulatory requirements for your industry and locations.

Recap of Steps to Form an Alabama Corporation

Incorporating in Alabama involves several key steps:

• Choose an available business name
• Reserve your corporation’s name
• Appoint a registered agent
• Draft and file Articles of Incorporation
• Create corporate bylaws
• Hold an organizational meeting
• Obtain an EIN from the IRS
• Stay compliant with annual reporting
• Get all required business licenses

Following this checklist will ensure your new Alabama corporation is fully set up. Here's to successfully launching your company!