Should you form your corporation in Alabama? We’ve collected the relevant information that will help you make this decision.
- Simplified periodic reporting
- Low cost of living
- Low cost of doing business
- Disclosure required in original filing
- 6.5% state taxes
- Among "Worst States for Business" (Forbes 2016)
Cost of doing business
- $195 filing fee / $0 periodic statement
- Owner is disclosed in original filing
Forming your corporation in Alabama
In order to communicate to the public that your new business is incorporated, its official name will need to end with one of the following signifiers (or a relevant abbreviation): “incorporated”, “Company”, or “corporation.” In addition, it is required that the name of your business is not intentionally misleading to consumers, for any reason. Your company’s new name must also be completely unique, and not deceptively similar to any other organizations name or trademarks. Do a FREE name search now.
Board of directors requirements
You will need to form an official board of directors when incorporating in Alabama. Here are the states' explicit regulations regarding these directors:
- Required number of directors
Alabama corporations must have at least one director listed in their incorporation documents.
- Age restrictions
Directors of corporations located in Alabama must be at least 19 years of age.
- Residence restrictions
There are no residence restrictions imposed on the directors of C corporations in Alabama. However, S corporations are only allowed to have directors located in the United States.
- What information needs to be included in the Articles of Incorporation?
Alabama requires the names and addresses of each director to be disclosed in their incorporation documents.
Requirements for the Articles of Incorporation
The Articles of Incorporation is a document that must be filed during the incorporation process in every state. Here is the information that must be included in this document when filing in Alabama:
Alabama requires the number of initial shares outstanding, and their par value, to be disclosed during the incorporation process. The number of outstanding shares does not affect initial state filing fees.
The state of Alabama does not require officer information to be disclosed during the filing process.
Registered agent information
All Alabama corporations must have a registered agent on file, and submit their name and address (which cannot be a PO box). This agent will be required to be accessible during standard business hours and act as the state’s point of contact with the company. Learn more about Registered Agents in Alabama.
Additional Alabama filing requirements
Many states have steps in the incorporation process that are unique to that state. These can also vary at the municipality or county level as well. Here are the typical steps required throughout all of Alabama:
Some counties in Alabama require county level filing.
Initial report deadlines
All corporations in Alabama must file a set of initial report documents within 2½ months of incorporating. These documents should be filed with the state’s Department of Revenue and include an initial Business Privilege Tax Return and annual report. Learn more about Initial Reports.
If your business is a professional practice
Professional service corporations are permitted to form under the professional corporation (PC) structure.
Corporate record keeping requirements
Corporations are required to keep formal documentation regarding several of their operations. These are the explicit record keeping formalities required by Alabama:
- A copy of the Articles of Incorporation, bylaws, and their amendments
- Records that detail the owners and class of all outstanding stock shares
- The address and names of all officers, directors, and shareholders
- Meeting minutes for all shareholder and director meetings
- A copy of all written communications with shareholders within the previous three years
- A copy of the corporation’s most recent annual report
- Formal documentation of all director and shareholder decisions, regardless of if they were made during a meeting or not.
Alabama corporate taxation and fee requirements
There are several tax and fee requirements that must be addressed by corporations in Alabama. They are as follows:
All states have complex taxation requirements. For more information regarding taxes in Alabama, it is advised that you visit the state’s official business related website.
Annual report requirements
Corporations in Alabama are required to file three documents each year called the Business Privilege Tax Return, Annual Report, and Schedule AL-CAR during the first 2½ months of the business’s fiscal year. Learn more about annual reports.
Tax identification numbers
Alabama requires an EIN (employee identification number) for all corporations that will have employees, and most banks will require one to open accounts. Alabama does not require corporations to obtain state tax ID numbers. Learn more about EINs
Business license requirements
The business licenses and permits required in Alabama vary wildly depending on the county or municipality in which your new corporation is located. If you would like to see more in-depth information on licenses and permits, please feel free to visit the content in our learning library that covers these topics. Learn more about business license requirements and permits.
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