Alabama LLC Cost: Filing Fees Explained (2026)

Q: Does an Alabama LLC pay a franchise tax?

Alabama does not call it a franchise tax; it levies a Business Privilege Tax on net worth apportioned to Alabama, at $0.25 to $1.75 per $1,000, with a general maximum of $15,000. The minimum was reduced to $50 and eliminated for small entities.

Q: How much is the Business Privilege Tax minimum in Alabama?

Historically $100, the minimum Business Privilege Tax was reduced to $50 for tax years beginning after December 31, 2022 and later eliminated for small entities. Confirm the exact current-year minimum and filing threshold with the Alabama Department of Revenue.

Q: Does an Alabama LLC need a business license, and what does it cost?

Most Alabama businesses need a county business privilege license from the Probate Office where they operate, coordinated by the Department of Revenue. The fee is set locally and varies, so confirm it with your county Probate Office.

Fact-checked by the LegalGlass editorial team against primary sources · Published Aug 6, 2026 · Last updated Aug 6, 2026

An Alabama LLC costs two Secretary of State fees to start - a name-reservation fee plus the Certificate of Formation filing fee - then the annual Business Privilege Tax paid to the Department of Revenue. That minimum was cut to $50 for tax years after December 31, 2022 and eliminated for small entities. A federal EIN from the IRS is free.

Quick Answer

Start-up fees: Name reservation + Certificate of Formation (set by Secretary of State - confirm)
Annual cost: Business Privilege Tax (Department of Revenue)
BPT minimum: $50 for tax years after Dec 31, 2022; eliminated for small entities
BPT rate / max: $0.25–$1.75 per $1,000 net worth; $15,000 general maximum
Business license: County business privilege license (fee set locally)
EIN: $0 (IRS)

What It Costs to Start an Alabama LLC

Starting an Alabama LLC involves two Secretary of State filings rather than one. Alabama requires a Name Reservation before you can file, and then the Certificate of Formation for a domestic limited liability company creates the entity. Both fees are set by the Alabama Secretary of State and updated periodically, so the reliable figure is the one published on the Business Services fee schedule at the time you file - not a number quoted by a third-party filing service. For the full walkthrough, see how to form an LLC in Alabama.

Everything else at start-up is optional or free. A federal EIN from the IRS is free, and adopting an operating agreement yourself costs nothing. Compare Alabama with other states using the national how much does an LLC cost guide, and see what an LLC is if you are still choosing a structure.

Alabama LLC Fee Table (2026)

The table lists the Alabama costs most LLCs encounter. The Business Privilege Tax figures are verified against the Alabama Department of Revenue; Secretary of State filing fees and the county license fee are set by those agencies and should be confirmed directly, so they are shown as requirements rather than fixed figures.

Item	When	Amount (2026)	Agency
Name Reservation	Before forming	Set by Secretary of State - confirm	Secretary of State
Certificate of Formation	To form the LLC	Set by Secretary of State - confirm	Secretary of State
Business Privilege Tax - minimum	Annual	$50 (after Dec 31, 2022); eliminated for small entities	Department of Revenue
Business Privilege Tax - rate	Annual	$0.25–$1.75 per $1,000 net worth	Department of Revenue
Business Privilege Tax - maximum	Annual	$15,000 (general)	Department of Revenue
Business privilege license	Annual	Set locally - confirm	Probate Office / Dept. of Revenue
Federal EIN	After formation	$0	IRS

The Business Privilege Tax: Alabama's Recurring Cost

The Business Privilege Tax is the main ongoing state cost of an Alabama LLC. It is an annual tax "levied for the privilege of being organized under the laws of Alabama or doing business in Alabama," administered by the Alabama Department of Revenue. The tax is calculated on the entity's net worth apportioned to Alabama, at a rate of $0.25 to $1.75 per $1,000 of taxable net worth, with the rate tied to the entity's federal taxable income apportioned to Alabama.

Alabama historically imposed a $100 minimum Business Privilege Tax. For tax years beginning after December 31, 2022, taxpayers who would otherwise owe the $100 minimum instead pay $50, and Alabama has since eliminated the minimum for small entities - so many small LLCs owe nothing. The general maximum is $15,000 (higher caps apply to financial institutions and insurance companies, and a $500 cap applies to electing Family Limited Liability Entities). Because the current-year minimum and filing threshold are updated by the Department of Revenue, verify the figure for your tax year. See Alabama annual reporting and Business Privilege Tax for filing detail.

Business License and Local Costs

Alabama has no single statewide "general" business license, but most businesses need a county business privilege license from the Probate Office in the county where they operate; the Department of Revenue's Business and License Division oversees and coordinates the issuance of state and county business privilege licenses. The license fee is set locally and varies by county and business type, so confirm the exact amount with your county Probate Office. Some regulated activities also require a state store license or a municipal license. See how to get a business license in Alabama and the national business license overview.

Registering for state tax accounts through the Department of Revenue's My Alabama Taxes portal is free; the costs there are the taxes themselves, not a registration charge. If your LLC sells taxable goods or has employees, budget for sales/use tax and withholding obligations, which are separate from the Business Privilege Tax.

Registered Agent Cost

Naming a registered agent on your Certificate of Formation does not carry a separate state charge; the cost of the agent is a private-market decision. If you act as your own Alabama registered agent or name a member or manager, your registered agent cost is $0. Commercial registered agent services charge their own annual fee, which is not set by the state. See the national registered agent overview for how to choose.

Whatever option you pick, the requirement is the same: every Alabama LLC must continuously maintain a registered agent and a physical Alabama registered office. Letting the agent lapse can cost far more than any service fee if it leads to loss of good standing or administrative dissolution.

Federal Tax Treatment and the EIN

A federal EIN is free from the IRS and is used to open a bank account, hire employees, and file taxes. By default, the IRS treats a single-member Alabama LLC as a disregarded entity and a multi-member LLC as a partnership, so profit is taxed on the owners' returns; either can elect corporate or S-corporation treatment by filing IRS Form 8832 or Form 2553. The election can change payroll and self-employment tax, but it does not add a state formation fee.

There is no IRS charge to form or classify an LLC - only the federal income tax the LLC or its owners ultimately owe. Keep federal and Alabama filings separate in your budget: the EIN and classification are federal and free, while the Business Privilege Tax and license are Alabama obligations.

Sample First-Year Cost

For a typical single-member Alabama LLC, the first-year state cost is the Secretary of State name-reservation and Certificate of Formation fees (confirm both on the current fee schedule), plus the county business privilege license. On the tax side, a small LLC that falls under the eliminated-minimum threshold may owe $0 in Business Privilege Tax, while a larger LLC pays the $0.25–$1.75 per $1,000 rate on its Alabama net worth up to the $15,000 general cap.

Beyond state fees, real-world costs vary: a commercial registered agent, an accountant, and industry-specific licenses are all separate and priced privately or locally. The takeaway is that Alabama's mandatory recurring tax is modest for small LLCs, and the up-front cost is driven by the two Secretary of State filings.

What It Costs to Close

Closing an Alabama LLC involves filing the appropriate dissolution paperwork with the Secretary of State and settling any outstanding Business Privilege Tax with the Department of Revenue. The Secretary of State sets the dissolution filing fee, so confirm it on the Business Services fee schedule. For the full wind-up process, see how to dissolve an LLC in Alabama and the national how to dissolve an LLC guide.

Frequently Asked Questions

How much does it cost to start an LLC in Alabama?

Two Secretary of State fees create the LLC: a name-reservation fee and the Certificate of Formation fee. Both are set by the Secretary of State, so confirm the current amounts on its Business Services fee schedule. A federal EIN is free.

What is the annual cost of an Alabama LLC?

The main recurring state cost is the Business Privilege Tax. The minimum was reduced to $50 for tax years after December 31, 2022 and eliminated for small entities, so many small LLCs now owe nothing beyond filing.

Does an Alabama LLC pay a franchise tax?

Alabama calls it a Business Privilege Tax, not a franchise tax. It runs $0.25 to $1.75 per $1,000 of Alabama net worth, with a general $15,000 maximum. The minimum was reduced to $50 and eliminated for small entities.

How much is the Business Privilege Tax minimum in Alabama?

Historically $100, it was reduced to $50 for tax years beginning after December 31, 2022 and later eliminated for small entities. Confirm the current-year minimum and threshold with the Department of Revenue.

Does an Alabama LLC need a business license, and what does it cost?

Most need a county business privilege license from the Probate Office where they operate. The fee is set locally and varies, so confirm it with your county Probate Office.

Sources

Alabama Secretary of State - Business Services (name reservation and Certificate of Formation fees).
Alabama Department of Revenue - Business Privilege Tax ($0.25–$1.75 per $1,000; $100 minimum reduced to $50 after Dec 31, 2022; $15,000 general maximum; $500 Family LLE cap).
Alabama Department of Revenue - Individual & Corporate Tax Division (administers the Business Privilege Tax).
Alabama Department of Revenue - Business License (county business privilege license).
Alabama Department of Revenue - Business and License Division (state and county licenses).
My Alabama Taxes - state tax registration and filing portal.
IRS - Get an Employer Identification Number (free EIN).
IRS - Limited Liability Company (LLC) (federal default classification).
IRS - About Form 8832, Entity Classification Election.
Legal Information Institute - 26 CFR 301.7701-3 (entity classification election).
Legal Information Institute - 26 U.S.C. § 1361 (S corporation definition).
IRS - About Form 2553, Election by a Small Business Corporation.

LegalGlass provides general information for educational purposes and is not a law firm or a substitute for advice from a licensed attorney or tax professional. Laws, fees, and thresholds change; verify current requirements with the Alabama Secretary of State and Alabama Department of Revenue before acting.