Alabama LLC Business Privilege Tax Return

Last updated on November 9, 2022

LLC formed in Alabama needs to file a tax return with the state annually when the federal income tax return is due. Read about how to file this report.

Mail official form

Visit the 2022 format for the official Business Privilege Tax Return for LLC.

Visit Alabama official form
Tool screenshot

What is an LLC?

Limited Liability Company

LLC is a business entity in the U.S that provides limited liability to its members. It has characteristics from both corporation and sole proprietorship. LLCs are permitted under State statutes of each US state.

Limited liability

Personal assets are protected for people with limited liability when they are sued.


A business entity that can issue shares and give limited liability to shareholders.


Owners of an LLC are referred to as members. They own membership interest in the LLC.

Sole proprietorship

Where an individual engages in business activity without formal organization.

Why file the return?

Alabama business privilege tax return

Business privilege tax return is filed on or after paying the business privilege taxes.

Initial return

Within 2.5 months of forming an LLC, an initial return has to be filed

Annual return

Business privilege tax is paid proportional to the company's net worth and a return is filed annually.

File online or via mail

Returns can be filed either online or by mail.

Minimum tax

There is a minimum annual privilege tax of $100 for all LLCs.

Alabama actions

Here are some of the actions business owners can take in Alabama:

How to file privilege tax return in Alabama?

Follow these steps:

1. File the initial tax return

All domestic LLCs have to file an initial report within 2.5 months after formation.


2.5 months

2. Pay business privilege tax

Business privilege tax has to be paid along with the initial tax return. So, similar to the initial business privilege tax return, LLCs have to pay the tax within 2.5 months after formation.

To calculate how much privilege tax to pay, you have to first calculate the percentage of net worth that is apportioned to Alabama. And then find the tax rate you fall under. Then apply the tax rate to your net worth.

3. File annual tax return

After the initial return is done, every LLC has to file a business privilege tax return annually. The filing due date is the same as the federal income tax return due date. You can file the return after you pay the taxes.

Address (when you paid electronically)

Alabama Department of Revenue

Business Privilege Tax Section

PO Box 327431

Montgomery, AL 36132-7431

The business privilege tax is calculated based on the company's net worth. There is a minimum of $100. It can go up to $15,000 annually.

Minimum tax


LLC Annual Report

LLCs file the annual report as part of the business privilege tax return every year in Alabama.

Filing initial business tax return

Every LLC has to file the Alabama business initial privilege tax return within 2.5 months of formation in the state.

  • Mail it to Alabama state



2.5 months after formation

File annual business tax return

For the privilege of doing business in Alabama, LLCs and other entities have to pay a business privilege tax annually in proportion to their net worth. It is to be filed when the federal tax form is due; generally on April 15th.

  • Mail form PPT


  • Must file form BPT-V if you're not paying electronically


Address (not paying electronically)

Alabama Department of Revenue

Business Privilege Tax Section

PO Box 327320

Montgomery, AL 36132-7320


April 15th

LLC elected as Corporation

LLCs that are elected as corporations file a tax return Form-CPT annually. They do not file Form-PPT (that normal LLCs file).

Certificate of Formation

In Alabama, Certificate of Formation is the form you file with the Secretary of State to form an LLC. It contains the articles of formation for the LLC.

Filing Certificate of Formation

There are a couple of ways to file.

  • You can file it online on Alabama Secretary of State website


  • You can mail a form to Alabama Secretary of State



Secretary of State

Business Services

P.O. Box 5616

Montgomery, AL 36103-5616

Online & mailing fee


Online & mailing processing time

10 days


When you file by mail, you should attach the Name Reservation certificate from the Office of the Secretary of State.

Entity name

Every LLC should have a unique name in Alabama. Alabama maintains a list of names of entities in the state. Go through it to check if your chosen name is available.

Search for names

Go to the official website of the Alabama business entity tool to see if the name you want is available.

Searching fee



You can reserve a name for your LLC for a specific duration by paying reservation fees to the Alabama business services. You will have to file your LLC formation documents within this period to keep the name. Alternatively, you can directly go ahead with the LLC formation without any reservation. That's fine too.

Reservation fee


Reservation period

1 year

LLC naming guidelines

The name you choose for your LLC must follow the official naming guidelines.

Here are some of the guidelines in simple language:

  • 1

    Must have the phrase "Limited Liability Company" or the abbreviation "L.L.C." or "LLC" as the last words of the name.

  • 2

    Don’t include terms that indicate that you are doing an activity that you are not authorised to do.

  • 3

    Your name should be ‘distinguishable’ in the Secretary of State records. Adding a punctuation or ‘the’ does not make it distinguishable.

  • 4

    Don’t use words that makes it seems like you are a governmental entity or has an affiliation.

Frequently asked questions

LLC annual report in Alabama

It is very important to maintain full compliance in Alabama. These tax returns have to be filed along with or after paying the privilege tax. This helps you protect your personal assets by maintaining limited liability and also be in good standing with the state. Read our guides to learn how to start and manage a business in Alaska.

Alabama LLC

Alabama Business search

Page written and verified by independent sources

If you like this page, maybe buy us a coffee?