Alabama LLC Business Privilege Tax Return
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
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.
Corporation
A business entity that can issue shares and give limited liability to shareholders.
Members
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.
Due
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
$100
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
PDF
Due
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.
Address (not paying electronically)
Alabama Department of Revenue
Business Privilege Tax Section
PO Box 327320
Montgomery, AL 36132-7320
Due
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
Visit
You can mail a form to Alabama Secretary of State
PDF
Address
Secretary of State
Business Services
P.O. Box 5616
Montgomery, AL 36103-5616
Online & mailing fee
$200
Online & mailing processing time
10 days
Note
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
Free
Reservation
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
$25
Reservation period
1 year
LLC naming guidelines
The name you choose for your LLC must follow the official naming guidelines.
AC §10A-1-5.06
Visit
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