State Processing Times and Fees
Most states have standard and expedited processing times for corporate formations, and Alabama is no exception. Fees are higher for expedited filings. We have the average wait times for standard and expedited filings in all 50 states.
Alabama charges a domestic business filing fee. It includes the Secretary of State's filing fee and a minimum fee charged by the local probate judge. In Alabama, there are also fees for name reservations, registrations and Certificates of Existence. Visit "compare pricing" in our incorporation center to see all state fees for Alabama.
Deciding Between an Alabama S Corp and C Corp Tax Designation
Because the limits on liability, structure, management and compliance documents are nearly the same, deciding whether to file an S Corp or a C Corp in Alabama comes down to a few considerations:
- Ownership Rules: An Alabama C Corp can have an unlimited number of shareholders and unlimited classes of stock. An S Corp is limited to a maximum number of shareholders, usually 100, and only one stock class.
- Taxes: A C Corp is taxed on a separate basis. It files taxes at the corporate level, then shareholders can be additionally taxed on individual dividends they receive. S Corps are "pass-through" tax entities. They pay no taxes at the corporate level, but corporate owners pay taxes individually.
- Documents: An Alabama S Corp must file IRS Form 2553 to elect S Corp status.
Every state has certain requirements for corporate personnel. In Alabama, they include the following:
- Age requirement: There is no minimum age requirement in Alabama for incorporators, officers or directors.
- Number of directors: Single-officer or single-director corporations are permitted. The same person can hold more than one office or position. The Domestic Business Corporation Certificate of Formation requires the disclosure of three or more directors, if you have that many. You must also disclose one incorporator. If you want to identify more than three directors or more than one incorporator, you must attach a list to your Certificate of Formation.
- Residency: Incorporators, officers and directors do not have to live in Alabama.
Other Requirements for Your Certificates of Formation
In addition to personnel requirements, your Alabama Certificate of Formation must also include the following.
Every Alabama corporation must name a registered agent. A registered agent is the person or business responsible for receiving tax, legal and government documents for your corporation. The agent must be available during regular business hours, and you must disclose your agent in your Certificate of Formation. Your registered agent must be located in the state, with both a physical and a mailing address there. The address can't be a post office box or a drop box. Your registered agent can't be the corporation itself. We can help you designate a registered agent when you incorporate with us.
The Domestic Business Corporation Certificate of Formation for an Alabama corporation must include the specific number of shares of stock that your corporation is authorized to issue. The Certificate also asks for disclosure of the stock's par value, but this is optional.
A Name Reservation Certificate is supplied to each corporation by the Secretary of State. You must attach this to your Certificate of Formation. The Certificate must also include the purpose for which the corporation was formed, the period of corporation's duration if it's not perpetual, and an attachment of any further provisions. Additional provisions must be consistent with the laws of Alabama.
When you file a Certificate of Formation in Alabama, submit a signed original and two copies. Send them and your filing fee to the probate judge in the county where the corporation's registered office is located. The judge will confirm the county filing fees. A separate form of payment for the Secretary of State's filing fee is required. The judge will send that fee, along with a certified copy of the Certificate of Formation, to the Secretary of State shortly after the Certificate is issued. The Secretary of State will index the filing. The judge will also send notification of the filing to all interested parties. In some areas, it is possible to pay the Secretary of State fees by credit card.
Other Required Paperwork
Alabama requires that corporations file an Application for Certificate of Existence of Registered Entities. The Certificate of Existence documents an entity that is indexed or registered with the Alabama Secretary of State. Completing an application for a Certificate of Existence in Alabama requires that the corporation has an entity ID number. The Secretary of State issues entity ID numbers. There are standard and expedited fee options for Certificates of Existence.
Guidelines for Corporate Names
A corporation's name says a lot about its business. Make sure yours meets with the following Alabama requirements.
- Your name must end with "Corporation," "Corp.," "Incorporated" or "Inc."
- Avoid deceptive terms. For example, don't name your Alabama corporation "Noah's Toy Trains" if you're selling baked goods.
- Your name should be unique. Avoid names that are deceptively similar to any other existing corporate names. Your name must be distinguishable from all other recorded entities already filed with the Secretary of State.
- Reserve your name prior to incorporation. You must attach the Name Reservation Certificate received from the Secretary of State to the Certificate of Formation.
Alabama Corporate Taxes & Reports
You must pay taxes for a new corporation in Alabama. Before transacting business in Alabama, apply to the IRS for an employer identification number, or EIN. An EIN is a Social Security number for businesses. All corporations that have or will have employees must have one.
We have more information about the tax structures and obligations of Alabama S Corps and C Corps.
Keeping Corporate Records and Ongoing Filing Requirements
Alabama recommends that corporations create business records, such as bylaws and corporate minute books and meeting minutes. We have requirements for bylaws and corporate meeting minutes for all 50 states. It's a good idea to create and keep these documents regardless of whether Alabama officially requires them. They can help protect the legality of your corporate status and shield you from personal liability.
Good luck creating your Alabama corporation. We look forward to helping you achieve your business goals.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.