If you’re planning to start a small business in Alabama, you’ll need a registered agent. A registered agent is a person or business entity who will receive important documentation regarding your LLC or corporation. Selecting a registered agent is one of the many decisions you’ll make as you establish your company in the Heart of Dixie.
For new entrepreneurs, the act of setting up a business, and filing the appropriate paperwork, can be daunting. To help, we’ll explain how to set up a business in Alabama, which includes selecting a registered agent.
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How is an LLC formed in Alabama?
Starting an Alabama LLC is a fairly easy process, but there are certain forms that must be filled out and filed with state agencies. To help, here are the steps to start an LLC in the state:
1. Name the company
The first thing you’ll need is a company name.
Before you settle on a name, it’s important to understand that Alabama has some naming rules. These rules aren’t necessarily unique to Alabama, in fact, most states have similar rules to make sure a company name is clear and unique.
An Alabama company name must:
- Have the phrase “LLC” or “Limited Liability Company” in the title.
- Not include any words or phrases that could mistake it for a government agency (like FBI or EPA).
- Be aware of restricted words that may be subject to additional approval. Words like bank, academy, or lawyer, for example, all require proof of these claims.
- Be unique and distinguishable from all other companies in Alabama.
For a name to be “distinguishable” it can’t be the same as any other company in the state. Before settling on a name, make sure it’s available by running a Business Entity Search on the Alabama Secretary of State’s website. If the name is already taken, a different name or a variation must be chosen.
You can reserve a company name for $25, which is actually required to set up a company. You need to reserve the name and obtain a Certification of Name Reservation, which is filed with the state.
2. Pick a registered agent
The next step in setting up a business in Alabama is to select a registered agent. A registered agent is a selected person or company that will receive official documents on behalf of your company.
Who can be a registered agent? There are several options, which include being your own registered agent. We’ll explore who can be a registered agent for your Alabama business in a later section.
3. File the Certificate of Formation
Next, you need to fill out and file a Certificate of Formation. Every state has a similar LLC formation paperwork that legally establishes a company. In Alabama, it’s called a Certificate of Formation. In other states, it’s called Articles of Incorporation or Certification of Organization.
These formation documents can be filled out online, or it can be handled in-person or by mail. This form is handled by the Judge of the Probate Office.
The form is fairly simple to fill out. It asks for the business name, a registered agent, a copy of the Name Reservation Certificate, and asks for a list of business services or products the company will provide.
Expect to pay a filing fee too. In Alabama, it’s $200 plus administrative fees to file online and $100 plus administrative fees to file via mail.
It will take about 10 days to process the paperwork. Expedited service is available for an additional fee.
When it’s approved, the company and its services will be a matter of public record.
4. Create a company operating agreement
Next on the list is to create an operating agreement. This step isn’t required by the state, but it’s a helpful agreement to have in place. An operating agreement, as you might expect, explains how the company will operate. It’s meant to provide clear procedures so everyone involved knows what to expect in different situations.
An operating agreement provides a list of managers, how the hierarchy works, what happens in the event of profit loss, and how profits are divided when things are going well.
While it’s not required by the state, many entrepreneurs create this agreement right after setting up an LLC or an Alabama corporation to provide clear documentation of how the company will operate.
5. Obtain an EIN
All of the paperwork is filed with the state, but there’s still a very important step that must be taken to get started. Every business needs an EIN, or an employee identification number. It’s a unique number issued by the IRS that will stay with your business for its lifetime and is used for tax purposes. Think of it as your company’s social security number.
A company needs an EIN to:
- Open business bank accounts at a local bank
- Hire employees and put them on a payroll
- File taxes as a company
What is an Alabama registered agent?
A registered agent is a person or business entity who will receive important documentation regarding your Alabama LLC or corporation. Important documents could include tax forms, legal documents, and a notice of a lawsuit known as service of process documents.
A registered agent is essentially an official point of contact that can be reached at any time on behalf of your company.
Do I really need a registered agent in Alabama?
Alabama requires every LLC or corporation to list a registered agent. If a registered agent is not selected, your company won’t be in good standing with the state and could be subject to state fees or penalties.
Can I be my own registered agent in Alabama?
Yes. Alabama allows business owners to be their own registered agent. Many entrepreneurs do list themselves as the company’s registered agent.
However, the state of Alabama lets several people serve as a registered agent, so there are choices.
Who can be a registered agent in Alabama?
In addition to the business owner or LLC organizer, a registered agent can be a trusted friend, coworker, a neighboring company, or even a registered agent service.
In Alabama, a registered agent can be:
- A person who is at least 18-years-old
- Has a physical address in the state, not a P.O. Box; and
- Is available during the day to accept mail
Why would a company choose to work with a registered agent service?
Some entrepreneurs pick a registered agent service rather than tap a person to fill the role. There are some benefits to selecting a company, which includes:
- Convenience. A registered agent must be available during normal business hours. For some entrepreneurs, this isn’t always possible. An entrepreneur who travels a lot or isn’t in the office regularly may opt for a registered agent service for convenience.
- Managing companies in multiple states. If a company has several locations, having an agency be the registered agent ensures that nothing is missed. In some cases, you might be able to use the same registered agent service for multiple businesses.
- Privacy. The documents that a registered agent receives are confidential, so some entrepreneurs want to make sure things like lawsuit filings are kept quiet.
List of Alabama registered agent services
The State of Alabama has a list of registered agents on its website. While it doesn’t endorse any one company, there are about a dozen or so options on the list. Several choices include:
- Alabama Registered Agent – This affordable service offers same-day mail scanning and a secure online portal for just $49 a year.
- Harbor Compliance – With this company, entrepreneurs get same-day mail documents from a local office in Dothan, online access to state forms, and free document scanning starting at $89 a year.
- COGENCY GLOBAL – This company offers a full range of statutory representation, which includes being a registered agent service. You get access to your own online portal, mail forwarding, and report reminders from this company. Pricing isn’t listed online.
How much does a registered agent service cost in Alabama?
Registered agent services charge an annual fee for their services. For basic services, which simply forwards any official mail to your company, expect to pay around $50 or less. For more advanced services with mail forwarding, online accounts, and reminders regarding annual reports, prices hover around $100-250 annually.
How does an owner select a registered agent in Alabama?
To select a registered agent for your Alabama business, you simply list that person or company on the Certification of Formation.
Can a company change its registered agent?
Yes. A registered agent can be changed at any time. To do so, you need to file new paperwork with Alabama’s Department of Revenue. The form simply asks for the contact information of the newly appointed registered agent. The cost is $25.
What’s a statutory agent?
A statutory agent is another term for a registered agent. The names vary by state. You may have also heard of a service of a process agent, which is also the same as a registered agent.
What’s a commercial registered agent?
You might be asked if the appointed registered agent is commercial or non-commercial. A commercial registered agent is a registered agent service, a non-commercial agent is a person or company that holds the title that isn’t paid to do so.