When it comes to starting a new business venture, choosing your business structure is one of the most important decisions you can make, and since you’ve chosen an LLC, you’ve ticked one of the most crucial boxes off your to-do list. Once you’ve gathered all of your paperwork, which is a tedious task in and of itself, then you have to submit it all for approval and deal with various things like processing times and approval times. Translation: you’re going to have to wait for your LLC to be officially recognized by the state. We’re here today to answer the question “How Long Does It Take To Get An LLC In Alabama?”.
Discovering Alabama
Alabama is a bustling hub of business and industry, and it has a storied history. Known as “The Heart of Dixie”, Alabama has been around since 1819. It’s a gorgeous place with a selection of plant and animal life, forests, mountains, rivers and beaches because it borders the Gulf of Mexico. Because of its various terrains and scenery, it’s probably no surprise that it’s a great place for a number of different business industries!
Economic Overview of Alabama
As of 2023, the economy in Alabama is growing, which is a good sign for any business owner. The unemployment rate was recorded as 2.1% this year, which is lower than the national average of 3.8%. And the Gross Domestic Product (GDP) growth rate in retail trade in the state in 2023 is 11.9%.
As far as how big Alabama’s economy is, its GDP in the first quarter of 2023 totaled $278.3 billion in both goods and services. It also makes up 1.1% of the United State’s total economy, which is quite impressive! It’s the 27th largest state economy in the United States.
Business Environment in Alabama
Alabama has more than 2 million workers who are available to work, which is always great news for any business that will be creating jobs in a new place. It hosts 425 foreign companies from places all over the world. And, there are a total of 160 different metropolitan areas that cover a 600 mile radius, which means you have lots of opportunities to place your business in a busy district.
CNBC says that Alabama ranks 42nd on a list of top states for doing business, which means it fell nine spots from last year. North Carolina is currently in the #1 spot. While Alabama got an A grade for “Cost Of Doing Business”, and a B for Infrastructure, it got a failing grade in the “Life, Health & Inclusion” category, as well as the “Business Friendliness” category. A lot of people in the state contest that ranking, so there are definitely some mixed reviews about Alabama’s business environment.
State-Specific Regulations And Incentives For Forming An LLC In Alabama
There are lots of incentives and regulations that benefit business owners forming LLCs in Alabama.
- Jobs Credit: This is a program that provides incentives if a business creates jobs. If you’re eligible, you can get refunds up to 3% of last year’s gross payroll for all new and eligible employees. If you’re in specific counties, are an underrepresented company, a tech company, or a company that provides pharmaceutical, biomedical, medical technology or medical supplies, or anything in relation to R&D, you can get a refund up to 4%.
- Investment Credit: If you put an investment into a qualified new or expansion project, then you can get a tax credit up to 1.5% of the qualified capital investment. This is available to claim within 10 years of the investment, and you can carry forward unused credits for 5 years.
- Port Credit: This is a one-time tax credit designed to increase the used of ports in the state. You must be a shipper that manufactures, warehouses, or distributes goods, and the credit is good for $3 per net ton, $50 per TEU, $0.04 per kilogram, or $2.91 per vehicle. If you’re a new distributor or shipping warehouse and you’ve invested $20 million or more and created 75+ jobs, you can receive as much as $100 per TEU for 3 years if you enter a project agreement with the state government.
- Growing Alabama Credit: This is an incentive that offers funds to Economic Development Organizations or EDOs in Alabama. If you contribute to an EDO for a qualified project, you can get a tax credit which could offset as much as 50% of income tax in Alabama, as well as state financial institution excise tax, and insurance premiums for the next 5 years.
- Alabama Enterprise Zones: This is an incentive for choosing to locate your business in certain areas. You can receive the incentive in several ways. You get 35% if your new, full-time employees were previously unemployed for a period of 90 days before you employed them. These credits are incrementally applied over a 5 year period: the first year you get 80%, 60% for the second year, 40% for the 3rd year, and the 4th and 5th year you get 20%. And as for your company’s capital investment, you get 10% on your first $10,000, 5% on the next $90,000, and 2% on any subsequent investments. You can also get $1,000 for training new, permanent employees and giving them new skills. That’s capped out at $2,500 per new, permanent employee.
- AIDT Workforce Development Services: If you’re a new or expanding company, the AIDT will provide both training for new employees and help you recruit new employees at no cost to the employer or the employees. They provide training, assessment of employees, they develop and create all of the training materials related to your job, provide training facilities, and deliver the training to the potential employees.
- Apprenticeship Tax Credit: You can get a tax credit of up to $1,250 for up to 10 qualifying apprentices. You get an additional $500 if the apprentices are 18 years old or less, and meet other youth-registered and criteria for apprenticeships recognized by the industry.
- Sales And Use Tax Abatement: This tax abatement is discretionary and is used on the non-educational part of taxes on things like construction materials, equipment or various other capitalized costs.
- Property Tax Abatement: This is another discretionary tax abatement for up to 20 years of property taxes. Data processing centers that qualify may qualify for up to 30 years.
Pros And Cons Of Establishing An LLC In Alabama
Some of the pros of choosing to form an LLC in Alabama are the various metropolitan areas that draw consumers in, the different types of scenery that allow for different types of businesses and industries, and the many tax credits that Alabama offers businesses.
The cons of forming an LLC in Alabama are that it costs $200 to file your Articles of Organization, and you’ll have to pay at least $50 per year to file your annual report. That’s in contrast to states like Kentucky, where it’s only $40 to file plus $15 per year, or Missouri where it’s $50 to file and there’s no annual report, fee, or information report.
Procedure Of Establishing An LLC In Alabama
Before you learn how long it takes to get an LLC in Alabama, you need to know how to form a Limited Liability Company. Here are the steps to forming an LLC in Alabama.
- Obtain the Proper Form: In Alabama, this is called the Articles of Organization. You can get your copy from the Secretary of State.
- Choose Your LLC’s Name: You can’t just name your LLC the first thing that pops into your head. Alabama state law dictates that the name of your Limited Liability Company must be different from other business names in the state, and it can’t be too similar to other names being used. To find out whether you can use your business name, run a business name search.
- Choose a Registered Agent: A registered agent is a person or business who accepts official mail and service of process on behalf of your business at your registered business address during business hours. It’s an important legal position that you’ll need to take great care when filling. If you choose a civilian, they need to be available during business hours on business days, and have a physical address.
- Choose Your LLC’s Address: Your LLC’s business address is where all of its government correspondence will be sent, service of process will be delivered, and it’s the address that will be listed on public record for your company. Because it’s listed on public record, you probably won’t want to list your home address, and state regulations bar the use of PO boxes.
- File Your Paperwork: After you’ve double (or triple)- checked all of the information on your formation paperwork, you can submit it. You can either sign it yourself, get someone else to, or hire an LLC formation company to help you with it, but whomever signs and files the paperwork, the information will be listed on public record.
There are lots of other things you’ll need to do once you’ve submitted your paperwork, too. If you’re interested in these other activities, make sure you read How To Start An LLC In Alabama.
Necessary Documentation For Filing An LLC In Alabama
It’s important that you gather up all of your documents so that your LLC formation goes quickly and smoothly, especially if you want to get an Alabama LLC fast!
You’ll need a name reservation form, of course your Certificate of Formation, an Operating Agreement (which you should create even though the state doesn’t require it), all of your tax paperwork, business licenses, and you’ll need to apply for an EIN. It’s also a good idea to apply for a business bank account once you’ve received your EIN and have that ready.
Legal Requirements For Starting An LLC In Alabama
There are relatively few legal requirements for you to start an LLC in Alabama compared to other states. You’ll need to reserve your business name, you’re required to have a registered agent, file your Certificate of Formation, file your annual report, register for an EIN, and get both state and local business licenses.
You’re also required to keep records in your principal office at all times of:
- A list with the names and addresses of all your LLC members or managers that’s up to date
- Your Certificate of Formation, or Articles of Organization, along with any amendments to it
- Any copies of power of attorney paperwork you may have
- Federal, state and local tax returns for the past 3 years
- Your Operating Agreement, as well as any amendments made to it
- Financial statements for the past 3 years.
Time Frame For Establishing An LLC In Alabama
Now this is the section that you’re likely the most interested in! We’ll tell you everything you need to know about how long it takes to get an LLC in Alabama, and the time frames you can expect to encounter.
How Long Does The Initial Paperwork Take In Alabama?
There are only two ways to file your documents in Alabama: online or by mail. Mail filing takes 1-2 business days, plus additional time for mail delays. Online filing is immediate, however. But these estimates don’t take into account processing times.
Processing Times In The State Of Alabama
What is processing time? It’s the time it takes for the Secretary of State and the government in Alabama to read your information and put it into their system. It’s different from approval time, which is the total time it takes for your LLC to be approved, including process time.
So, processing times in Alabama are immediately for online filings, and 1-2 business days for mail filings. But approval times for mail filings can take up to a week.
Common Delays In The LLC Formation Process In Alabama
The most common delay that holds up the formation process in Alabama is choosing to file by mail. This can cause approval time to be as long as a week, as opposed to immediate processing times with online filings.
It can also take longer if you have a complex business structure. This means you’ll have to have a more complex Operating Agreement, and if you’re using an LLC formation service, it can take them longer to complete it before filing all of your paperwork. And, obviously, the more complicated the documents, the longer it will take for your formation service to double-check it before filing it. So, definitely consider getting a formation service with a 100% accuracy guarantee if you’ve got a complicated business structure.
Expedited Processing For LLC Formation In Alabama
Obviously, if you want to file fast in Alabama, you’re probably wondering if you can take advantage of things like expedited filing. Here’s everything you need to know about expedited filing in Alabama.
What Are The Expedited Options Available?
The Secretary of State's office does offer one option for expedited filing, which is good news if you're looking for a more speedy filing option. With the expedited filing option, you can have your documents processed within 3 days after the Secretary of State receives them.
Additional Costs for Expedited Services in Alabama
Expedited processing costs $250 in Alabama, and your documents will be processed in 3 days or less of the Secretary of State actually receiving them. This is in contrast to the standard fee of $150, so it's $100 more for the expedited processing.
Comparing LLC Formation Time Frame In Alabama With Other States
If you’re considering Alabama as one of the states where you may form your LLC, you’ll want to know how it compares to other states. So, how do Alabama’s LLC formation time frames stack up against other states?
Brief Comparison With Key States
Alabama’s approval times can take about a week with immediate approval of online filings. Their expedited processing is within 3 days.
States with lightning-quick expedited processing, like Delaware, Montana, Nevada and West Virginia have options where you can get your LLC in as little as an hour. Of course, those options are quite expensive, which is the trade-off. And states with quicker processing times for mail-in filings are Ohio and Kentucky, both of which have 1-day processing time, plus mail time.
There are states with snail-slow expedited processing, like Maryland with 7 days and Arizona with 5 days. And several states with slower online processing, like Arizona with 14-16 days, Maryland with 2 weeks, Texas with 13-15 days, and Washington with 12-14 days. And of course there are loads of states with slower mail processing times, like Washington D.C. with 2-4 weeks, Maryland with 5-8 weeks, Missouri with 3-4 weeks, Nevada with 3-4 weeks, New York with 8 months, Oregon with 4-6 weeks, Pennsylvania with 6 weeks, Texas with 4-8 weeks, and Washington with 5-6 weeks.
So, it’s not the fastest, but it’s certainly not the slowest, either!
Why Is Alabama A Favorable Place For Forming An LLC?
Alabama is a good place to start a Limited Liability Company because the state’s economy is soaring, and it’s diverse enough to accommodate any industry your business may fall under. It’s also one of the faster states to get your LLC in, which means you won’t have to wait around for an answer for too long.
