Launching a business in Alabama involves meeting specific legal obligations, beginning with the submission of a Certificate of Formation. This document formally registers your business, granting it legal authority to operate within the state. Properly understanding and filing this certificate helps ensure a smooth start and establishes a legal foundation for your company.
Name Requirements
When selecting a name for your new Alabama business, it must be unique in the Secretary of State’s records, meaning it cannot be the same as or very similar to any existing business name already filed, reserved, or registered. You can check name availability using the business entity search tool on the Secretary of State’s website.1Alabama Secretary of State. Business Entity Search The Alabama Business and Nonprofit Entities Code details these naming rules.2Justia Law. Alabama Code Title 10A – Alabama Business and Nonprofit Entities Code
The name must not suggest an illegal purpose or misrepresent your business, such as falsely implying it’s a government agency. It must also include specific designators like “LLC” or “Inc.” based on your business structure. A name not considered distinguishable can lead to rejection of your Certificate of Formation.
Entity Types
Choosing the right business structure is an important decision, as different entity types have varying legal and tax implications. Alabama law allows for several types of business organizations, and each has specific rules for its creation and operation that affect the Certificate of Formation requirements.
Limited Liability Company
An Alabama Limited Liability Company (LLC) offers a flexible structure with pass-through taxation and limited liability, which shields members’ personal assets from business debts. An LLC is formed by filing a Certificate of Formation.3Alabama Secretary of State. Certificate of Formation Domestic Limited Liability Company (LLC) The LLC’s operating agreement details its operations and the financial and managerial rights and duties of its members.4Justia Law. Alabama Code § 10A-5A-1.08 – Limited Liability Company Agreement – Scope, Function, and Limitations
For-Profit Corporation
A for-profit corporation in Alabama is a legal entity distinct from its shareholders, offering limited liability. Formation requires filing a Certificate of Formation with the state.5Alabama Secretary of State. Certificate of Formation For-Profit Corporation These corporations aim for profit and are subject to corporate income tax, though S corporation status (a federal tax designation) allows for pass-through taxation. A board of directors and officers manage the corporation.
Nonprofit Corporation
Nonprofit corporations in Alabama are for purposes other than profit (e.g., charitable, educational). They are formed by filing a Certificate of Formation.6Alabama Secretary of State. Domestic Nonprofit Corporation Certificate of Formation Information A nonprofit’s income must advance its mission, not benefit individuals beyond reasonable compensation. Many seek federal 501(c)(3) tax-exempt status, a separate process from state incorporation.7Internal Revenue Service. Exemption Requirements – 501(c)(3) Organizations A board of directors oversees governance.
Document Contents
An Alabama Certificate of Formation must contain specific information. Key elements include:
- The entity’s name, meeting state naming rules.
- A statement of purpose (which can be general or specific).
- The entity’s duration, if not perpetual.
- The initial principal office’s street address (and mailing address, if different).
- The name and street address of the initial registered agent and office in Alabama.
- The names and addresses of all organizers.
Additional information may be needed depending on the business structure, such as authorized shares for corporations. The certificate must be signed by the organizers.
Registered Agent Mandates
Alabama law requires every business entity to continuously maintain a registered agent and a registered office in the state.8Justia Law. Alabama Code § 10A-1-5.31 – Designation and Maintenance of Registered Agent and Registered Office The registered office must be a physical street address in Alabama (not a P.O. Box) where the agent is available during business hours.
A registered agent can be an Alabama resident or a qualified business entity. A business cannot act as its own agent. The agent’s role is to receive legal and tax documents.
Entities must keep their registered agent information current with the Secretary of State by filing a statement of change when needed.9Alabama Secretary of State. Change of Registered Agent or Registered Office by Entity Failure to maintain a registered agent can lead to consequences, including administrative dissolution.
Filing Steps
After preparing the Certificate of Formation, it must be submitted. The first step for most Alabama businesses is filing with the Office of the Judge of Probate in the county of the entity’s initial registered office.10Alabama Secretary of State. Domestic Business Entities Brochure This local filing is specific to Alabama; check the local Probate Court’s website for county requirements.
The Probate Judge’s office reviews the certificate for compliance with state law and records it if satisfactory. Filing fees vary by county, including local and state charges. Confirm the total fee with the Probate Court.
Following county recording, the Probate Judge sends the document to the Alabama Secretary of State for state-level recording and public access. Formation is effective upon filing with the Judge of Probate. This two-part process completes the formation.
Post-Filing Confirmation
Once the Certificate of Formation is filed with the Judge of Probate and recorded by the Alabama Secretary of State, the business legally exists. Its status will show as “Exists” on the Secretary of State’s online business entity search.
A stamped, approved copy of the Certificate of Formation is your primary proof of formation. Keep this official confirmation. The Secretary of State issues a state Entity ID number, distinct from a federal EIN from the IRS.
You can also request a Certificate of Existence from the Secretary of State to verify your entity’s legal formation and good standing (all state filings and fees are current). Online records allow ongoing status checks.