How to Incorporate a Business in Alabama: Everything to Know

Learning how to incorporate a business in Alabama is vital for business owners.3 min read

Learning how to incorporate a business in Alabama is vital for business owners. When you incorporate a business, the state of Alabama recognizes you as a real business.

Steps to Form a Corporation in Alabama

Complete the following steps to form a corporation in Alabama:

• Step one: Check and reserve your corporation name. Your corporation name needs to differ from existing corporation names. It must also include the words "corporation" or "incorporated." Some names may be prohibited, such as "bank," unless previously approved by the state of Alabama. Reserving the name requires that you file a name reservation form with the state. This form is $28 by mail or $10 online.
• Step two: Name a registered agent. This person must be available for receiving business documents and notifications during normal business hours. A registered agent in Alabama can be an individual or the company. They must be a resident of Alabama. It is possible to be your own registered agent, but this might require you to make your contact information public. You must also be available to receive forms during business hours.
• Step three: File a certificate of formation. This document is similar to the articles of incorporation. After filing this document, your business is officially legal with the state of Alabama.
• Step four: Register for an EIN. An employee identification number (EIN) is required for all Alabama corporations. This number is essentially an identification number for your business.
• Step five: Plan organizational meeting. The organizational meeting is important and includes the board of directors. During the meeting, you will give out shares among members, elect officials, create a banking resolution document, and decide on either an S-corp or C-corp business. It is necessary to document the meeting by recording the minutes.
• Step six: Start a corporate records book. This book will hold all of the corporation's important legal documents, including the certificate of formation, EIN information, corporate bylaws, and meeting minutes. Although an actual book is not required in Alabama, this process can make it easier to organize these important records.
• Step seven: Handle taxes and licensing. Many businesses require special licenses to open. Additionally, it is a good idea to get a jump start on taxes. Your corporation may be required to pay federal, state, and local taxes. You can find more information about the federal requirements by visiting the IRS website. You can find more information about state taxes by visiting the Alabama Department of Revenue. Finally, you can find more information about local taxes by reaching out to the local Chamber of Commerce in your area.
• Step eight: Open a business banking account. It can be helpful to evaluate your different banking options. Some have perks that are useful to Alabama corporations. Avoid rushing this decision, and take some time to choose the best bank for your corporation. There are many banks to choose from, including both local and national choices.

Information Included in a Certificate of Formation

An Alabama certificate of formation should include the following information:

• Name and purpose of the business.
• The contact information of the business.
• The contact information of the registered agent.
• Number of shares available for issuance.
• Director's contact information.
• A copy of name reservation certificate.

There is a $100 fee when filing the certificate of formation form. The form should be filed with the local Judge of probate and not the Alabama Secretary of State.

Information Included in Alabama Corporate Bylaws

An Alabama corporation's bylaws dictate the expectations and responsibilities of the corporation. They should include the following:

• Specific details of the responsibilities of each board member.
• Process in which important decisions will be made.
• Clear details on the leadership structure of the corporation.

The bylaws should be created during the initial organizational meeting of the corporation. They can be edited later, but this will require a new shareholder meeting.

There are a lot of steps involved in incorporating a business in Alabama. If you choose to do this alone, it is important to do your research to ensure you are thorough. It is also possible to hire a service to complete these steps for you.