Alabama is among the top states for doing business, so if you’re already living there and want to get a small business off the ground, you’re in luck. You must file formation papers with the state if you are beginning any business that is not a sole proprietorship or general partnership. Starting a business in Alabama is relatively simple and low-cost: You’ll need to name your business, choose a type of business entity, register the business online, get tax ID numbers and apply for necessary licenses or permits.
Alabama’s online business resources and registration make it simple to get your business officially up and running. In this guide, we’ve included answers to a few questions you might have along the way, and you might want to consult a business attorney to confirm the right moves for your company.
There are several types of business entities you can choose for your company. Which is best for your business depends on a variety of factors, like ownership in the business, taxation, and more. Each structure has its own one-time formation or set-up cost that varies by state.
Franchise taxes are state fees that businesses pay in order to have the right to operate in those states. They are paid in addition to state and federal income taxes. Here are the franchise tax fees for each business entity structure in this state.
Most states (44 out of 50) levy a corporate income tax.
C-Corps pay a C-Corp state income tax rate.
If the income tax is pass-through, as with S-Corps, use your personal income tax rate.
For LLCs, the tax rate depends on the how you set up the LLC business structure.
These costs are similar across states. We estimate the total non-state specific costs to be $XXX. Link to Overall Costs page.
Summing up the above fees, we estimate the total cost for starting a business in this state to be:
$XX