How to Start a corporation in Alabama

The first step will be to decide on a name for your business. Choose a name that is memorable and unique, easy to understand and pronounce, and accurately represents your business. When picking out a name, remember to conduct a name search to find out whether it is available. Jot down one or two alternatives, in case the name you settle on is not available for registration in Alabama.

There are a few rules that Alabama Corporations must follow in order to register a name.

1. The name you choose must be unique and not "confusingly similar" to the name of any other Alabama business. This is to prevent fraud or misrepresentation and is a common rule in all 50 states. You can find out whether a name is available in Alabama by using the Secretary of State's business entity search tool. Search through entity name, entity number, officer, agent, incorporator, month and year, date, and reservation for your search options. Be sure to check variations or alternate spellings as well, otherwise your filing may be rejected. In a pinch, you can use MyCorporation's business name search service, where we will conduct a more thorough search on your behalf and report back our findings. Plus, MyCorporation includes a business name search for free when we complete your corporation filings on your behalf.
2. Your business name must include the words "Corporation," or its abbreviations "Corp." or "Inc." You can learn more about how to choose a business name and other important statutory information through the Alabama Secretary of State.

Most states require that you designate a registered agent for your business, and Alabama is no exception. A registered agent (often abbreviated as RA) acts as the state's means to communicate with a business. An RA is responsible for receiving legal and official documents related to the business. This may be an individual or third party service that agrees to accept legal papers on the corporation's behalf. A corporation may not act as its own registered agent for service of process.

In the state of Alabama, it is required that all business entities filed in the state maintain a registered agent. This registered agent may be an individual or entity that receives official and legal documents on behalf of the business. They must be an Alabama resident, have an Alabama street address, and be available at the given address during normal business hours to accept service of process. A P.O. Box is not accepted as a registered agent address. A member of the LLC can act as the registered agent if desired, or you may also use a third-party registered agent service like MyCorporation.

Registered agent information is publicly available. This may cause privacy concerns for business owners who do not wish to list their personal contact information for everyone to see. It is also common for the registered agent to become a target of spam or robocalls since this private information is relatively easy to obtain.

Another issue that may arise is that in the case of a lawsuit, these documents would be hand delivered directly to the registered agent. In the case that you used your business location for this purpose, this could occur in front of your customers. This is why many business owners opt for a third-party registered agent service such as MyCorporation to act as a registered agent on behalf of their business.

The state of Alabama requires you to file Articles of Incorporation in order to legally create a Corporation. The Articles of Incorporation is a simple one page form that contains all of the basic information required to register your business. This document includes basic information about the Alabama corporation such as:

• The name of the Alabama corporation
• Principal office street address and mailing address
• Name of the registered agent and street address
• Purpose for which the corporation is formed
• Amount of stock the corporation is authorized to issue
• Name of the incorporator(s), street address, and mailing address
• Any other provisions (attached)

A filing fee of $200 must be made payable through check or money order to the Secretary of State. Expedited service is available for $200 and processed within three days after date of receipt from the County Probate Office.

Corporate bylaws are a detailed set of rules agreed upon and adopted by the board of directors after a corporation is formed, that specify the internal management structure of the corporation. They are typically drafted by the corporation's founder or directors. Corporate bylaws are not submitted to the state.

The state of Alabama does not require a corporation to create bylaws upon approval of the Certificate of Incorporation, but it is strongly recommended. Bylaws allow a business to maintain consistency in the way it operates and communicate organizational rules to help avoid conflicts and disputes. They cover how directors are elected, meetings are organized, and officer roster and summary of duties. In addition to management, bylaws specify details about ownership rights, annual meetings, and the addition or removal of officers and directors.

If you are not sure how to create corporate bylaws, you can purchase MyCorporation's customized Minutes and Bylaws Package. This kit provides you with the internal documents required to fulfill your corporate formalities and properly operate your business after incorporating.

The board of directors of a corporation are normally elected by the shareholders. However, for a new business, the incorporator (the person who signed the Certificate of incorporation) will often designate the initial directors if there are no initial directors named in the certificate of incorporation. This is done by creating the "Statement of Incorporator" which will list the names and addresses of the initial directors of the business.

The statement of incorporator is then signed by all of the incorporators, which passes all elements of control over to the initial directors. This is filed not with the state, but in a corporate minute book of the incorporation. It is kept as part of the corporate record.

The first meeting of the board of directors is an important time in the life cycle of a corporation. During this meeting, the initial directors of the business will adopt the corporate bylaws, set the fiscal year, and appoint corporate officers. It is also common to authorize the issuance of shares of stock to the founders of your company, usually in exchange for assets.

This meeting, and all future meetings of the board of directors, must be recorded in corporate minutes. Minutes are documents that detail what was discussed and any decisions the business makes during meetings. They are stored with the corporate records.

Corporate minutes are required for all Alabama corporations by law. Falling behind on keeping and maintain minutes can jeopardize the corporation's liability protection and overall tax advantages. It is important to maintain updated corporate minutes and keep copies of all the signed and approved minutes or actions by unanimous consent from any special or annual meetings of the corporation's shareholders and directors.

Stock is a representation of ownership in your corporation. When your shareholders purchase stock, they are buying a small piece of your business. Although it's not legally required, it is common that most corporations will issue paper stock certificates to their shareholders.

In a private company (not publicly traded on the stock market), you can set the value to each stock however you see fit in your corporate bylaws. For example, one share could be worth $10 or $10,000, either would be completely acceptable. If you have additional questions, you may contact the Alabama Department of Business Oversight to learn more.

In Alabama, all businesses are required to file for a general business license (sometimes referred to as a business tax certificate). Business licenses are issued by cities and municipalities, and every city in Alabama differs in their requirements. If you plan on operating your business in multiple cities, you will need to apply for a business license in each location. Some additional permits may be required in addition to a general business license, which may need to be filed with the county or the state. You can find out about the specific licenses applicable to your business by checking with the city offices where you will conduct business, or by using MyCorporation's business license compliance package. Our team of skilled professionals will identify the licenses required by your business and provide you with all the information you need to file.

An EIN (also referred to as a Federal Tax ID) is a nine-digit number that is issued by the IRS and used to uniquely identify your business for tax purposes. Think of it as a Social Security Number (SSN) for your business, except an EIN is less sensitive. It is important to wait until the LLC has been approved by the state before applying for an EIN. For that reason, filing for an EIN is one of the last things to do when you are setting up a business.

• Open business checking, savings, or investment accounts
• File taxes for the business
• Complete payroll for employees if applicable
• Obtain lines of credit and credit cards, as well as "build credit" for your business
• Apply for applicable business licenses when required.

You will only need a few pieces of information to file including your mailing address and legal business name. You can apply online Opens in a new window with the IRS by downloading IRS Form SS-4 (PDF)(116 KB), or work alongside a third party organization like MyCorporation to complete an EIN application.

If a Alabama corporation pays more than $100 in wages to employees each calendar quarter, you'll need to obtain a State Employer Identification Number, or SEIN. You'll need to register with the Alabama Employment Development Department Opens in a new window (EDD).