Alabama Business Compliance Checklist
Alabama's Business Privilege Tax is unusual — it's separate from income tax and applies to almost every entity. This page covers everything from filing fees to sales tax to hiring laws.
$236
$10
Every year
4%
state base rate
Yes
1. Entity Formation
| LLC filing fee (Articles of Organization) | $236 |
| Corp filing fee (Articles of Incorporation) | $208 |
| Registered agent required | Yes — must have a physical address in the state |
| Publication requirement | No |
| Processing time | ~7 business days (expedited available for extra fee) |
2. Annual Maintenance
| Annual/periodic report | Every year — fee $10 |
| Franchise tax | Business Privilege Tax, $100 minimum, based on net worth. |
3. Sales Tax
| State base rate | 4% |
| Combined rate range (with local) | 4% – 11.5% |
| Economic nexus (out-of-state seller) | $250,000 per year |
| Marketplace facilitator law | Yes — marketplaces (Amazon, Etsy) collect on your behalf. |
Need to check nexus across multiple states? Use our Sales Tax Nexus Checker.
4. Employer Requirements
| Minimum wage | $7.25/hr (2025) |
| Paid sick leave law | None (federal only) |
| Non-compete enforceability | Enforceable — reasonable scope and duration required |
| Contractor classification test | Common-law (IRS) test |
Full employment law breakdown: Alabama Hiring Laws.
5. Workers' Compensation
Alabama allows private-market workers' comp insurance (competitive market). Coverage is required starting with your 5th employee.
Estimate your premium with our Workers' Comp Calculator.
6. State Income Tax
Progressive brackets — top marginal rate is 5%.
Compliance by Business Structure
Pick your structure to see structure-specific compliance items.
What Makes Alabama Distinctive
Compliance quirks and rules that separate Alabama from other states — worth understanding before you file.
- Business Privilege Tax (BPT) is due annually with a $100 minimum, calculated on net worth in Alabama. Even non-operating LLCs owe the minimum.
- The Alabama Secretary of State's online portal (sos.alabama.gov) charges an additional processing fee for online filings on top of the statutory fee.
- Alabama has both a state and county-level business license requirement — county probate courts issue local business licenses annually.
- Alabama repealed the requirement for annual reports for LLCs in 2024, but BPT filing still creates an annual touchpoint.
This is a reference, not legal advice.
State fees and rules change. Verify current values with the Alabama Secretary of State, Department of Revenue, and Department of Labor before filing. For complex situations, consult a licensed CPA or attorney.