Starting a business is an exciting milestone, but staying compliant is just as important as getting started. If you’ve taken the step to apply for LLC in Alabama, congratulations! You’ve chosen a state known for its business-friendly environment, simple tax structure, and efficient registration process.
However, forming your LLC is only the beginning. To keep your business in good standing, you must meet certain annual filing requirements set by the state of Alabama. Missing these deadlines can result in penalties, suspension, or even involuntary dissolution of your LLC.
In this post, we’ll walk you through everything you need to know about annual filing requirements for an Alabama LLC — from annual reports to business privilege tax and more.
1. Understanding the Annual Report Requirement
Unlike many other states, Alabama does not require a traditional “Annual Report” for domestic LLCs. Instead, the equivalent reporting responsibilities are fulfilled through the Business Privilege Tax (BPT) filing.
The BPT filing acts like an annual report, keeping your company information current with the state and ensuring compliance. So, even though you don’t submit a separate “annual report” form, you still have yearly reporting duties as part of maintaining your LLC in Alabama.
2. Business Privilege Tax (BPT) and Annual Report Combined
In Alabama, all LLCs must file a Business Privilege Tax Return and Annual Report each year with the Alabama Department of Revenue. This is a combined document that fulfills two functions:
- It reports your company’s current details, such as business address and members.
- It calculates and pays Business Privilege Tax, which is a tax on your LLC’s net worth.
Let’s break this down further.
What Is the Business Privilege Tax?
The Business Privilege Tax (BPT) is a requirement for all business entities operating in Alabama, including domestic and foreign LLCs. It is based on the net worth of your business and must be filed annually.
The minimum BPT is $100, but depending on the size and net worth of your LLC, the amount may increase. If you’ve recently applied for an LLC in Alabama, your first BPT is due no later than 2.5 months after your formation date.
What’s Included in the Annual Report?
The annual report section of the BPT form includes:
- Name and address of the LLC
- Registered agent details
- Principal business address
- Names and addresses of members or managers
- Nature of business activities
This information must be current and accurate, and it allows the state to maintain a public record of your business.
3. Due Dates to Remember
Here are the critical deadlines you need to know to stay compliant:
- Initial BPT and Annual Report: Due within 2.5 months after formation for new LLCs.
- Subsequent Annual BPT filings: Due on or before April 15th each year (for calendar-year filers).
If your LLC uses a fiscal year, your due date will differ. It’s best to consult a tax advisor or professional to make sure you file correctly and on time.
4. Filing Method
You can file your Business Privilege Tax and Annual Report either:
- Online through the My Alabama Taxes (MAT) portal at https://myalabamataxes.alabama.gov, or
- By mail using the proper forms downloaded from the Alabama Department of Revenue website.
Online filing is generally faster and easier, and it helps you track submissions and confirmations.
5. Franchise Tax – Not Required in Alabama
Some states charge an annual franchise tax to LLCs, but Alabama does not impose a separate franchise tax. Your only mandatory yearly obligation is the Business Privilege Tax, which makes compliance simpler and less costly.
6. Penalties for Missing Your Filing
Failing to file your BPT and annual report by the deadline may result in:
- Late fees and penalties
- Interest on unpaid taxes
- Loss of good standing
- Administrative dissolution of your LLC
To avoid these issues, mark your calendar and make sure your documents are submitted on time each year.
7. Do Foreign LLCs Have the Same Requirement?
Yes. If you operate a foreign LLC (an LLC formed in another state) and are authorized to do business in Alabama, you also need to file the Business Privilege Tax and Annual Report each year. Foreign LLCs must also maintain a registered agent and renew licenses, if applicable, just like domestic LLCs.
8. Do I Need to File Anything Else Annually?
Apart from the BPT and annual report, here are some other annual considerations:
➤ Business Licenses
Alabama requires most businesses to hold a business privilege license, issued by the county probate office. These licenses must be renewed annually. Check with your local county to confirm your license requirements.
➤ Registered Agent Information
If your registered agent or business address changes, you must update that information with the state. Failing to keep this current can affect your compliance status.
➤ Operating Agreement
Alabama does not require you to file your LLC’s operating agreement, but you should update it yearly if any major changes occur (like new members or revised management structure).
9. EIN and Federal Filings
It’s critical to make sure that you are fulfilling your federal obligations. If your LLC has employees or is taxed as a corporation, annual returns must be submitted to the IRS. Even if you are a single-member LLC, you will still have to report your earnings on your personal tax return.
When you are filing as an LLC, you also need to have an Employer Identification Number (EIN). You can obtain an EIN from the IRS. Oftentimes, you will need your EIN when you open a business bank account or when you hire staff.
Final Words
Starting a business is more than simply filing some paperwork. Brands like MyCorporation know how important it is to stay compliant year after year. While you focus on growing your business, such brands can help manage your annual requirements.
Once you have taken the step of applying for an LLC in Alabama, you also want to stay on top of your annual responsibilities annually, to guarantee you are in good standing, not only with the LLC status under Alabama law, but with the state itself. If you know your annual filing obligations and you’re planning ahead, you are less likely to have compliance-related penalties, and you can look ahead to growing your business.
