You did it. Your Alabama LLC is officially up and running, ready to take on challenges, roll in the profits, and change the world.
There’s no doubt that this is an exciting time in your business journey. After starting your LLC, it’s easy to get carried away in all the excitement and expectations. After all, as a new business owner, you’ve got a lot on your plate.
But the state does too. They need to keep updated records on thousands of businesses so that they can effectively reach out with any important tax or legal communications down the road. How do they do it? With your cooperation, of course.
Every year, your LLC must submit an Annual Report to the Alabama Department of Revenue to keep your information current. Unsure how to go about it? Never even heard of it? No worries at all. That’s why we’re here. Keep reading for everything you need to know.
What is an Alabama Annual Report? Why is it Important?
Consider an annual report the state’s yearly checkup on your LLC. It’s similar to a census in that its purpose is to collect the necessary contact and structural information about each Alabama business.
Each state has its own annual reporting requirements, and some don’t even require them. But in most states, you’re required to submit one per year that includes your LLC name, principal office address, registered agent information, and member/manager names and addresses. Whether you run a domestic or foreign LLC, you should plan on submitting an annual report.
Don’t be intimidated, but it’s not something you want to take lightly. This is how the state updates your LLC’s record with the most recent information. They need to know how to reach you with important information about your business status, upcoming filings, taxes, and service of process.
For example, if you change your registered agent, or your current agent resigns, you’ll need to keep the state informed so they can update their contact information. Miss one of their communications and your LLC in Alabama might end up falling out of good standing or, even worse, administratively dissolved.
Moreover, keeping your information current will help other businesses and potential customers find you. If the Secretary of State has the most updated data on record, people can find your business by performing a name search.
How Much Does the Alabama LLC Annual Report Fee Cost?
If you’re putting together a budget for all your LLC’s costs – like formation costs, name reservation fees, and initial operating expenses – it’s important to include annual filings like this one, just so that there are no surprises.
Costs vary from state to state. Some are free while others can be several hundred dollars.
Alabama’s Annual Report, however, is fairly reasonable, just $100. But there are circumstances where it might be higher. In Alabama, the Annual Report is coupled with the state’s Business Privilege Tax, a yearly tax for the privilege of doing business in Alabama.
$100 is the minimum for this tax, but it depends on your federal taxable income. If you need tax help, it might be prudent to consult a CPA or other tax professional.
Due Date and Frequency for an Annual Report in Alabama
As the name suggests, your Annual Report (and Business Privilege Tax) must be submitted once per year. Because of its tax component, the report’s due date is March 15 for calendar year taxpayers. Otherwise, it’s the 15th day of the 3rd month after the start of your fiscal year.
Note: Aside from filing a report and business privilege tax each year, Alabama also requires that you file and “Initial Business Privilege Tax Return.” To do so, you must send the Department of Revenue a Form BPT-IN no more than two and a half months after successfully filing your Certificate of Formation.
What Happens if You Don’t File?
You might be thinking, “that sounds like a pain. How bad could it be if I just fly under the radar?” The short answer: don’t try it. Failing to file your Annual Report and Business Privilege Tax can yield some serious consequences.
Late filings incur a minimum $50 penalty, which may be higher depending on the amount you owe. Further, your LLC may lose its good standing with the state, so you won’t be able to obtain a Certificate of Compliance, which is required for several important business functions.
Here’s the meat of the subject, the information you need to complete your Alabama Annual Report.
First, you’ll need to download Form PPT. LLCs must fill out all tax sections of the form, but not the actual Annual Report section. These sections include:
- Taxable year
- Type of taxpayer (LLC, S Corp, C Corp, etc.)
- Legal LLC name
- Federal EIN
- Mailing address
- Contact person for the form
- Date, state, and county of organization
- LLC net worth (the form includes a computation sheet)
The form itself contains instructions for its completion, so follow them carefully, especially when inputting your financial information.
You’re finished with your Form PPT, don’t send it off just yet. You’ll need to include a couple more things. First is your payment. You can either include a check made out to “Alabama Department of Revenue.” If you include a check, you will also need to complete and submit a Form BPT-V.
Otherwise, you can pay online through the “My Alabama Taxes” portal, which requires you to first create an account. Keep in mind that even if you pay online, you will still need to submit a paper Form PPT to one of two addresses.
If you’re not including a payment (and instead paying online) send your materials to:
Alabama Department of Revenue
Business Privilege Tax Section
PO Box 327431
Montgomery, AL 36132-7431
If you are including a payment, mail your materials to:
Alabama Department of Revenue
Business Privilege Tax Section
P.O. Box 327320
Montgomery, AL 36132-7320
Does the State Send Reminders?
Reminders are always nice. They help you stay on top of your business requirements and ensure that you won’t fall out of good standing.
However, the Alabama Department of Revenue expects that you’ll keep track of your LLC due dates, so they don’t send reminders before your Annual Report and Business Privilege Tax are due. They will, however, mail a delinquency notice to your LLC business address if you fail to pay on time.
Can I Hire a Service to Handle it?
You probably have a full plate as it is, and the thought of adding one more responsibility to your to-do list might make you shudder. You’re not alone.
Plenty of other LLC owners have outsourced their reporting duties to LLC services. These companies will take the entire process off your hands, handling your Annual Report each year. If that piques your interest, we recommend ZenBusiness, which is an experienced and trustworthy LLC company.
But their services aren’t restricted to forming an LLC or managing Annual Reports. They can also help you form your business, draft an operating agreement, handle registered agent responsibilities, and much more, all for a reasonably low price.
If thinking about your LLC responsibilities ties your stomach in knots, let ZenBusiness take some of those worries off your plate.
There you have it, everything you need to know about Alabama’s reporting requirements. Follow this guide to a T and your LLC will be prepared to operate smoothly and in good standing long into the future.
And remember, if at any point it seems overwhelming, you’re not alone. A good LLC service like ZenBusiness (or LegalZoom) can be a valuable resource, taking care of all the little details, so you can focus on growing your business.