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.
In Alabama, every LLC needs to file a document known as the “Business Privilege Tax Return and Annual Report.” This filing helps the Alabama Department of Revenue stay current on some vital information about LLCs operating in the state. 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, being 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, has a fee that can vary widely. That’s because the Business Privilege Tax is based on your LLC’s federal taxable income for each year. The minimum fee is $100, but large companies with strong income can pay a maximum of $15,000.
The Department of Revenue’s website has a very helpful FAQ section that can help you determine your tax responsibilities. 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 Business Privilege Tax and Annual Report 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 an “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 Business Privilege Tax and Annual Report 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, but 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 paying online instead) send your materials to:
Alabama Department of Revenue
Business Privilege Tax Section
P.O. 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 Business Privilege Tax and Annual Report filing is 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.
Frequently Asked Questions
About Filing the Alabama LLC Business Privilege Tax and Annual Report
Should I use an annual report service, hire an attorney, or prepare and file my own reports?
This question largely comes down to personal preferences, but we do have some general insights. The DIY route can be quite a bit of work, as you’ll need to keep track of your due dates and complete the entire report on your own with no assistance. As for hiring an attorney, this can be prohibitively expensive for many businesses, as a lawyer can charge hundreds or even thousands of dollars to prepare and file your annual reports.
You can think of business services companies as a middle ground between these options. While most of these companies charge a fee to prepare and file your annual reports, that fee will be significantly less expensive than an attorney’s fee. At the same time, you still aren’t going it alone. Instead, you have an experienced professional guiding you through the entire process.
I’ve heard the most about LegalZoom. Are they the best annual report service?
LegalZoom is the most well-known of all business services companies, thanks to its long track record and extensive advertising campaigns. That said, all of that brand power comes at a cost, as LegalZoom’s pricing and features don’t always compare advantageously to its competitors. While we do appreciate LegalZoom’s annual report filing service, it isn’t our top choice.
When is my annual report due each year?
The answer to this question depends on your LLC’s fiscal year. If you follow a standard calendar-year schedule, your Business Privilege Tax and Annual Report will be due by March 15 every year. However, if your business operates according to a different schedule, your reports will instead be due by the 15th day of the third month of your fiscal year.
Does Alabama require LLCs to file initial reports?
In some states, LLCs are also required to file initial reports. These reports are typically quite similar to annual reports, with the difference being that an initial report either accompanies your formation documents or follows their filing within a couple of months.
In Alabama, you’ll need to file your initial report within 2.5 months after your LLC starts transacting business in the state. This report is quite similar to the Business Privilege Tax and Annual Report, but it does use a different form, which you can find right here.
What if I need more time to complete my annual report?
If you need some additional time to finish preparing your Business Privilege Tax and Annual Report document, all you need to do is request one and the state will provide you with an automatic six-month extension. However, this offer is not available for initial reports — there are no extensions offered for the 2.5-month timeline for initial reports.
Where can I find more official information about Alabama’s LLC annual reporting requirements?
The best resource for info straight from the state is the Alabama Department of Revenue’s Business Privilege Tax FAQ page. This page dives deep into many different aspects of the state’s annual reports for LLCs.
The Best Alabama LLC Annual Report Services
If you want to use a reputable online service to file your Alabama annual reports, there are dozens of options. We invite you to check out our full list of the best available LLC annual report services, but we’ll also share a few of our favorites with you here.
There are two general types of annual report services: basic and managed. A basic service only handles the preparation and filing of the report itself, while a managed service also tracks your due dates and provides you with reminders.
Let’s take a quick look at the three best LLC annual report services for entrepreneurs in the state of Alabama.
ZenBusiness ($75 – Total Cost of at Least $175)
ZenBusiness has a very attractive offer for annual report service, as it offers fully managed service at a price point that undercuts many competitors’ rates for basic service. ZenBusiness often tops our lists for a variety of business services, as they’re also our favorite company for LLC formations. ZenBusiness is a company that truly excels when it comes to customer feedback, as nearly all of their 6,200+ reviews are extremely positive in nature.
Another aspect of ZenBusiness that we value is its dedication to giving back to the communities it serves. ZenBusiness partners with Kiva.org to help lift underprivileged entrepreneurs out of poverty through financial lending. Additionally, they provide loans to help boost women- and minority-owned businesses.
MyCompanyWorks ($49 – Total Cost of at Least $149)
If you’re in the market for a basic service, and you don’t mind tracking your own due dates, MyCompanyWorks is the best option. At just $49 (plus any applicable state fees), MyCompanyWorks has the most affordable basic annual report package we’re aware of. While many of its competitors charge $100 or more for a similar service, MyCompanyWorks offers annual reports for less than half of that price point.
Of course, it’s not all about pricing! Cost is always a highly important consideration, but it’s far from the only criterion we use when analyzing annual report service providers. MyCompanyWorks also receives tremendous feedback from its customers, with more than 3,700 reviews available online and nearly all of them being positive.
MyCorporation ($99 – Total Cost of at Least $199)
MyCorporation is another solid option for managed annual reports. MyCorporation has lots of experience, as they’ve helped form more than one million businesses over the years. In addition, MyCorporation receives excellent feedback from its customers, with hundreds of positive reviews scattered across the web.
While MyCorporation doesn’t excel in any specific way that would earn a spot above MyCompanyWorks or ZenBusiness, they have plenty of their own advantages that make them a strong contender for your dollar.