Incorporate in Alabama for FREE^*

Incorporation is the process of registering a business as a corporation and making it recognizable under law as its own legal entity. Incorporating a business can be a complicated process because each state has its own requirements for registering and operating a business as a corporation. Knowing the necessary steps and forms, however, will help keep you organized and stress-free. 

With our easy business registration service, you simply answer a few questions and we create your initial paperwork and file it with the state for you. The first business entity registration is free for Rocket Legal+ members—you pay only the state filing fees. Then, you can make and personalize all the legal documents you need for your business. Store everything online in your Rocket Lawyer account.

What is a C-Corp? 

A C-Corp, or C-Corporation, is a common business entity type. More specifically, a C-Corp is a corporation taxed under Subchapter C of the U.S. Code. Under Subchapter C, corporations are subject to tax at both the corporate and individual level (sometimes called “double taxation”). Depending on the situation, this may result in lower or higher tax burdens for the shareholders. 

C-Corps allow for anyone to be an investor and for an unlimited number of shareholders and multiple share classes.

As with other types of corporations, C-Corporations provide a common and well-known legal structure for businesses and offer their shareholders some limited liability. Except for certain instances of fraud or misconduct, a shareholder is not liable for the debts or obligations of a corporation beyond the shareholder's investment into the corporation.

Corporations are treated as a C-Corp by default, unless another type of tax treatment is selected, such as an S-Corp.

What is an S-Corp? 

Like C-Corps, S-Corps provide a common and well-known legal structure for businesses and offer their shareholders some limited liability. However, S-Corps have two main differences from C-Corps: they are taxed differently and they have more restrictions with shares.

An S-Corporation, or S-Corp, is an IRS election that allows a company to be treated like an LLC for income tax purposes, that is, as a “pass-through" entity. Instead of income taxes being owed at both the company and individual level, the income of an S-Corp is only taxed at the individual level, which means it passes through the company directly to the owners and shareholders. Again, this may result in lower or higher tax burdens for the shareholders depending on the situation.

S-Corps have more restrictions regarding shares and shareholders than C-Corps. Specifically, S-Corps can have no more than 100 shareholders, only one class of shares, and only U.S. residents or citizens as investors.

One area of common confusion is what type of entity can elect S-Corp status. Remember that this election is simply a tax choice, not a governance or legal structure choice. Both limited liability companies (LLCs) and corporations can choose S-Corp status if they qualify under the IRS's guidelines.

Because the limits on liability, structure, management, and compliance documents are nearly the same, deciding whether to file an S-Corp or a C-Corp in Alabama comes down to a few considerations:

• Ownership Rules: An Alabama C-Corp can have an unlimited number of shareholders and unlimited classes of stock. An S-Corp is limited to a maximum number of shareholders, usually 100, and only one stock class.
• Taxes: A C-Corp is taxed on a separate basis. It files taxes at the corporate level, then shareholders can be additionally taxed on individual dividends they receive. S-Corps are "pass-through" tax entities. They pay no taxes at the corporate level, but corporate owners pay taxes individually.
• Documents: An Alabama S-Corp must file IRS Form 2553 to elect S-Corp status.

Your corporation’s name should be unique and make a statement about your business. Make sure it complies with the following Alabama requirements:

• Your name must end with "Corporation," "Corp.," "Incorporated," or "Inc."
• Avoid deceptive terms. For example, don't name your Alabama corporation "Noah's Toy Trains" if you're selling baked goods.
• Your name should be unique. Avoid names that are deceptively similar to any other existing business names. Your name must be distinguishable from all other recorded entities already filed with the Secretary of State.
• Reserve your name prior to incorporation. You must attach the Name Reservation Certificate received from the Secretary of State to the Certificate of Formation.

Need help coming up with a business name for your corporation? Try the Rocket Copilot™ AI Business Name Generator, a free tool to help you brainstorm business names and get started registering your corporation.

Each state has its own personnel requirements for incorporating. In Alabama, the Domestic Business Corporation Certificate of Formation requires the disclosure of three or more directors, if you have that many. You must also disclose one incorporator. If you want to identify more than three directors or more than one incorporator, you must attach a list to your Certificate of Formation.

Single-officer or single-director corporations are permitted. The same person can hold more than one office or position. 

There is no minimum age requirement in Alabama for incorporators, officers, or directors, nor do they have to live in Alabama.

In addition to personnel requirements, your Alabama Certificate of Formation must also include the following:

Every Alabama corporation must name a registered agent. A registered agent is the person or business responsible for receiving tax, legal, and government documents for your corporation. The agent must be available during regular business hours, and you must disclose your agent in your Certificate of Formation. Your registered agent must be located in the state, with both a physical and a mailing address there. The address can't be a post office box or a drop box. Your registered agent can't be the corporation itself. We can help you designate a registered agent when you incorporate with us.

The Domestic Business Corporation Certificate of Formation for an Alabama corporation must include the specific number of shares of stock that your corporation is authorized to issue. The Certificate also asks for disclosure of the stock's par value, but this is optional.

A Name Reservation Certificate is supplied to each corporation by the Secretary of State. You must attach this to your Certificate of Formation. The Certificate must also include the purpose for which the corporation was formed, the period of the corporation's duration if it's not perpetual, and an attachment of any further provisions. Additional provisions must be consistent with the laws of Alabama.

When you file a Certificate of Formation in Alabama, submit a signed original and two copies. Send them and your filing fee to the probate judge in the county where the corporation's registered office is located. The judge will confirm the county filing fees. A separate form of payment for the Secretary of State's filing fee is required. The judge will send that fee, along with a certified copy of the Certificate of Formation, to the Secretary of State shortly after the Certificate is issued. The Secretary of State will index the filing. The judge will also send notification of the filing to all interested parties. In some areas, it is possible to pay the Secretary of State fees by credit card.

Alabama requires that corporations file an Application for Certificate of Existence of Registered Entities. The Certificate of Existence documents an entity that is indexed or registered with the Alabama Secretary of State. Completing an application for a Certificate of Existence in Alabama requires that the corporation has an entity ID number. The Secretary of State issues entity ID numbers. There are standard and expedited fee options for Certificates of Existence.

Nearly every state has standard processing times, but not all provide expedited processing for corporations. In Alabama, there are a few fees that you may be charged when you register your business as a corporation. They include the following:

State Fees: $258 (this includes a state fee, county fee, name reservation fee, and state credit card processing fees).

Rocket Lawyer filing fee: $0 $99.99.

• First filing FREE* for Rocket Legal+ members (excluding state fees).
• Get additional filings HALF OFF with Rocket Legal+.

Processing time: 10 business days.

Note: The above state fees and processing times (including expedited processing fees and times) are provided as a summary and may or may not encompass various fees mandated by your state or local authorities. Your state may also change these fees and processing times over time and without notice. If you have questions, speak to a Rocket Lawyer Business Pro to understand the costs and processing times that apply to your specific filing.

Businesses can save up to $2,500 per year with a Rocket Legal+^™ membership. This calculation is based on total savings on an initial business registration and registered agent, trademark, and business tax filing services for Rocket Legal+ members (a total cost of $924.97) compared to Rocket Legal members (a total cost of $1,949.96). This is in addition to savings on the average cost of 5 hours for document preparation by a non-Rocket Lawyer network attorney at the average attorney hourly rate in the U.S. of $300 (an estimated cost of $1,500 when purchased without any form of Rocket Lawyer membership) compared to unlimited use of customizable business documents for both Rocket Legal+ and Rocket Legal members at no extra cost.

Yes, you must pay taxes for a new corporation in Alabama. Before transacting business in Alabama, apply to the IRS for an employer identification number, or EIN. An EIN is a Social Security number for businesses. All corporations that have or will have employees must have one.

We have more information about the tax structures and obligations of S-Corps and C-Corps.

Alabama recommends that corporations create business records, such as Bylaws and Corporate Minutes. We have requirements for Bylaws and Corporate Meeting Minutes for all 50 states. It's a good idea to create and keep these documents regardless of whether Alabama officially requires them. They can help protect the legality of your corporate status and shield you from personal liability.

We wish you success with your new Alabama corporation! You can count on Rocket Lawyer for all the business, tax, and legal help you need at a price you can afford.

If you are planning to operate in another state, you may need to register a corporation in that state. Rocket Lawyer can help you determine which states you should register in.

Other states may have their own rules for foreign corporations that originate in Alabama or domestic corporations that also operate in Alabama. Talk to an attorney to understand the legal and tax requirements for the state(s) in which you plan to operate.