Starting an LLC in Alabama is not for the faint of heart. Maintaining one isn’t, either. There’s a bunch of annual requirements: annual taxes, business licenses to renew, and of course, annual reports. A lot of the annual requirements can be pretty complicated, too.
Annual reports can be pretty complicated…but only if you don’t know what to expect. That’s what we’re here for. In this guide, we’ll cover all the essentials to annual reports in Alabama: LLC filing fees, where to file, due dates, and if you want, where to go to get help filing. By the end, the annual report won’t feel so daunting anymore.
What is an annual report?
An annual report is a lot like an annual newsletter for your LLC—except you only send it to one place: the state government. Each year, the state needs updated information about your business. And this isn’t a requirement that’s unique to Alabama. In fact, nearly every state requires some form of annual (or similar timeline) update.
That said, the newsletter analogy falls short because you don’t need to tell the state what you did each month. You don’t even have to tell them the highs and lows of your year. And thankfully, you don’t have to write it out as a letter. All you’ll have to do is fill out the requested information.
Here’s a quick glance at the information Alabama will require from you:
- Calendar year taxation format or fiscal year taxation
- Taxation structure of your business
- Legal name of the business
- Mailing address
- Your Federal Employer Identification Number
- NAICS code (if known)
- Name and contact information for a person to contact if there are questions with the filing (like the registered agent)
- Date you incorporated
- State and county where you incorporated
- Net worth of your LLC (included form helps you calculate this)
Sound overwhelming? Don’t panic. It’s actually a lot easier than you might think! In the rest of this guide, we’ll cover all the essentials to annual reporting—including a DIY approach and how to get help if you’d rather not file on your own.
Where do I start?
It’s tempting to run right to the Secretary of State’s Business Services page. After all, that’s where you went to start your LLC, right? However, when the annual report comes due, you won’t file on with the Secretary of State.
Instead, you’ll visit the Alabama Department of Revenue to get started. That’s because the annual report actually goes hand in hand with the state’s Business Privilege Tax. In a way, you kill two birds with one stone when you file: you cover the annual tax and the annual report with a single filing.
Most LLCs will use Form PPT, which applies to pass-through entities. If you’re taxed as a corporation, use Form CPT instead. Alabama requires you to mail in this form; you can’t submit it electronically.
Quick note: if you haven’t yet, you should also file the Initial Privilege Tax Return. This start-up form must be filed within two and a half months of filing your initial Certificate of Formation.
The annual report (and the initial report) isn’t extremely difficult to fill out, honestly. But if you’re extremely busy (and who isn’t these days?), the report can seem overwhelming—it’s yet another thing you have to do. That said, you can hire an Alabama LLC Service to handle the work for you. Not only will these services actually form your business for you (if you need it), but they’ll also help you handle annual requirements like the annual report.
How much does Alabama’s Annual Report cost?
Some states have a pretty hefty price tag of several hundred dollars for their annual report. Other states charge more reasonable fees of less than $100. Alabama, however, charges a rate that varies depending on your business’s net worth. That said, each year you’ll pay a minimum of $100. So no matter what your business income is, you can expect to pay at least $100 annually. If your income is higher, don’t be shocked if your fees are higher.
Alabama requires you to mail in a physical copy of the report, but you can pay electronically or by mail as well. Popular payment options include checks, money orders, or credit cards. If your tax due exceeds a certain level, you may be required to pay electronically. For more information on paying your annual business privilege tax, check out Alabama’s Payment Options page.
When is the Annual Report due?
In most states, the annual report is due, well, annually. In other states, entrepreneurs often refer to it as an annual report even though it’s due every other year. But in Alabama, the annual report fits its name; you’ll file every year.
More specifically, most Alabama LLCs will file their annual report (and pay the Business Privilege Tax that comes with it) by March 15th. This due date applies for all businesses operating on a standard calendar year for their taxable period. If your fiscal year follows a different schedule, then your annual report is due on the fifteenth day of the third month after your fiscal year ends.
If you don’t file on time, then you’ll get hit with a $50 late fee (sometimes more if your total tax is higher than $100).
What happens if you don’t file your annual report?
Sometimes annual check-ins are a pain, right? And we get it: with some things, like annual physicals, dental cleanings, and eye appointments are tempting to skip. Usually, there isn’t a big penalty if you skip them for a year or two (aside from a minor scolding from your doctor).
However, that isn’t the case with annual reports. You should never skip filing your annual report, and you should always do it on time. For one thing, filing on time ensures that you don’t spend any more than you have to.
More importantly, though, failing to file your annual report can cost you your good standing in the state. If your report is delinquent, the state will not grant you a Certificate of Good Standing. That certificate is a must-have for several other business functions, so you won’t want to lose it.
In extreme cases, the state will dissolve your LLC. Long story short, they’ll shut down your business by force. If that happens, don’t panic; you can get reinstated. But it’s a hassle to do so, so we highly recommend filing it on time each year. You’ll save yourself a lot of time and money.
Maintaining an Alabama LLC is no laughing matter, and the annual report is without a doubt one of the most important annual filings. Thankfully, it doesn’t have to be too complicated. Hopefully this guide has helped take out some of the guesswork. And don’t forget: an LLC Service can make things even easier.