How do you set upa company in Alabama.
In Alabama you register with the Secretary of State and file business privilege tax annually. Teamed lets you hire there with no entity at all.
At a glance
Alabama entity setup at a glance
Forming an LLC or corporation in Alabama means filing with the Secretary of State for a fee of $200, then staying current on the state's business privilege tax, which is calculated on a margin basis and carries a minimum of $0. None of that is difficult on its own, but it is ongoing work that sits on top of payroll, benefits, and everything else you actually moved to Alabama to do.
- Minimum franchise tax
- $0
- Franchise tax basis
- margin
- Formation / registration fee
- $200
Formation
Registering your entity with the state
To operate legally as an LLC or corporation in Alabama, you file formation documents with the Alabama Secretary of State and pay the registration fee of $200. You will also need a registered agent with an Alabama address, since the state requires someone reachable in-state for legal and tax correspondence.
Beyond the state filing, most companies also need a federal EIN, a business bank account, and an operating agreement or bylaws depending on entity type. None of that is unusual, but each step adds a few days and a dependency on someone signing something, which is exactly the kind of friction that slows down a hire you wanted to make this month.
Ongoing tax
Alabama's business privilege tax
Once your entity exists, Alabama expects an annual business privilege tax filing. The tax is calculated on a margin basis, and the minimum amount due is $0, which does not mean the filing itself is optional. You still have to prepare and submit the return every year the entity is active, whether or not tax is owed.
This is a recurring compliance obligation, not a one-time cost. It sits alongside payroll tax registration, unemployment insurance, and workers' compensation setup, all of which need to be current before your first Alabama employee gets their first paycheck.
Timeline
What the process actually takes
Setting up in Alabama is a sequence, not a single event: entity formation, EIN, state tax registration, payroll tax accounts, workers' compensation, and then whatever benefits infrastructure you want in place before day one. Each step depends on the one before it, so delays compound.
If you already know you're hiring one or two people in Alabama and are not sure yet whether the state will be a long-term base, that sequence is a lot of setup for an uncertain payoff. Teamed's EOR route skips it entirely, since employees are hired under Teamed's existing Alabama entity from day one.
Before you commit
Sometimes an employer of record is the better fit
An employer of record is sometimes the right call, not a compromise, when you're hiring a small or still-changing group in Alabama or simply testing whether the state works for you. Talk to a member of the team about your specific situation, or run the numbers yourself in the crossover calculator, since the right answer depends on salaries and how long you intend to stay.
Contractors, employer of record and your own entity all run on one platform at Teamed, so moving between them later does not mean changing provider or re-onboarding anybody. Real HR and legal experts handle the work rather than a ticket queue.
Talk to a member of the team and we will tell you plainly which one suits where you are. If you would rather look at the numbers yourself first, the crossover calculator models it on local salaries and employer costs rather than on a headcount rule of thumb.
Who carries it
Your own entity, when it's time. We set it up, migrate you in, and hand it back intact.
Global Entity and Employment Operations, which we call GEMO, is how Teamed forms your company, registers it for tax and payroll, runs it month to month and keeps its filings current, across 100+ countries. You stay the employer. We do the work behind it.
When Alabama becomes a real, permanent part of your operation, we form the LLC or corporation, handle the Secretary of State filing and the business privilege tax setup, and move your employees onto your new entity's payroll without a gap in their pay or benefits. You keep the entity, fully yours, with clean records from the first filing onward, and we do the same wherever else you're building through GEMO, across 100+ countries.
They set up our EU entity and moved hires across without missing a payroll.
Questions
Alabama entity setup, answered
Do I need to register with the Alabama Secretary of State before hiring employees there?
Yes, if you want to employ someone directly through your own company, you need a registered entity in Alabama, which means filing with the Secretary of State and paying the $200 registration fee. If you'd rather not form an entity yet, an EOR like Teamed can employ the person on your behalf under an entity that already exists.
What does Alabama's business privilege tax apply to?
It applies to entities registered or doing business in Alabama, and it's calculated on a margin basis rather than a flat amount. The minimum tax due is $0, but the annual filing requirement still applies even when no tax is owed.
How much does it cost to form an LLC or corporation in Alabama?
The Alabama Secretary of State charges a registration fee of $200 to file formation documents. That figure covers the state filing itself, not the ongoing costs of a registered agent, tax filings, or payroll infrastructure that come afterward.
Can I hire in Alabama without setting up a legal entity?
Yes. An employer of record like Teamed employs the worker under its own existing Alabama entity, so you avoid the Secretary of State filing and the ongoing business privilege tax filings entirely while you decide whether a permanent presence makes sense.
What happens to my Alabama entity if I stop hiring there?
An entity you've formed doesn't disappear on its own. You still owe the annual business privilege tax filing and any registered agent obligations until you formally dissolve it. That's one reason some companies prefer to start with an EOR and only form an entity once Alabama is a confirmed, long-term part of the business.
Where these figures come from
Sources
These figures are drawn from the Alabama Secretary of State's fee schedule and the Alabama Department of Revenue's guidance on business privilege tax filing requirements.
Looking for a job in Entity Setup yourself? Teamed does not hire people directly. Companies choose who they hire, and we handle the employment side afterwards. Here is why we cannot help with your search.