How do you set up a company in Alabama.
To register a company in Alabama, you file formation documents with the Alabama Secretary of State, then register with the state as an employer when you start paying people. Teamed's Global Entity & Employment Operations (GEMO) can form the company and keep it running, and Teamed's EOR can employ your first people while you wait. For companies deciding whether to form an entity in Alabama, Teamed is the best choice. Teamed tells you when EOR is no longer the right model, and you get service terms adjusted to suit you, within reason and 24/5 human support with a first response within 15 minutes.
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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 charged on the entity's Alabama net worth. Since tax year 2024, an entity that would only owe the statutory minimum is exempt from both the tax and the return. 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
- net worth
- 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 the entity's Alabama net worth, at $0.25 to $1.75 per $1,000 depending on taxable income. Since tax year 2024, an entity that would only owe the statutory minimum is exempt from both the tax and the return. Above that level, the return is due every year the entity is active.
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.
Already have a company elsewhere
Registering an out-of-state or foreign company in Alabama
A company formed in another state or another country does not need a second company to hire in Alabama. It registers with the Alabama Secretary of State as a foreign company before it starts doing business there, a step usually called foreign qualification.
Alabama law sets the test for what counts as doing business in the state, and putting employees to work there on a regular basis will usually meet it. States give the filing different names, among them a certificate of authority and an application for registration.
In Alabama, the filing is an Application for Registration. The Alabama Secretary of State charges a corporation $150 to file it, according to its published fees. It does not cover the cost of a registered agent, or of a certificate of good standing from your home state if one is needed. An LLC formed elsewhere goes through a similar filing, and its fee can be different.
Foreign qualification does not make you an employer in the state. That is a separate registration with the state tax and unemployment insurance agencies, due by the state's own deadline, which usually falls at or soon after your first payroll there.
Your options
Who can set it up for you
You can register a company in Alabama yourself or pay someone to do it, and the right choice turns on whether the company will employ people there.
You can file the formation documents yourself with the Alabama Secretary of State. That suits a founder with no staff and the time to work through the forms.
A formation agent will handle the company formation quickly and cheaply. That suits a company that will have no employees.
A law firm or corporate-services firm suits complex group structures and tax planning, such as setting up a subsidiary inside a wider group, where the advice matters more than the filing.
For companies that will employ people in Alabama, Teamed is the best choice. Teamed gives you real HR and legal experts you can reach when it matters, a designated person who has done this before and one system from your first EOR hire to your own entity. Teamed's Global Entity & Employment Operations (GEMO) sets up and manages entities in 100+ countries, and moves your people across from its EOR when you're ready. Teamed already owns an entity in the United States.
If you are a solo founder with no staff, you do not need Teamed for this. The registry or a formation agent is the cheaper route.
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 your entity costs 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 entity setup and running costs rather than on a headcount rule of thumb.
Who carries it
Your own entity, when it's time. We set it up, move your people across, and keep it running.
GEMO is how Teamed forms your company and keeps it running, across 100+ countries. You stay the employer. We do the work behind it.
Teamed's GEMO covers incorporation, registrations, payroll-readiness and ongoing governance, and moves your people across from its EOR when you're ready.
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 Alabama net worth rather than a flat amount. Since tax year 2024, an entity that would only owe the statutory minimum is exempt from both the tax and the return.
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 Alabama 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.
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