The minimum cost to form an Alabama LLC is $236 online — a required $28 name reservation plus the $208 Certificate of Formation fee. Filing by mail is $225 ($25 + $200). Several formation services charge $0 in service fees, so you only pay the state fees. The cheapest path: use a $0-service-fee formation service like ZenBusiness or Bizee to avoid filing errors, and add a $49/year registered agent.
Alabama LLC formation — what it actually costs
Most guides list the Alabama LLC cost as "$200" — that's wrong for two reasons. First, Alabama requires a name reservation before filing, which costs an additional $28 online. Second, the Certificate of Formation filing fee is $208 online (not $200 — that's the mail rate). The actual minimum cost for online formation is $236.
Alabama's mandatory name reservation: Unlike most states where name reservation is optional, Alabama requires you to reserve your LLC name before filing the Certificate of Formation. The reservation costs $28 online or $25 by mail. You cannot skip this step.
| Required state fee | Online | By mail |
|---|---|---|
| Name Reservation (required first step) | $28 | $25 |
| Certificate of Formation | $208 | $200 |
| Total government fees | $236 | $225 |
Beyond the state fees, you'll need a registered agent (required by law) and may want an operating agreement. Here's the full picture:
| Item | DIY / Free | Low-cost service | Premium service |
|---|---|---|---|
| Name reservation | $28 | $28 | $28 |
| Certificate of Formation | $208 | $208 | $208 |
| Formation service fee | $0 | $0 | $0–$299 |
| Registered agent (yr 1) | $0 (DIY) or $49 | Included | Included or $249 |
| Operating agreement | $0 (DIY) | Included | Included |
| Year 1 total (est.) | $236–$285 | $236–$285 | $236–$755 |
The $0 service fee plans — what you actually get
ZenBusiness, Bizee, and LegalZoom all advertise $0 formation service fees. This is real — you only pay the Alabama state fees. But what's included in each free tier varies, and understanding that matters for total cost:
Files your Certificate of Formation and name reservation. Includes registered agent service (a significant saving — most competitors charge this separately). Online dashboard for document storage.
Files Certificate of Formation and name reservation. Includes registered agent service free for the first year ($119/year after). Lifetime company alerts and online dashboard.
Files Certificate of Formation and name reservation. Does not include registered agent service in the basic plan — you'll need to add it ($249/year) or source it separately. Best value from LegalZoom is their bundle plans where registered agent is often free for year one.
The cheapest total setup — year 1 and ongoing
Lowest cost path for year 1: Use ZenBusiness Starter ($0 service fee, registered agent included) + $236 in Alabama state fees = $236 total for year 1. Registered agent renews with your ZenBusiness plan annually.
Lowest cost path ongoing: After year 1, switch registered agent to Northwest at $49/year. Total ongoing cost: $49/year registered agent + $0 Business Privilege Tax for most small LLCs (exempt under Act 2022-252 if calculated tax ≤ $100).
Hidden costs most guides miss
Business Privilege Tax — most small LLCs owe $0
Most Alabama LLC guides say "budget $100/year for the Business Privilege Tax." That's outdated. Under Act 2022-252, if your calculated privilege tax is $100 or less, the payment is fully exempt — you still file Form PPT but owe nothing. Most new small Alabama LLCs qualify for this exemption. If your net worth grows and the calculated tax exceeds $100, you pay the difference above $100. See our full Alabama Business Privilege Tax guide.
BOI Report — free but required
Every Alabama LLC formed in 2024 or later must file a Beneficial Ownership Information Report with FinCEN within 90 days of formation. It's free and takes about 15 minutes at fincen.gov. Missing it carries a $500/day penalty. See our BOI Report guide.
Business license
The state of Alabama requires an annual business license for most businesses. County and city licenses may also be required. Fees vary: the state privilege license starts around $10–$15, county licenses range from $25–$100+ depending on business type. See our Alabama business license guide.
Registered agent renewal
Registered agent service is an annual recurring cost. If you choose Bizee's free first year, the service auto-renews at $119/year. Switching to Northwest ($49/year) after year one saves $70/year — a simple process that costs $25 in state filing fees and takes about 10 minutes.
DIY vs. formation service — is DIY actually cheaper?
Filing directly with the Alabama Secretary of State costs the same $236 in state fees — there's no discount for going DIY. The choice is between spending time on a government website versus using a service that handles the paperwork.
Since several formation services charge $0 in service fees, DIY saves you nothing in year 1 if you use a free-tier service. What DIY avoids is creating an account with a formation service and receiving their marketing emails. That's a legitimate reason to go DIY, but it's not a cost reason.
The one genuine cost advantage of DIY: no risk of accidentally selecting add-ons during checkout. If you go through a formation service, read the checkout carefully and uncheck EIN filing ($70+), expedited processing, and compliance packages you don't need.