How to Form a Corporation in Alabama
By Edmond Hui · Facts verified July 29, 2026 against primary state sources
Edmond Hui · Founder, MyStateLLC
Edmond Hui is a software engineer and serial entrepreneur based in New York who has founded multiple online businesses across e-commerce, media, and information publishing. Before transitioning into tech, he spent years as a commercial real estate professional closing deals totaling over 100,000 square feet, giving him firsthand experience with business formation and entity structuring. He built MyStateLLC to provide the free, state-specific LLC guidance he wished existed when forming his own companies.
What you file in Alabama
Incorporation filing
| Document | Domestic Business Corporation Certificate of Formation (Ala. Code § 10A-1-4.31; the SOS assigns no form number) — a Certificate of Name Reservation must be obtained first |
| Fee | $200 |
| Recurring report | Secretary of State corporate annual report (Schedule AL-CAR, Ala. Code § 10A-2-16.22), $10 fee, collected by the Dept. of Revenue and filed as part of the Business Privilege Tax return — Form CPT for C corporations, Form PPT for S corporations and other pass-through entities — every year, $10 |
| First report due | Filed with the Alabama Business Privilege Tax return: the C-corporation return (Form CPT) is due the 15th day of the 4th month after year-end (April 15 for calendar-year filers, matching the federal deadline); the S-corporation/pass-through return (Form PPT) is due the 15th day of the 3rd month (March 15 for calendar-year filers). |
This page covers the state filing and the charges that follow it. For the procedural side — name availability, registered agent, bylaws and the federal EIN — see the formation guide and how to get an EIN, both of which apply to corporations as well as LLCs.
What it costs to incorporate and stay filed
State filing charges only. Corporate income tax and franchise tax are excluded — both depend on income or net worth, so no flat figure would be true for every corporation.
| Charge | Amount | How often |
|---|---|---|
| Domestic Business Corporation Certificate of Formation (Ala. Code § 10A-1-4.31; the SOS assigns no form number) — a Certificate of Name Reservation must be obtained first | $200 | One time |
| Secretary of State corporate annual report (Schedule AL-CAR, Ala. Code § 10A-2-16.22), $10 fee, collected by the Dept. of Revenue and filed as part of the Business Privilege Tax return — Form CPT for C corporations, Form PPT for S corporations and other pass-through entities | $10 | Every year |
| First-year state filing charges | $210 | — |
| Five-year state filing charges | $250 | — |
Alabama is the 44th cheapest of 49 states on the incorporation filing fee alone. Nationally the fee runs from $35 in Montana to $300 in Texas, averaging $113.06. It is a one-off charge, so over five years it is usually outweighed by the recurring report fee and any annual franchise or minimum tax.
States that are cheaper to incorporate in
A cheaper filing fee elsewhere rarely saves money if you actually operate in Alabama. Every state sets its own threshold for what counts as transacting business, and where that threshold is met an out-of-state corporation is generally required to register as a foreign corporation — which would mean fees in both states rather than one. Whether it applies to you depends on facts this page cannot see, so check foreign qualification in Alabama before incorporating elsewhere to save on the filing fee.
Alabama corporation vs Alabama LLC
State filing charges only. Corporate income tax and franchise tax are excluded because both depend on income or net worth, so no flat figure exists for either entity.
| Corporation | LLC | |
|---|---|---|
| Formation filing fee | $200 | $200 |
| Report cadence | Every year | Not required |
| Report fee | $10 | No report required |
| Entity-level tax on the LLC side | — | Alabama Business Privilege Tax |
Both entities cost $200 to file in Alabama, so the filing fee is not a reason to pick one over the other.
Full Alabama LLC cost breakdown · LLC vs C-corp explained · LLC vs S-corp explained
State taxes a Alabama corporation pays
Corporate income tax
| Applies | Yes |
| Rate | 6.5% of Alabama net income, with a deduction allowed for federal income tax paid/accrued; applies to all net income (there is no $25,000 exemption). Filed on Form 20C. |
Franchise or gross-receipts tax
Alabama levies a separate Business Privilege Tax (a net-worth privilege tax, Ala. Code § 40-14A) on corporations and LLEs. Rate is graduated from $0.25 to $1.75 per $1,000 of net worth apportioned to Alabama (rate tier set by federal taxable income). Historic minimum was $100; reduced to $50 for taxable years beginning after 12/31/2022 — the ADOR Business Privilege Tax page still states this $50 minimum and makes no mention of any elimination to $0. Maximum is $15,000 (higher caps apply to financial institutions/insurance companies — $3,000,000; electing Family Limited Liability Entities capped at $500). Corporations also pay the $10 Secretary of State annual report fee with the return (Form CPT for C corps, Form PPT for S corps/pass-through entities).
What these totals leave out: the filing-charge figures on this page are what you pay the business filing office. They exclude corporate income tax and any franchise or gross-receipts tax, because both depend on income, net worth or receipts. The section above sets out what Alabamalevies — or that it levies neither. Where a state's franchise tax carries a flat minimum, that minimum is an unavoidable annual cost these totals do not include, and over five years it can be the larger number.
C-corp return: Form 20C (Alabama Corporation Income Tax Return)
Electing S-corporation status in Alabama
Alabama follows the federal S election. Full Alabama S-corporation election guide.
Frequently Asked Questions
Where these numbers come from
This page covers the state filing required to incorporate in Alabama and the charges that follow it. Every figure was checked against Alabama's own published sources on July 29, 2026— the state business filing agency's fee schedule, the governing statute, and where a state tax applies, the state Department of Revenue. Commercial formation-service pages were used as leads only and are never cited. Anything the review could not confirm from an official source is left blank on this page rather than filled with an estimate.
Corporate income tax and franchise tax are quoted as the state publishes them, as rate schedules and thresholds, and are excluded from every dollar total here. They depend on income or net worth, so there is no flat figure that would be true for every corporation.
Primary sources:
- https://www.sos.alabama.gov/business-entities/domestic-corporations
- https://www.sos.alabama.gov/sites/default/files/form-files/FeeSchedule.pdf
- https://www.revenue.alabama.gov/tax-types/business-privilege-tax/
- https://www.revenue.alabama.gov/tax-types/corporate-income-tax/
- https://www.revenue.alabama.gov/faqs/what-is-the-electing-pass-through-entity-tax-return-form-and-when-is-it-due/
- https://www.revenue.alabama.gov/forms/proforma-form-20c-for-corporations-filing-the-alabama-consolidated-corporate-income-tax-return/
- https://www.revenue.alabama.gov/forms/computation-of-federal-taxable-income-reference-for-alabama-business-privilege-tax-forms-form-cpt-and-form-ppt/
- https://www.revenue.alabama.gov/forms/balance-sheet-net-worth-computation-form-cpt-and-form-ppt-9/