Businesses in the United States are legal entities defined by city, state, and federal laws. The legal structure of a business can vary. Some businesses are structured as corporations, some as limited liability companies, some as sole proprietorships, and so on.
In order to start your business, you’ll need to decide on an appropriate legal structure, and work with an attorney or other service provider to prepare the necessary documentation.
There are many legal and financial issues to consider when choosing a legal structure for your business. The right legal structure can help limit your liability and protect your personal assets from bankruptcy. Legal structure can also influence the way your business is taxed, and the way it carries out day-to-day operations.
There are many factors to consider when determining an appropriate legal structure for your business, and it’s best to consult with a business counselor, attorney or accountant before making a decision.
The Small Business Administration is a great resource for learning more about possible legal structures for your business.
Once you have chosen a legal structure for your business, you will need to register with the Alabama Secretary of State. The Secretary’s office manages records and provides services for the State’s businesses.
Besides being a requirement to do business in Alabama, maintaining a current registration with the Secretary of State is also a requirement to work with the City of Mobile.
You can file with the Secretary of State online by visiting the office website here.
Filing as a domestic corporation with the Alabama Secretary of State costs $100.
Any out-of-state corporation wishing to do business in Alabama must register as a foreign corporation with the Secretary of State and obtain a certificate of authority.
Search for your business name in the Alabama Secretary of State’s Business Entity Record database to ensure it hasn’t already been reserved.
Once you’ve ensured your business name is unique, you can submit an foreign filing application at the Alabama Secretary of State’s Online Service portal. The office website also provides applications that can be submitted via mail.
A foreign filing application costs $150.
Being in “good standing" means that your business has filed all necessary paperwork and paid all required fees to do business within the State of Alabama. If your business is in good standing in Alabama, you may obtain proof in the form of a Certificate of Existence.
Ensuring your business is in good standing allows you to bid on contracts with the City, expand your business to other states, or obtain small business loans. Additionally, many governmental agencies require a Certificate of Existence as part of their application process.
The easiest way to verify your business is in good standing is to search for your business in the Alabama Secretary of State’s Business Entity Record database. A business in good standing is indicated by the word “Exists" in the status column to the far right.
If the entry in the status column for your business is “Cancelled", “Revoked", or anything other than “Exists", you should contact the office of the Secretary of State to find out the steps necessary to get your business back in good standing.
Reserving your business name is a relatively simple process that ensures your new business has a unique identifier. It is a requirement of doing business in Alabama.
Before you reserve your name, you must verify it is available for use. Search for the business name you’d like to use in the Alabama Secretary of State’s Business Entity Record database to ensure it hasn’t already been reserved.
Once you’ve chosen a unique name, you can submit an online application at the Alabama Secretary of State’s Online Service portal. The office website also provides applications that can be submitted via mail.
A name reservation application costs $28.
A registered agent is an individual or a company that receives and keeps track of official legal communications from entities such as the Alabama Secretary of State on behalf of your business.
Choosing to use a registered agent is entirely optional, however using one is a good way to ensure you remain in good standing with the Alabama Secretary of State. By using a registered agent, you can avoid the risks associated with accidentally missing an important legal communication. For example, if someone files a lawsuit against your business and you miss the mailed summons, you lose your right to appeal, and lose the lawsuit by default. A registered agent eliminates this risk by tracking all official communication related to your business.
The Alabama Secretary of State provides a list of all Licensed Registered Agents online. You can contact any of these registered agents directly.
Registered agents usually bill their services annually. You can expect to pay between $100 and a few hundred dollars per year for their services.
My Alabama Taxes (MAT) is the official web portal for the Alabama Department of Revenue. All business entities wishing to do business in Alabama must register for a unique Alabama Tax ID using MAT. The portal also makes it easy to file tax returns, make payments and process other important transactions related to business taxation.
Once you have a Tax ID, you will be able to obtain your State/County Business Privilege License and City of Mobile Business License, which we’ll cover in later sections.
Register online for an Alabama Tax ID through the My Alabama Taxes Portal.
Obtaining a Tax ID is free. It will take approximately 3 to 5 days for the Alabama Department of Revenue to process your application.
A Certificate of Compliance confirms that your business is in compliance with the Alabama Department of Revenue. The City uses a certificate of compliance to ensure your business has paid and filed taxes in a timely fashion.
Request a Certificate of Compliance through the Alabama Department of Revenue .
Obtaining a Certificate of Compliance costs $14. It will take approximately 3 to 5 days for the Alabama Department of Revenue to process your application.
A Business License issued by the City of Mobile is a type of business privilege license that allows you to operate within the City. It is not to be confused with the State/County business privilege license detailed in the previous section. The City’s license allows the Revenue Department to verify what your business owes in taxes.
You can obtain a license through the online application on the City of Mobile’s Revenue Department website.
The minimum license fee is $120, plus a $10 issue fee and $8 zoning fee. Fees for certain types of businesses may be higher. It will take approximately 5 business days for the Revenue Department to process your application.
You will need several types of business licenses to do business in the City of Mobile. This section describes the necessary State/County Business Privilege License, which is different than the City of Mobile Business License.
Business privilege license is a general term for the different types of local and state licenses that are required to do business in the state of Alabama. Most business privilege licenses must be obtained in the county where the business is located. If you wish to do business in Mobile County, you will need to apply for a business privilege license through the Mobile County License Commission.
A business privilege license is a requirement for all businesses operating in Alabama. Most licenses must be obtained in the county where a business is to be located and are to be purchased prior to the start of business. You can get your Business Privilege license from the Mobile County License Commission.
You can obtain a Business Privilege License by completing the necessary form from the Mobile County License Commission.
Forms can be returned via mail, fax or in-person. It will take approximately 2 to 3 weeks for the Commission to process your application.
There are many different kinds of business insurance. Each kind exists to protect your business from unanticipated costs due to accidents, errors, or lawsuits.
If you’d like to learn more about the different types of business insurance, the U.S. Small Business Administration has good explainations available here.
It’s important to carry at least some basic business liability insurance to provide financial protection against lawsuits due to simple accidents like trips and falls in or around your business location. You can also get a policy to protect your business from costs resulting from errors or omissions made while performing services for customers.
The easiest way to determine the insurance needs for your business is to find an insurance broker to work with. They will help you identify areas of risk for your business and provide quotes for insurance policies to cover those risks.
Insurance costs will vary significantly based on your specific business needs. While starting your search for an insurance broker, you should be sure to get estimates from a few places to make sure you get a good price.