Every state is different when it comes to corporate law. Some, like Nevada or Delaware, are known for their business friendly atmosphere and extremely low corporate tax rate. As for other states, well let’s just say that not every state is as friendly towards small business as it should be. Knowing how each state stacks up in terms of laws, fees, and friendliness is enormously helpful when trying to figure out where to form your corporation. Over the next fifty weeks, we are going to look at the basics of corporate law and culture in each of the fifty states on our blog to help our readers better understand how to form and run a corporation in each state. And today we start with Alabama.

Alabama, despite not being as well known as Nevada or Delaware when it comes to incorporating, was actually ranked the second most business friendly state in the United States by thumbtack.com. Over the last few decades Alabama has made it extremely easy to start and run a business, and the lack of an over-regulatory government has meant that small businesses across an array of industries have been able to flourish and help the local economy.

Alabama also has a flat corporate tax rate of 6.5% for all income brackets. While there are states with lower, or no, corporate tax, 6.5% is still a comparatively low rate – Pennsylvania, for example, has a flat rate of 9.99% of corporate income. Alabama’s sales tax of 4% is also well below the national median of 6%, though some local government will levy their own sales tax on top of the state’s.

Along with these tax rates, Alabama has a variety of programs meant to help new and existing businesses. The Alabama Small Business Administration offers financial assistance through guaranteed loans, and there are a variety of industry and minority programs available to qualified businesses and entrepreneurs.

So how do you form a corporation in Alabama? First you have to visit Alabama’s Secretary of State’s website as their SoS handles state-corporate relations. Alabama requires that all businesses first reserve their name before filling out the Certificate of Formation, and the corporate name you reserve will have to include some form of the words ‘incorporated’ or ‘corporation.’ After your name is reserved you can begin filing for a Certificate of Formation. The forms ask that you name a registered agent, give the principal location of your office, and give the names and addresses of the corporate directors. You will also have to record how many shares the corporation will be authorized to issue, and what purpose the corporation is being formed for. After that is filled out, you turn it in and pay a fee of $100. Remember, though, that this only forms the corporation – you will still need to apply to the Department of Revenue for any licenses and permits that are required. The Small Business Administration has a handy tool for finding all of the required forms. 

And there you have it – our first state on our tour of Corporate America! If you have any questions about forming a corporation in Alabama, or the laws and regulations of the state, feel free to call us at 1(877) 692-6772 or just leave a comment below.


  1. We’re planning on covering one state every week so stay tuned – there will definitely be coverage from coast to coast on our MyCorp blog to come!

  2. Well, Alabama certainly looks like a good place to start when you are just starting out, hopefully more of such articles are to come!

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