How to File Alabama Articles of Incorporation

Your Guide to Incorporating in Alabama

Alabama articles of incorporation are filed to create a corporation. This guide provides instructions and tips when preparing and filing this legal document.

Overview

Preparing and filing your articles of incorporation is the first step in starting your business or nonprofit corporation. Approval of this document secures your corporate name and creates the legal entity of the corporation. Only after this approval can the corporation apply for tax IDs, obtain business licenses, sign contracts, and otherwise conduct business.

Incorporating provides many important benefits:

• Limits the liability of directors, officers, and shareholders
• Fulfills statutory requirements to register your business’s or organization’s name
• Provides governance and adds credibility to the business or organization

Incorporating in Alabama is a three-step process:

1. Obtain a name reservation from the Alabama Secretary of State. Many states make name reservations optional, but in Alabama it is mandatory. It costs ~$28 online and will be available in less than 24 hours.
2. Submit your articles of incorporation to the Office of the Judge of Probate in the county where the corporation’s initial registered office is located. You must submit a packet containing the original articles of incorporation (also called Certificate of Formation), two copies, and the Certificate of Name Reservation. At this time pay all county fees (minimum $50) and state processing fees ($100 + optional $100 expedited service). Only some counties accept credit card payment and the state expedite service option. The Probate Judge’s Office reviews and files the document, provides notification of filing via a stamped copy, and, within 10 days, transmits a certified copy and state fees to the Secretary of State.
3. The Secretary of State indexes the filing and makes publicly available the record via their website. They will not notify you when this is complete.

The Alabama Secretary of State offers forms and instructions to help with incorporating. Use the correct certificate of formation forms and instructions for a business or nonprofit corporation.

Before Filing Your Articles of Incorporation

As you prepare to file your articles of incorporation, a couple words of caution:

First, really take time to understand the specific information required on those documents. Documents prepared by non-professionals are rejected for a number of common reasons such as not including a corporate suffix and not providing a valid registered agent address. This guide will help. When in doubt, consult the Code of Alabama. Alabama restatements cost $100 and ammendments cost $50.

State articles of incorporation templates represent the minimum amount of information you must provide for state approval, but there might be additional provisions you should provide. The IRS requires additional provisions for 501(c)(3) eligibility. State tax exemptions, licenses, B-corporation and other certifications, and even some banking purposes require additional provisions in the articles. This guide provides general education on optional provisions.

Business Corporations

Profit corporations, for-profit professional corporations, and employee cooperative corporations

How to File Articles of Incorporation for an Alabama Business Corporation

Alabama profit articles of incorporation include the following information. Differences for professional and employee cooperative corporations are called out. Note that some information is optional.

1

Name of the Corporation

The name of your corporation must be distinguishable from all other registered names in Alabama. This includes other corporate names, professional corporate names, nonprofit corporate names, limited partnership names, registered limited liability partnership names, and other reserved and registered names. You are required to obtain a name reservation prior to filing your articles.

Your corporate name must contain the word “corporation” or “incorporated” or an abbreviation of the two. Professional corporations must include the words “Professional Corporation” or the abbreviation “P.C.” or “P C”. The names of professional corporations must also abide by any rules set forth by the licensing agency.

An employee cooperative corporation may include the word “cooperative” or “co-op” in its corporate name, provided, however, that the name does not include the words “electric” or “power”. (Code of Alabama § 10A-11-1.05)

2

Type of Entity Being Formed

Simply state that you are forming a corporation. If you are using a state template, this is inherent in the form. Employee cooperative corporation should include “The corporation elects to be governed as an employee cooperative under the Code of Alabama § 10A-11.” (Code of Alabama §10A-11-1.03).

3

Principal Office

Provide the address of the principal (main) office of the corporation. It may not be a post office box. You may declare a separate mailing address.

4

Registered Agent & Registered Office

The corporation’s registered agent is the individual or company on which may be served any process, notice, or demand required or permitted by law to be served on the corporation. In other words, this is who signs for service of process, lawsuits, subpoenas, and other legal documents. Deliveries to the registered agent are often made in-person from a designated official, require signature, and are time-sensitive.

Your Alabama certificate of formation must name the corporation’s registered agent and registered office. The registered agent may be any individual or company who provides prior consent to serve in this capacity. An individual must be a resident of Alabama. Hiring an Alabama registered agent service is useful if you have a home office, are regularly out of the office, wish to keep your address off the public record, or do not want to risk receiving a sheriff or process server in front of clients or employees.

The registered office address must be a street address located in Alabama. It may not be solely a mailbox service or telephone answering service.

5

Purpose

Alabama permits a general declaration of purpose for which the corporation is formed such as “any lawful purpose”. Professional corporations must include as a stated purpose “the performance of professional services”. You may detail a more specific purpose or purposes.

Further note for professional corporations the following limitations on the purposes for which the corporation may be organized:

Similarly, professional corporations are limited to the profession listed in the certificate of formation:

6

Authorized Shares

Shares represent ownership interest in the corporation. State the total number of shares the corporation is authorized to issue. Stating the initial par value per share is optional.

You do not have to issue all shares authorized, that way you have the flexibility to add more shareholders at a later date. In the example of a corporation with three owners, you may authorize 1,000 shares and issue 250 shares to each owner (750 shares issued). This leaves 250 shares to issue to future investors or partners. The corporation may later change the amount of shares authorized by filing an amendment to the articles of incorporation.

7

Duration

By default the corporation exists perpetually. This means the corporation continues to exist until it is actively dissolved. If desired, declare a period of duration.

8

Incorporator(s)

The incorporator is the individual responsible for executing the articles of incorporation. The function of the incorporator usually ends after the documents are filed. More than one incorporator may be used. Each incorporator must print their name, street address (not a post office box), and mailing address (if different). Remember that any information you provide will become part of public record so you may wish to use a business location. Each incorporator must sign the articles of incorporation to execute them. A signature consists of a printed name, signed name, title or capacity, and date.

9

Directors

Directors are the individuals elected by the shareholders to oversee the management of the corporation. The Board of Directors elects corporate officers to run the day-to-day operations and make certain decisions for the corporation. List the name, street address (not a post office box), and mailing address (if different) for each initial director.

10

Optional Provisions

You may choose to include additional statements in the articles of incorporation (certificate of formation). Be aware that any information you include will become part of public record.

• The name and address of the preparer of the articles of incorporation.
• Reservation to the shareholders of the right to adopt the initial bylaws of the corporation.
• Provisions regarding managing the business and regulating the affairs of the corporation.
• Defining, limiting and regulating the powers of the corporation, its board of directors and shareholders.
• A par value for authorized shares or classes of shares.
• A provision eliminating or limiting the liability of a director to the corporation or its shareholders for money damages for any action taken, or any failure to take any action, as a director, except liability for
  • (A) the amount of a financial benefit received by a director to which he or she is not entitled;
  • (B) an intentional infliction of harm on the corporation or the shareholders;
  • (C) a violation of Section 10A-2-8.33;
  • (D) an intentional violation of criminal law; or
  • (E) a breach of the director’s duty of loyalty to the corporation or its shareholders.

Supplementary Documents an Alabama Business Corporation May File with the Articles of Incorporation

Name Reservation Certificate

Attach your corporate certificate of registration you received from your name reservation.

Right to Corporate Name

If your corporate name is not distinguishable from others, you may file paperwork showing your right to the name.

Copies

Include the original Certificate of Formation and two copies.

Filing Fees

Include all county and state filing fees. Make separate checks to each authority.

Credit Card Payment Option Sheet

If allowed by your county probate office, you may pay by credit card. The Secretary of State provides a worksheet to collect your card information. The Secretary of State does not provide a receipt for this payment method, which you may want since this expense is tax-deductible.

Expedited Processing Fees

If allowed by your county probate office, you may expedite indexing by the Secretary of State. The Secretary of State fee is $100 for indexing in 3 days.

Other Filing Tips

State Certificate of Formation forms must be typed or laser printed.

Nonprofit Corporations

Nonprofit corporations and nonprofit professional corporations

How to File Articles of Incorporation for a Nonprofit Corporation

You can form an Alabama nonprofit corporation by filing the articles of incorporation forms (also called certificate of formation forms) intended for a nonprofit. Differences are noted for professional nonprofit corporations. Nonprofit articles must contain the following information:

1

Name of the Corporation

The name of your corporation must be distinguishable from all other registered names in Alabama. This includes other nonprofit corporate names, professional corporate names, profit corporate names, limited partnership names, registered limited liability partnership names, and other reserved and registered names. You are required to obtain a name reservation before filing your certificate of formation.

Your nonprofit corporations does NOT need to contain a corporate suffix such as “corporation” or “incorporated”. However, professional corporations must include the words “Professional Corporation” or the abbreviation “P.C.” or “P C”. The name of a professional corporation must also abide by any rules set forth by the licensing agency.

2

Type of Entity Being Formed

Simply state that you are forming a nonprofit corporation. If you are using a state template, this is inherent in the form.

3

Members

Declare whether the corporation will or will not have members. By default the corporation has members unless you state it does not. Members of a nonprofit corporation are like the shareholders of a business corporation. Members elect the board of directors and provide a layer of oversight that is important to many nonprofits, especially larger ones. Having members comes with added complexity in management, recordkeeping, and maintenance.

4

Principal Office

Provide the address of the principal (main) office of the corporation. It may not be a post office box. You may declare a separate mailing address.

5

Registered Agent

The corporation’s registered agent is the individual or company who receives any process, notice, or demand required or permitted by law to be served on the corporation. In other words, the registered agent signs for service of process, lawsuits, subpoenas, and other legal documents. Deliveries to the registered agent are often made in-person from a designated official, require signature, and are time-sensitive.

Your Alabama certificate of formation must name the corporation’s registered agent. The registered agent may be any individual or company who provides prior consent to serve in this capacity. An individual must be a resident of Alabama. Hiring an Alabama registered agent service is useful if you have a home office, are regularly out of the office, wish to keep your address off the public record, or do not want to risk receiving a sheriff or process server in front of clients or employees.

6

Registered Office

The registered office is the street address where the registered agent is generally available during business hours to sign for documents and otherwise perform the functions of a registered agent. This address is made part of public record. The address must be a street address located in Alabama - it may not be solely a mailbox service or telephone answering service. If desired, you may list a separate mailing address.

7

Purpose

Alabama permits a general declaration of purpose for which the corporation is formed such as “any lawful purpose”. You may detail a more specific purpose or purposes.

If you will apply for 501(c)(3) federal tax exemption, the IRS will require a description. Consider using the language prescribed for your desired exemption in IRS Pub Rev-557.

Professional corporations must include as a stated purpose “the performance of professional services”. Further note for professional corporations the following limitations on the purposes for which the corporation may be organized (per the Code of Alabama §10A-4-2.01):

Similarly, professional corporations are limited to the profession listed in the certificate of formation (per the Code of Alabama §10A-4-2.03b):

8

Duration

By default the corporation exists perpetually. This means the corporation continues to exist until it is actively dissolved. If desired, declare a period of duration.

9

Incorporator(s)

The incorporator is the individual or company responsible for executing the articles of incorporation. The function of the incorporator usually ends after the documents are filed. More than one incorporator may be used. “One or more persons, partnerships, domestic corporations or foreign corporations, whether profit or nonprofit, may act as incorporator or incorporators of a nonprofit corporation by signing the certificate of formation and delivering the same to the judge of probate of the county in which the nonprofit corporation is to have its initial registered office.” (Code of Alabama §10A-3-3.01). Each incorporator must print their name, street address (not a post office box), and mailing address (if different). Remember that any information you provide will become part of public record so you may wish to use a business location. Each incorporator must sign the articles of incorporation to execute them. A signature consists of a printed name, signed name, title or capacity, and date.

10

Directors

Directors are the individuals elected by the members to oversee the management of the organization. State the number of directors on the initial board of directors. Unless the Certificate of Formation restricts that a change in the number of directors shall be made only by amendment, a change in the number of directors can be overruled by the corporate bylaws. List the name, street address (not a post office box), and mailing address (if different) for each initial director.

*

Optional Provisions

You may choose to include additional statements in the articles of incorporation. Be aware that any information you include will become part of public record. Nonprofits that wish to apply for 501(c)(3) exemption should review and include provisions required in the articles of incorporation by the IRS. IRS guidance for your desired exemption is available in IRS Pub Rev-557. In general:

• Describe how the nonprofit will distribute assets if the corporation is dissolved or liquidated.
• Include provisions regarding regulating the internal affairs of the corporation such as limiting inurement.

Understand that, more generally, federal and state tax exemptions often require specific language in the articles of incorporation. It is best to research and use the exact language required by each tax-exemption or tax-deductible application in each state and with each agency where you will apply.

You may also include the name and address of the preparer of the articles of incorporation.

Supplementary Documents a Nonprofit Corporation May File with the Articles of Incorporation

Name Reservation Certificate

Attach your corporate certificate of registration you received from your name reservation.

Right to Corporate Name

If your corporate name is not distinguishable from others, you may file paperwork showing your right to the name.

Copies

Include the original Certificate of Formation and two copies.

Filing Fees

Include all county and state filing fees. Make separate checks to each authority.

Credit Card Payment Option Sheet

If allowed by your county probate office, you may pay by credit card. The Secretary of State provides a worksheet to collect your card information. The Secretary of State does not provide a receipt for this payment method, which you may want since this expense is tax-deductible.

Expedited Processing Fees

If allowed by your county probate office, you may expedite indexing by the Secretary of State. The Secretary of State fee is $100 for indexing in 3 days.

Other Filing Tips

State Certificate of Formation forms must be typed or laser printed.

Additional Requirements for Alabama Corporations

Alabama Does Not Have a Publishing Requirement

In some states, corporations are required to publish notice of their intention to or their filing of the articles of incorporation. This is not the case in Alabama.

Alabama Initial Business Privilege Return

Alabama will send profit corporations notice to file an Initial Business Privilege Tax Return (BPT-IN) within 2.5 months of incorporating. Nonprofit corporations do not need to file an initial report.

Alabama Corporation Annual Report

All profit corporations must file annual reports, due March 15th (or the next business day if the 15th falls on a weekend). The annual report is submitted along with the Alabama Privilege Tax to the Alabama Department of Revenue.

• C-Corps and Professional Corporations file Form CPT and Schedule AL-CAR. The minimum tax is $100 plus a $10 annual report fee.
• S-Corps file Form PPT and Schedule AL-CAR. The minimum tax is $100 plus a $10 annual report fee.

Alabama nonprofit corporations only file annual reports if they are charities. Within 90 days of the close of the fiscal year, file a notarized Charitable Organization Renewal with the Consumer Protection Division of the Alabama Office of Attorney General. The annual renewal fee is $25.

Next Steps

Filing articles of incorporation is the first step in setting up a corporation. When this document is approved, next you will register for taxes and establish records. Our all-in-one incorporation packages help you get set up in one step.

• Obtain a Federal Tax ID (EIN), a unique nine-digit number assigned by the IRS to identify your business.
• Many small businesses creating a profit corporation choose to elect to be taxed as an S-Corporation. You must file form IRS-2553 within 75 calendar days of incorporation.
  • Electing Subchapter S status helps shareholders avoid the double taxation that applies to traditional C-Corporations.
  • S-Corps can also help the owners avoid paying the 15.3% Self-Employment Tax (Social Security and Medicare) on distributions.
• Nonprofit corporations often wish to obtain federal income tax exemption under 501(c)(3). 501(c)(3) recognition also allows donors to make tax deductible contributions.
• Register for state taxes. State tax registration requirements vary, but the most common registrations are for sales tax and employer taxes. Nonprofits can often apply for income and sales tax exemptions. Remember to consider each state in which your business or organization will operate.
• Nonprofits often need to register in each state before fundraising. Be sure to check the procedures for obtaining the authority to solicit, employee solicitors, or otherwise engage in fundraising in each state where you raise funds.
• Obtain licenses and/or permits. Federal, state, and local licenses or permits may be required.
• Hold an organizational meeting of the incorporators and take minutes of that meeting. At that time, you will ratify corporate bylaws, adopt a shareholders agreement, issue stock certificates and complete a stock ledger, elect directors and officers, and anything else you may want to include. Consider purchasing our corporate kit that stores your documents and contains your corporate seal and stock certificates.
• Maintaining the corporation includes ongoing requirements such as annual meetings with minutes, special meetings to make important business decisions, maintaining a registered office, amending your articles of incorporation as needed, and more. For more information on business compliance action items, please consult your Harbor Compliance representative.