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What are the Alabama Annual Report and Alabama Business Privilege Tax?
Every Alabama LLC that does business in Alabama must file Annual Reports (called a Business Privilege Tax Return and Annual Report) each year.
Unlike most other states where the Annual Report is filed with the Secretary of State, in Alabama, the Annual Report is filed with the Department of Revenue.
You have two returns to file. The first is a one-time filing and the second one is an ongoing filing due every year.
The first one-time filing is known as the “Initial Business Privilege Tax”.
The ongoing filing is known as the “Business Privilege Tax Return and Annual Report”.
Both of these annual obligations are taxes paid to the Department of Revenue. There is no annual filing fee paid to the Secretary of State in Alabama.
Before you continue: You must have an EIN Number for an Alabama LLC from the IRS before you can file any returns with the Alabama Department of Revenue.
Why do I need to pay the Alabama Business Privilege Tax?
The Business Privilege Tax and Annual Report is a legal requirement for operating a business in the state of Alabama. Think of it as the “privilege” to be doing business in the state.
In short, there’s no way around it. You need to file and pay this tax every year in order to keep your LLC in good standing.
How is the rate for the Business Privilege Tax determined?
The Business Privilege Tax is based on your business’s federal tax return. You’ll multiply your federal taxable income by your “apportionment factor”.
You’ll then take this new number and use it to reference the rate schedule to determine the total taxes due. Your federal taxable income is the amount passed through to the LLC member(s).
Initial Business Privilege Tax Return (Form BPT-IN)
- Amount due: $50 minimum
- Due by: 2.5 months after LLC formation
- Name: Form BPT-IN
- Ongoing: No, just filed once
All new LLCs must file an Initial Business Privilege Tax Return (and pay the business privilege tax) within 2.5 months of their formation. The formation date is the date next to the signature on your Certificate of Formation.
A minimum tax of $50 is due, but you may owe more depending on your federal taxable income and your net worth. We recommend consulting with a tax professional for help.
Before 2023, the minimum tax used to be $100. It was reduced to $50 for the 2023 tax year. That means for any amount owed of $100 or less, you pay $50.
If your Initial Business Privilege Tax Return is due in 2023: if you owe $20 you’ll pay $50. If you owe $70, you’ll pay $50. But if you owe $101, you’ll pay $101.
If Northwest Registered Agent is your LLC’s Registered Agent:
The Initial Business Privilege Tax Return requires your Registered Agent’s Federal Tax ID Number. Please call Northwest to confirm, but we have their Federal Tax ID Number listed as 26-4375596.
Business Privilege Tax Return (Form PPT)
- Amount due: $50 minimum
- Due by: April 15th (first filing due the year after your LLC is formed)
- Name: Form PPT
- Ongoing: Yes, due by April 15th every year
- Attachments: Federal Tax Return, Schedule BPT-NWI, Form BPT-V
All LLCs must file the Business Privilege Tax Return (and pay the business privilege tax) each year. The annual report deadline is April 15th. That means the Return must be filed and the tax paid by April 15th each year.
Your first filing of the Business Privilege Tax Return (Form PPT) is due the year after your LLC is formed.
For example, if your LLC was formed (approved) on July 20th of 2024, your first filing of the Business Privilege Tax Return (Form PPT) will be due by April 15th of 2025.
A minimum tax of $50 is due, but you may owe more depending on your federal taxable income and your net worth. We recommend consulting with a tax professional for help.
Alabama House Bill 391 was signed into law in 2022. This bill reduces the minimum fee from $100 to $50 for the 2023 tax year. That means in 2023, if you owe $100 or less, you’ll pay $50.
For example, it doesn’t matter whether you owe $100, or $20, or $70; either way, you’ll pay $50. If you owe more than $100, you’ll pay the actual amount due.
Note: There are no “filing fees” for Alabama Annual Reports. You only pay the amount owed for the Business Privilege Tax.
The Name of Form PPT is Confusing
At the top of Form PPT, you’ll notice the title “Alabama Business Privilege Tax Return and Annual Report.”
This name is a little confusing as most Alabama LLCs are not required to attach a separate Annual Report form. That requirement only applies to an Alabama Corporation and LLCs taxed as C-Corporations and S-Corporations (learn more in LLCs taxed as S-Corporations).
Although LLCs do not need to attach an Annual Report, you will still be filing your Business Privilege Tax on the form titled “Alabama Business Privilege Tax Return and Annual Report”.
- Related article: How are LLCs taxed?
Download Business Privilege Tax Forms
Visit the Alabama Department of Revenue: Forms page.
In the upper right side of the table you’ll see a “Search” box. Enter the bold terms below and make sure to select the proper tax year (which you’ll see in the far right column):
- Form BPT-IN (Print Only)
- This is the Alabama Business Privilege Tax Initial Privilege Tax Return
- Form PPT
- This is the Alabama Business Privilege Tax Return and Annual Report for Pass Through Entities Only
- Form BPT-V
- This is the Business Privilege Payment Voucher
Note: The Form PPT is different for limited liability entities (like LLCs) and for other business entities (like corporations), so make sure your form says “for Pass Through Entities” on it.
Alabama’s Terms: “Limited Liability Entity” vs “Disregarded Entity”
These terms are just “tax classifications” used by the Alabama Department of Revenue.
(In the eyes of the law you are still a Limited Liability Company.)
“Disregarded Entity” = Single-Member LLC
“Limited Liability Entity” = Multi-Member LLC
What other Alabama taxes are due?
Additional taxes will be due depending on your type of business. Taxes such as Income Tax, Franchise Tax, Corporate Tax, Sales and Use Tax, and more.
You may also need to file more taxes if your business has employees.
For more information, please visit the Alabama Department of Revenue.
Calculating your Alabama LLC’s taxes can be quite confusing and if done improperly can negatively affect your business.
Our Recommendation for filing your Alabama taxes
We recommend hiring an LLC accountant to help, not only with your Alabama taxes, but also with your Federal Taxes.
Hiring a tax professional will not only help keep your LLC in compliance with Alabama, but it will also give you an advisor to go to for other business questions.
A referral from a friend or someone you trust is usually the best way to find someone to do your taxes.
You want to find someone who is a good fit for your company, makes you feel comfortable, and is willing to answer all of your questions. It should be someone you like personally as well as professionally.
It may take time to find the right person, so we recommend talking with at least 2-5 people before making your final decision. We hope you find a great tax professional!
Alabama Department of Revenue Contact Information
334-242-1170 (option 8 for Business Privilege Tax)
Alabama Department of Revenue
Alabama Department of Revenue: Contact Us
Note: Because the Annual Report in Alabama is actually a tax paid to the Department of Revenue, you should contact them directly. The Alabama Secretary of State won’t be able to answer your questions about the Business Privilege Tax.
References
Alabama Legislature: Code of Alabama
Alabama House Bill 391: Reducing minimum tax
Alabama Department of Revenue: Individual & Corporate Tax
Alabama Governor Press Release: Small Business Tax Relief
Alabama Department of Revenue: Forms and Mailing Addresses
Matt holds a Bachelor's Degree in business from Drexel University with a concentration in business law. He performs extensive research and analysis to convert state laws into simple instructions anyone can follow to form their LLC - all for free! Read more about Matt Horwitz and LLC University.
Does the Alabama PPT for a single member LLC have to be mailed? Is there a wat to file it electronically?
Thanks
Hi Bill, yes, it can be paid online via My Alabama Taxes (MAT). You can find more info here: Alabama Department of Revenue: How do I make a Payment for Business Privilege Tax.
Hi Matt,
I created an LLC with my partners in Texas where we live. But we purchased real estate (a mobile home park) in Alabama (closing in a week) Are we still obligated to pay the Initial Business Privilege Tax” and “Business Privilege Tax Return and Annual Report”. Does it matter that my EIN number was given to me by the Secretary of State in Texas?
Hi Maqui, the EIN Number is issued by the IRS, not the Texas Secretary of State. Because your Texas LLC is doing business in Alabama, it should register as a foreign LLC in Alabama. Foreign LLCs in Alabama are subject to the tax return and Annual Report mentioned on this page. Hope that helps.
So regardless of the type of business, you are running you need an LLC in the state you are doing business? For instance, in our case, we are purchasing this Mobile home park in Alabama, planning on selling each mobile home as personal property, and retaining the land. So the business will be maintaining the land and to charge lot fees. Do you need to register a foreign LLC to do that? (sorry if my question is redundant)
Hi Maqui, it’s okay. Foreign LLC registration can be confusing. I’ll back up a bit. An LLC needs to be formed (or registered as a foreign LLC) in the state(s) where it’s transacting business. Yes, in your case, because your Texas LLC is transacting business in Alabama, it should be registered as a Foreign LLC in Alabama.
I failed to submit my form PPT last April. I am in the process of doing it now and need to know how to pay the interest on it since it is late. Any help would be much appreciated!
Hi Wade, you’ll need to speak with the Alabama Department of Revenue and/or an accountant.
How do I mark a PPT form for Alabama as “Final”?
Hi Dee, since there isn’t an ‘final return’ checkbox on the PPT, usually you can just write “FINAL RETURN” at the top. However, we’re not 100% sure on this, so it’s a good idea to call the Department of Revenue to double-check. Hope that helps.
I just opened my own Real Estate office at my house in Alabama. I am the Broker/Owner. I have an agent working under my Brokers License but is not an employee, she is a Realtor and is basically self-employed. Would I be considered a disregarded entity.
Thank you for your Help
Deanna
Hi Deanna, whether or not an LLC is a Disregarded Entity has to do with who owns the LLC, not the employees/independent contractors or the industry. Hope that helps!
I cannot thank you enough for how easy you have made this process of starting a new business. If it had not been for you, I don’t know how I would have made it through. It definitely would have taken MUCH more time. Thank you!
Hey Sonrise! Thank you for such a nice comment. You’re so very welcome :) Best wishes with your business!
Hi Matt, I have a question about business privilege tax. So if I formed my LLC on march of this year, I still have to file both initial business privilege tax return( Form BPT-IN) and business privilege tax return(Form PPT) due April 15? Or just the Form BPT-IN? Thanks again for your help!
Thanks,
George
Hi George, great question. Your first filing of the Business Privilege Tax Return (Form PPT) is due the year after your LLC is formed. So in your case, it’ll be due by 04/15/2019.
Your Initial Business Privilege Tax Return (Form BPT-IN) will be due within 2.5 months of your LLC being formed. So if your LLC was formed on March 15th, 2018 (for example), Form BPT-IN must be filed by May 31st, 2018. Hope that helps. And thanks for your comment. We’ve since updated this lesson to make this more clear :)
Great tutor for filling out operating agreement, best Ive seen…Thanks
Thanks Monte! You’re very welcome :)
You have made my life so much easier. I honestly couldn’t not have done this on my own without your help. Thank you so very, very much.
Hi Dr. Jettie, thank you so much for the lovely comment! So happy to hear we were able to help :-)