Home » Alabama LLC » Alabama Annual Report + Business Privilege Tax

Last updated June 29, 2021

Alabama LLC Annual Report
& Business Privilege Tax

How to form an LLC in Alabama
This Quick Start Guide is a brief overview of how to form an LLC in Alabama.

Detailed Lessons:

 

Alabama LLC Costs:
Alabama LLC filing fee: $200
Alabama LLC annual fee: $100 minimum

Need to save time?
Hire a professional to form your LLC in Alabama:
Northwest ($39 + state fee) or LegalZoom ($149 + state fee)

★ Check out Northwest vs LegalZoom

Overview

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 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”.

Why do I need to pay the Alabama Business Privilege Tax?

The Business Privilege Tax 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 off of your federal taxable income. 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: $100 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 $100 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.

Note: The LLC needs to have their EIN from the IRS before filing any returns with the Department of Revenue.

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 Registered Agent to confirm, but we have their Federal Tax ID Number listed as 26-4375596.

Business Privilege Tax Return (Form PPT)

  • Amount due: $100 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 by April 15th.

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 2018, your first filing of the Business Privilege Tax Return (Form PPT) will be due by April 15th of 2019.

A minimum tax of $100 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.

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 LLCs are not required to attach an Annual Report (only C-Corp, LLCs taxed as C-Corp, and LLCs taxed as S-Corp).

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)
(“Alabama Business Privilege Tax Initial Privilege Tax Return“)

Form PPT
(“Alabama Business Privilege Tax Return and Annual Report for Pass Through Entities Only“)

Form BPT-V
(“Business Privilege Payment Voucher“)

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 a tax professional/CPA 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 can also use our favorite service, Thumbtack, or search on Yelp.

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

Matt Horwitz
Founder & Educator, LLC University®
Matt Horwitz has been the leading expert on LLC education for the past decade. He founded LLC University in 2010 after realizing people needed simple and actionable instructions to start an LLC that other companies weren't offering. He's cited by Entrepreneur Magazine, Yahoo Finance, and the US Chamber of Commerce, and was featured by CNBC and InventRight.
 
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.

22 comments on “Alabama Annual Report + Business Privilege Tax”

Disclaimer: Nothing on this page shall be interpreted as legal or tax advice. Rules and regulations vary by location. They also change over time and are specific to your situation. Furthermore, this comment section is provided so people can share their thoughts and experience. Please consult a licensed professional if you have legal or tax questions.

  1. 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 :-)

  2. Great tutor for filling out operating agreement, best Ive seen…Thanks

  3. 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 :)

  4. 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!

  5. 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!

    • 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.

  6. 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.

  7. 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.

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