Alabama Certificate of Authority

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If your company was not incorporated in Alabama, but you intend to do business there, you need to apply for an Alabama Certificate of Authority.

Acquiring Alabama Foreign Qualification allows a company formed in Delaware (or any other state) to legally transact business in Alabama.

Please note: information on this page is accurate to the best of our knowledge. However, requirements and costs can be changed by states at any time and Harvard Business Services cannot guarantee the accuracy of this information.

How to Get an Alabama Certificate of Authority:

Unlike many states, Alabama requires foreign entities to reserve their name prior to applying for the Certificate of Authority. This is to confirm that the company name is actually available before the application is processed. The fee for the name reservation is $28.

You must appoint and maintain an Alabama Registered Agent at all times and include your agent’s information on the application for your Alabama Certificate of Authority. We can provide this service for just $99 per year.

Next, an Alabama Foreign Qualification application must be submitted along with a fee of $150 (or $250 for expedited processing) for both LLCs and corporations. Foreign LLCs and corporations are typically not required to provide any documentation from the home state to Alabama during this process.

In addition, we typically see additional fees of $10-$15 applied to the total by the State of Alabama for processing and additional copies of your Alabama Certificate of Authority application.

Harvard Business Services can assist with your application so you don’t have to deal with the Alabama Secretary of State directly. We do charge our own fee for this service, in addition to the state fees. The exact fee can vary based upon whether your company is already filed and whether you need us to obtain additional documents to meet the state’s requirements. Contact us for an exact quote.

How Do I Know if I Need an Alabama Certificate of Authority?

If you plan to do business in the state of Alabama, but your company was not formed in Alabama, you will often need to obtain Alabama Foreign Qualification. Typically, “doing business” is defined by activities such as maintaining a physical office or having employees in the state.
 
Alabama statutes provide the following language:
 
General Rule. A foreign business entity owning property located in Alabama is considered doing business in the state of Alabama, and is considered to be subject to the Alabama business privilege tax. 

In addition to the general rule … a foreign business entity is considered to be doing business in the state of Alabama for business privilege tax purposes, if in the state of Alabama the foreign business entity:
  1. conducts a trade or business;
  2. engages in commerce of any kind;
  3. renders professional services; 
  4. conducts the business of insurance subject to the regulatory authority of the Alabama Insurance Commissioner; or,
  5. conducts the business of a financial institution
This list is not exhaustive. For additional detail and information visit review Alabama’s Business Privilege Tax Filing Statute.
 
Keep in mind that even if an Alabama Certificate of Authority is not required for a specific activity, a bank, vendor or another party can still require one in order to establish a relationship.

Alabama Annual Requirements

All business entities, foreign or domestic to Alabama, are required to file an Alabama Business Privilege Tax return. This is comparable to the fee known as the Franchise Tax is Delaware and some other states.

After obtaining an Alabama Certificate of Authority, all foreign entities in Alabama must file an “initial” return within the first two or three months (depending on the company type and fiscal calendar). The company will also file an annual return in all subsequent years.

The calculations for these fees can be confusing and are based on the company’s capital, among other factors. Additional information can be found here.

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