Forming Your Business
Legal Representation for Business Owners in Alabama and Florida
Choosing the right form of business can be an important aspect of helping your enterprise grow in the Gulf Coast. Different tax consequences and rules arise depending on whether you choose to organize your business as a sole proprietorship, a limited liability company, a nonprofit, or a type of corporation. At Milam & Milam, we view ourselves as small business owners serving clients in Alabama and Florida. We are familiar with all aspects of business formation and can advise you on how to organize for the best results, as well as offer you advice and representation related to running your enterprise.
Steps to Form a Corporation in Alabama
Different benefits attach to different business formations in the Southeastern United States, such as in Alabama. It is common for small businesses to want to organize as a sole proprietorship because it is simple to set up and requires very little paperwork. However, you are personally responsible for business debts. If you want to limit your liability in any way or obtain tax benefits, it may be wiser to organize as a limited liability company (LLC) or a corporation.
Alabama’s New Business and Nonprofit Entities Code covers these entities. LLCs are covered by the Alabama Limited Liability Company Act. There are more tax deductions available to LLCs than corporations, and an LLC can be a "pass through entity" for which the owners report losses and profits on their personal tax returns. If you want more personal protections against lawsuits, you may want to organize as a corporation under the Alabama Business Corporation Act.
You will need to complete several steps to organize properly as a corporation in Alabama. These steps include choosing a corporate name, preparing and filing a certificate of formation, appointing a registered agent, preparing bylaws, setting up a corporate records book, appointing initial corporate directors, holding your first Board of Directors meeting, and issuing stock. When choosing a corporate name, you will want to check the Alabama Secretary of State's records to make sure your name is not the same as another corporation or misleading. The official name must include "corporation" or "incorporated."
You can create the corporation by filing a certificate of formation with the Office of the Judge of Probate in the county where the business' initial registered office is located. This certificate will include the name of the corporation, its purpose, the name and address of its agent for service of process, the number of shares that the corporation will issue, and the names and addresses of incorporators and directors.
It can be especially important to work with an attorney to prepare your corporate bylaws. This is the internal document that outlines the basic ground rules for the corporation's operations. While you are not legally required to have these bylaws, you should adopt bylaws because they help to show the IRS, banks, and creditors that you have a legitimate business. This can prove important down the line in qualifying for loans or dealing with an audit.
If you have a corporation, you may want to convert to a different business formation. In Alabama, you do not need to separately form an LLC before the conversion. You can convert your business from a corporation to an LLC under Section 10A-1-8.01 of the Code of Alabama. This procedure will automatically transfer the corporation's assets and liabilities to the LLC. Unlike the requirements of other states, in Alabama you shouldn't dissolve your corporation before the conversion.
Attorneys Serving Business Owners on the Gulf Coast
Milam & Milam can help you through the process of corporation formation on the Gulf Coast or guide you in converting your enterprise to other business forms. We can also handle any contractual disputes that arise during the life of your business. We have 25 combined years of experience, using cutting-edge technology, clear communication, and ethical strategies. Our firm is located in Fairhope, Alabama on the eastern shore of Mobile Bay. Our clients come from Panama City, Birmingham, Montgomery, and other communities in Alabama and Florida. Contact us by calling 251-928-0191 or set up a meeting through our online form.