Business Law in Shelby County
Business Formation and Entity Selection in Columbiana, Alabama
The first legal decision a business makes is what kind of business it is going to be. That choice decides who is liable for what, how the owners get paid, how the company is taxed, and how hard it is to bring in a partner or sell later. Carden Legal Services helps owners in Columbiana, Shelby County, and Central Alabama choose the right Alabama entity and then forms it properly, with the governing documents that make the choice hold up. Grady Carden does the work himself and explains the fee before anything starts.
Three kinds of owners who call about entity selection
You are starting out and getting conflicting advice.
Your brother-in-law says LLC. A video says S corp. Your accountant said something about a C corp. You want one clear answer for your situation and the paperwork done right behind it.
You are adding owners, investors, or employees who will get a stake.
The entity that worked for one person may not work for three. The question is whether to restructure now, before the money and the expectations get complicated.
You are a licensed professional.
Physicians, dentists, accountants, engineers, architects, and other licensed practitioners have entity rules the rest of the business world does not. Section 7 below is for you.
Your options under Alabama law
Here is the short version. The consultation is where we apply it to your business.
| Entity | What it is | Owner liability | How it is taxed | When it fits |
|---|---|---|---|---|
| Sole proprietorship | You, doing business. No filing creates it. | You are personally liable for everything the business does. | On your personal return. | Very low-risk side work with no employees and nothing to lose. Rarely the right long-term answer. |
| General partnership | Two or more people in business together without forming an entity. | Each partner is personally liable for partnership debts, including a partner's mistakes. | Passes through to the partners. | Almost never recommended. If you have a partner, form an entity. |
| Limited liability company (LLC) | An Alabama entity formed by filing a certificate of formation with the Secretary of State. | Members are generally not personally liable for company debts, if the company is kept separate. | Flexible: disregarded, partnership, S corporation, or C corporation, depending on the election. | The default for most small and closely held Alabama businesses. |
| Corporation | An Alabama entity formed by filing with the Secretary of State, owned by shareholders, run by directors and officers. | Shareholders are generally not personally liable. | C corporation by default; S corporation by election if eligible. | Outside investors, stock-based compensation, certain tax plans, or when the business will be sold to a buyer who wants stock. |
| Professional corporation or professional LLC | A corporation or LLC that renders licensed professional services. | Shields owners from business debts but not from their own malpractice. | Same options as the underlying entity. | Required or expected for many licensed professions in Alabama. |
An S corporation is not on this list because it is not an entity. It is a tax election that an LLC or a corporation can make with the IRS. We coordinate that decision with your CPA; the legal structure has to support whatever the tax plan is.
WHAT IS INCLUDED
What business formation includes at Carden Legal Services
The filing is one item on this list. The rest is what makes the filing worth anything.
01
An entity recommendation you can explain
We ask about owners, money, employees, risk, and the exit you have in mind, and we tell you which entity fits and why in plain language.
02
Name reservation and state filing
Alabama requires the name to be reserved before the formation document is filed. We handle both with the Secretary of State.
03
Governing documents
An operating agreement for an LLC. Bylaws, organizational resolutions, and a share ledger for a corporation. Drafted for your company, not filled in from a template.
04
Organizational records
The record book a bank, a lender, a buyer, or a court will ask to see. Set up correctly on day one so it is never a scramble.
05
Coordination with your CPA
We obtain the EIN and make sure the legal documents match the tax classification your accountant recommends. We do not give tax advice; we make sure the two plans agree.
06
Your first-year checklist
What is due to the Alabama Department of Revenue, how to open the account, how to sign contracts so the company is the party and not you.
Forming an Alabama corporation
Corporations are the right answer less often than people assume, but when they are right, the details matter.
Reserve the name, then file with the Secretary of State. The state filing fee is $200, the same as an LLC. The corporation exists when the Secretary of State records the certificate
Directors, officers, and shares. A corporation needs at least one director and the officers the bylaws call for. Authorized shares, par value, and any classes of stock are set in the formation document and are hard to change later without a filing.
Bylaws and organizational resolutions. These are not filed with the state, but they are what make the corporation function: how directors are elected, how officers are appointed, how shares are issued and transferred.
Share records. A ledger of who owns what, kept current with every issuance or transfer.
No annual report to the Secretary of State. Alabama repealed the corporate annual report effective October 1, 2024. The ongoing state filing is the Business Privilege Tax return with the Alabama Department of Revenue, plus the corporation's income tax return.
S corporation election, if it fits. Made with the IRS, on your CPA's recommendation, within the IRS deadline for the tax year you want it to start.
Governance documents that keep the entity real
An entity protects its owners only if it is operated as a separate thing. For a corporation that means bylaws, organizational and annual resolutions, written consents for major decisions, meeting records, and a current share ledger. For an LLC it means an operating agreement and resolutions for the decisions that matter: taking on debt, admitting a member, buying real estate, signing a lease.
Most small companies form, get an EIN, open a bank account, and never create another corporate record. Years later a bank, a buyer's attorney, or a plaintiff's attorney asks for the record book and there is nothing in it. We set up the records at formation and give you a short annual checklist so they stay current. For companies that already exist and have no records, we can reconstruct what should have been there and bring the entity into order.
Professional entities
Licensed professionals have their own rules
Alabama allows physicians, dentists, accountants, engineers, architects, attorneys, and other licensed practitioners to practice through a professional corporation or a professional limited liability company. Ownership is generally limited to licensed persons, the licensing board may have its own requirements, and the entity shields you from the business's debts but not from your own malpractice. Forming a standard LLC when a professional entity is required can create a problem with the board and with the entity's standing.
Who this usually applies to
Physicians, dentists, and other health care practices
CPAs and accounting firms
Engineers and architects
Attorneys
Other licensed professions where the board regulates practice entities
Fees and how it works
Fees explained before work begins Business formation at Carden Legal Services is generally handled on a flat-fee basis. The fee depends on the entity and the documents it needs, and you will know it before any drafting starts. State filing fees are separate and are passed through at cost. Complex ownership structures may require a different arrangement, and that is discussed up front.
What to expect
Schedule a consultation. By Google Meet, by phone, or in person by appointment in Columbiana, Alabaster, or Calera. Tell us what the business does and who owns it.
Get a recommendation and a fee. You leave knowing whether an LLC is the right entity, how it should be structured, and what it will cost.
We file and draft. Name reservation, certificate of formation, operating agreement, and organizational records.
Sign and launch. You review everything, sign, and leave with a record book and a first-year checklist.
Frequently asked questions
Which business entity should I choose in Alabama?
For most small and closely held Alabama businesses, a limited liability company is the starting point because it is flexible, simple to maintain, and can be taxed several different ways. A corporation makes sense in specific situations, such as outside investors, certain employee ownership plans, or when your accountant recommends it for tax reasons. Licensed professionals may need a professional entity. The right answer depends on who owns the business, how it makes money, and where you want it to be in ten years.
Is an S corporation a type of business entity?
No. An S corporation is a federal tax election, not a kind of company. Both an LLC and a corporation can elect to be taxed as an S corporation by filing with the IRS. Whether that election makes sense is a question for your CPA, and the legal documents should be drafted to support whichever choice you make.
Do licensed professionals in Alabama have to form a special kind of company?
Often, yes. Alabama allows licensed professionals such as physicians, dentists, accountants, engineers, and attorneys to practice through a professional corporation or a professional limited liability company. Ownership is generally limited to licensed persons, the entity does not shield a professional from liability for his or her own malpractice, and the licensing board may have its own rules. The entity has to be set up with those requirements in mind.
Do Alabama corporations still file an annual report with the Secretary of State?
No. Alabama repealed the Secretary of State annual report requirement for corporations effective October 1, 2024. The ongoing state filing for corporations and LLCs is the Business Privilege Tax return with the Alabama Department of Revenue, along with the entity's income tax filings.
Do I need bylaws and resolutions if I am the only shareholder?
Yes. A corporation is expected to act like a corporation regardless of how many owners it has. Bylaws, organizational resolutions, a share ledger, and annual written consents are what show that the company is separate from you. Banks and buyers will ask for them, and they matter if the corporate shield is ever challenged.
Can I change my entity type later if I choose wrong?
Usually, yes. Alabama law allows an entity to convert from one form to another, and tax elections can often be changed. But a conversion costs more than forming correctly the first time, and some changes have tax consequences that cannot be undone. Spending an hour on entity selection up front is the cheaper path.
Form it once. Form it right.
Call (205) 201-1297
or schedule a consultation. Tell us what the business does, who owns it, and where you want it to be in five years. We will tell you which entity fits and what it takes to set it up.
No representation is made that the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers.
Carden Legal Services, LLC serves clients in the following Alabama locations: Birmingham, Alabaster, Helena, Pelham, Jefferson County, Shelby County, Chilton County, Montgomery, Prattville, Millbrook, Wetumpka, Tuskegee, Selma, Troy, Greenville, Autauga County, Montgomery County, Elmore County, Tri-County Region, River Region, Central Alabama, Alabama statewide.