In Alabama, annual reporting is especially essential. The state combines its annual report with its business privilege tax filing, meaning that business owners must complete both simultaneously.
If you own a business in Alabama, it’s imperative to complete your annual report and business privilege tax return accurately and on time. Submitting a late return could be a costly mistake: The penalty can amount to 10% of your total tax burden, plus an additional 1% for each month your payment is late.
At ZenBusiness, we’re here to take the stress out of annual reports for Alabama business owners. In this guide, we’ll break down the practical details of the Alabama annual report and business privilege tax, allowing you to understand your obligations. We’ll also explain how different business entities are required to file and answer common questions about Alabama’s business reporting system.
As we describe various aspects of this process, we’ll also explain how ZenBusiness can assist you in fulfilling your administrative duties and tax obligations. Our annual report service can take the hassle of filing off your plate, while our worry-free compliance service can help with every filing deadline.
After learning a bit more about Alabama’s regulations, these services might seem especially appealing. Here’s everything you need to know about annual reports in Alabama.
What is an Alabama annual report?
All business entities in Alabama must file annual reports and business privilege tax returns. An annual report provides basic details about a business and its operations, while the business privilege tax charges businesses for operating in Alabama.
While annual reports and taxation are dealt with separately in many states, Alabama elects to combine them (at least with this particular tax; your business will likely owe taxes beyond the business privilege tax), meaning business owners file both simultaneously. But the filing process differs somewhat depending on the type of business you operate.
The simplest way to understand annual reports and business privilege tax returns in Alabama is to familiarize yourself with the following forms. Once you do, you’ll know which forms you’ll need to submit to the Alabama Department of Revenue in any given year.
- Alabama Business Privilege Tax Return and Annual Report for Corporations (form CPT): This form must be completed by C corporations and limited liability entities taxed as corporations. The form requires detailed information about a corporation’s net worth and earnings during the preceding tax period and a final calculation of the corporation’s business privilege tax burden. This form can be quite complicated, so we recommend reading the associated instructions and seeking the assistance of a qualified accounting professional.
- Alabama Business Privilege Tax Return and Annual Report for Pass-Through Entities (form PPT): This form is the equivalent to the CPT but intended for entities not taxed as corporations. These entities include S corporations, limited liability entities, and “disregarded entities” (such as a single-member Alabama LLC). This form is also somewhat complicated, so we recommend reviewing its instructions carefully and consulting a qualified accounting professional to complete it properly.
- Alabama Business Privilege Tax Initial Privilege Tax Return (form BPT-IN): This form is only required for business entities that have been recently formed and must be submitted within two and a half months of the formation of your business. This form is intended to capture any business privilege tax owed by all new businesses, including corporations and “pass-through entities.” Once again, a qualified accounting professional can be quite helpful in completing this form.
- Alabama Secretary of State Corporation Annual Report (schedule AL-CAR): This form is only required for C corporations and S corporations (even limited liability entities taxed as corporations do not need to submit this form). It requests basic contact information related to the business and its leaders. Corporations must attach this form to their CPT or PPT forms and submit them together.
Due dates for submission of these forms also differ for various Alabama business entities. However, because these forms relate to the business privilege tax, they are due at the same time that tax is.
Here are the due dates for submission of Business Privilege Tax Return and Annual Report forms in Alabama for different businesses. These deadlines refer to filing the prior year’s return (e.g., filing a 2019 return in 2020):
- C corporations: Due the same date as the corresponding federal income tax return (April 15 or Sept. 15, depending on chosen fiscal year calendar)
- S corporations: March 15
- Limited liability entities: March 15
- Disregarded entities: Whenever the owner is required to file their federal income tax return
As you can likely tell from the information that we’ve shared, filing your annual report in Alabama can be confusing and time-consuming. If you’d rather spend that time building your business, ZenBusiness would be happy to help. Our team can assist you in filing your annual report on an ongoing basis.
What information do I need to file an annual report in Alabama?
To complete the forms discussed, you’ll need to supply the information they require. Some of these items are basic, intended for records and contact purposes.
For example, regardless of the type of business entity you operate, you’ll need to provide your business’s mailing address, a contact person, and their email address and phone number.
You’ll also need to provide certain administrative information, such as your business’s “BPT account number,” which you received after registering your business with the Department of Revenue online. If you need any clarification regarding these items, use this Department of Revenue annual report service forms search website to find detailed instructions for completing each form.
However, the most important information you’ll provide will concern how much your business owes in business privilege tax. Once again, we advise hiring a qualified tax professional to complete these calculations for your business.
While it is possible to compute your tax burden using the Department of Revenue’s instructions, the necessary calculations can be quite convoluted.
Once you complete your required forms, you’ll need to gather some related documents to substantiate your filing. Here’s what Alabama requires you to submit with your Business Privilege Tax Return and Annual Report forms:
- A copy of pages 1 to 5 of the business’s federal tax return. If you do not submit a federal tax return, you’ll need to provide a balance sheet and income statement instead.
- A copy of the balance sheet used to compute the taxpayer’s net worth for business privilege tax purposes. You can use this form as your balance sheet.
- Documentation supporting any exclusion of deductions claimed on that balance sheet to calculate net worth.
- If you do business in and outside Alabama, you’ll need a copy of your business’s income apportionment schedule. If you have a C corporation, you’ll use Form 20C; S corporations use Form 20S; and for Limited Liability Entities you’ll use Form 65.
Recall that C corporations and S corporations must also fill out the AL-CAR form and attach it to their return.
How do I file an annual report for my business in Alabama?
Unfortunately, Alabama’s process for submitting your Business Privilege Tax Return and Annual Report forms and associated documentation is thoroughly old-school. You’ll need to send in all the documentation by mail to the Alabama Department of Revenue.
Importantly, the address you send your filing to will depend on whether you include a check for the amount of business privilege tax you owe. You can choose to include this payment with your forms or submit the forms and pay separately using the Department of Revenue’s online payment system.
If you do choose to include payment, provide the following with your filing:
- This voucher form with details of your payment
- A check written out to the Alabama Department of Revenue with your BPT account number in the note section
You can send these items and all your forms to the following address:
Alabama Department of Revenue
Business Privilege Tax Section
P.O. Box 327320
Montgomery, AL 36132-7320
If you choose to pay your tax online instead of mailing your payment, send your forms to the following address:
Alabama Department of Revenue
Business Privilege Tax Section
P.O. Box 327431
Montgomery, AL 36132-7431
When you are ready to make your business privilege tax payment, you’ll need to log on to the Department of Revenue’s My Alabama Taxes (MAT) portal. If you do not have an account, you may need to make one before proceeding.
The MAT website offers two options for submitting payments by credit card, the Official Payments Corporation and Value Payment Systems. Value Payment Systems does not charge a convenience fee to process your payment, but enrolling in this system may take slightly longer.
We hope this guide helps clarify your responsibilities as an Alabama business owner when it comes to filing your Business Privilege Tax Return and Annual Report. While the particular details may seem complicated, the information we’ve shared should help you proceed with confidence.
Of course, the best way to gain confidence is by having an expert team in your corner. ZenBusiness is your ally for all Alabama business filings, with the resources and knowledge to keep your business compliant.
Our annual report service is a cost-effective way to skip the stress and frustration of filling out forms. Our worry-free compliance offering delivers even better value, with ongoing support for your business filing obligations. With professionals experienced in Alabama law, we’re prepared to deliver the practical guidance you need.
You didn’t start your business to get bogged down in paperwork. Let us take care of it so that you can focus on your business’s future. To learn how we can take the red tape off your plate, reach out to our team today.
Filing Your Annual Report FAQs
How much does it cost to file an annual report in Alabama?
There is a $10 filing fee associated with the Alabama Business Privilege Tax Return and Annual Report (form CPT for corporations and form PPT for pass-through entities). However, you will need to pay your calculated business privilege tax burden. You can submit payment with your return or send payment separately at some later date (see the bottom of page 1 of form CPT for further instructions).
As mentioned, C corporations and S corporations must also file an Alabama Secretary of State Corporation Annual Report (form AL-CAR) and attach this to their Alabama Business Privilege Tax Return and Annual Report. The fee for filing this additional report is $10, which is added to the amount of business privilege tax you owe (see line 6 of the CPT form). LLCs do not need to submit this additional form or pay the $10 fee, even if they elect to be taxed as corporations.
What happens if I file my annual report late in Alabama?
If you miss the deadline for filing your Business Privilege Tax Return and Annual Report, you will be assessed a financial penalty. The late filing fee amounts to 10% of the business privilege tax you owe or $50, whichever is greater.
Additionally, you should note that Alabama will charge you a separate fee if you are late paying your business privilege tax. This fee amounts to 1% of the tax you owe for each month you go past the deadline, not to exceed 25%.
Of course, with ZenBusiness’s worry-free compliance service, you’ll never have to stress about filing or paying late. We’ll stay on top of all state deadlines, ensuring that you’re never hit with a surprising penalty.
What happens if I don’t file my annual report at all in Alabama?
If you fail to file your Business Privilege Tax Return and Annual Report form, the Department of Revenue will send you a notice of delinquency. During the period in which you don’t file, you will continue to incur additional penalties. Once again, ZenBusiness’s worry-free compliance service is an excellent way to prevent these unfortunate outcomes.
Continued failure to pay your business privilege tax could result in more serious sanctions, including the dissolution of your business. If you are unable to pay the amount of business privilege tax you owe, we recommend seeking the assistance of a trained tax professional.
Can I use the Alabama annual report to update information about my business?
The Alabama Business Privilege Tax Return and Annual Report (form CPT for corporations and form PPT for pass-through entities) does request items of information about your business that may change periodically. For example, if you change your business’s mailing address, you can include the new one on this form.
C corporations and S corporations must provide additional information in the Alabama Secretary of State Corporation Annual Report (form AL-CAR). This form is also an opportunity to update certain details concerning your business.
However, you cannot use these forms to amend the information provided in your business formation documents. For example, to amend your registered agent, you’ll need to complete and submit an associated form to the Alabama Secretary of State.
If you need to update your business formation documents, ZenBusiness can easily implement any change you need. Our team will handle the amendment paperwork and filing process on your behalf, saving you the time and trouble.
How are Alabama annual reports different from annual reports that public corporations provide to shareholders and the SEC?
Perhaps you’ve heard the term “annual report” in a slightly different business context. Publicly traded companies are required to publish annual reports to their shareholders, detailing the state of their business. These companies must also share an expanded version of this report with the Securities and Exchange Commission (SEC), the federal agency responsible for regulating financial markets.
Thankfully, most small business owners don’t need to concern themselves with this type of annual report. When your business blooms into a publicly traded company, you can worry about this government compliance.