Alabama Code Section 10A-1-7.01

Alabama Code Section 10A-1-7.01 provides, in relevant part, that to transact business in the state, a foreign entity must register as a foreign entity if, formed in Alabama, the entity would have to register under the Alabama Business and Nonprofit Entities Code. Effectively, if you are a corporation, llc, or partnership, you are required to register as a foreign entity to transact business in Alabama. According to the Alabama legislature, “Transacting business” means conducting a business, activity, not-for-profit activity, and any other activity, whether or not for profit. A consideration for sole proprietors: the Alabama statutes, while not specifically listing sole props as being captured by this requirement, seem to capture them with the definition of “transacting business”.

Economic Threshold

It appears that Alabama has no specific economic threshold to reach before registration as a foreign entity is required. That said, and for purposes of determining sales tax nexus, the Alabama Department of Revenue has provided that “a retail vendor has ‘nexus’ in Alabama if they have a physical presence in Alabama, such as a retail store, warehouse, inventory, or regular presence of traveling salespeople or agents, or has established remote entity nexus.”

Wayfair Nexus

$250,000 in annual sales directly to the consumer. Wholesale sales for resale are not included in this calculation.


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