State guide · Alabama
Starting a Medical Practice in Alabama
What physicians need to know about Alabama's regulatory environment, entity requirements, and practice-specific rules.
Entity required
Professional Corporation or Professional LLC
LLC permitted
No
CPOM enforcement
Moderate
Top income tax
Verify — top bracket approximately 5.0%
Min. franchise tax
Verify — Alabama Business Privilege Tax minimum eliminated for most filers (2024)
Med board registration
Not required
The information on this page is provided for general reference only and may not reflect recent regulatory or legislative changes. Entity formation requirements, tax rates, and CPOM rules vary by state and change frequently. Always verify requirements with your state's official agencies, a qualified healthcare attorney, or a CPA with medical practice experience before making business formation decisions. Nothing on this page constitutes legal or financial advice.
Entity Requirements
Alabama physicians may form a Professional Corporation under the Alabama Professional Corporation Act or a Professional LLC. All shareholders or members must be licensed Alabama physicians.
Filing is with the Alabama Secretary of State, Business Services Division.
- •Form a Professional Corporation or Professional LLC
- •All shareholders/members must be licensed Alabama physicians
- •File Certificate of Formation with the Alabama Secretary of State
- •File Initial Business Privilege Tax Return within 2.5 months of formation
- •Obtain a name reservation before filing if applicable
Corporate Practice of Medicine
Alabama recognizes a moderate Corporate Practice of Medicine doctrine. Lay corporations cannot employ physicians for the practice of medicine, but hospitals and certain healthcare entities have statutory exceptions. Fee-splitting with non-licensed persons is prohibited.
MSO arrangements are common and generally permissible if structured to avoid clinical control by non-physicians.
Tax Considerations
Alabama imposes a graduated personal income tax with a top bracket near 5%. The Alabama Business Privilege Tax was significantly reformed for 2024 — the $100 minimum was eliminated for most small businesses. Verify current rules with your CPA.
- •Top personal income tax: Verify — approximately 5.0%
- •Business Privilege Tax — minimum eliminated for many small filers (Verify current rules)
- •No general franchise tax beyond the Business Privilege Tax
- •Local occupational taxes apply in some Alabama cities
Alabama State Board of Medical Examiners
Alabama does not require general entity registration with the Board of Medical Examiners. Individual physicians must hold an active Alabama license.
- •No general entity registration with the Board of Medical Examiners required
- •All practicing physicians must hold an active Alabama medical license
- •Pain management clinics have separate registration requirements
Employment Law Considerations
Alabama is a generally employer-friendly state. At-will employment is the default, there is no state-mandated paid sick leave, and non-compete agreements are enforceable for physicians under specific statutory rules (Ala. Code §8-1-190 et seq.).
- •At-will employment is the default
- •No state-mandated paid sick leave
- •Physician non-competes enforceable if reasonable
- •Alabama minimum wage at federal $7.25/hour
- •Workers' compensation required for businesses with 5+ employees
Official resources
Bookmark these official agency portals for Alabama entity formation, tax registration, and medical board information.
Looking for Alabama licensing and credentialing information?
State medical license requirements, controlled-substance registration, and Medicaid enrollment specifics for Alabama.
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