It can seem overwhelming to set up a business and all the paperwork you need to complete. The federal, state, and local governments all want to know everything about your business. They want a cut. There are many advantages to starting a business within the state of Alabama. You don’t need to pay fees to get a license for your business, unless you are applying for a special license to sell controlled substances or guns or if your business is directly related to the health of people.
It can be as much fun as trying to get your business licensed properly. We have compiled a guide for obtaining a Alabama business license.
In just five steps, you can get an Alabama business license.
1. Name your company and create it
If you don’t have an Alabama business license, the first step is to create your company. We offer a variety of guides to help you start a business, form an LLC, or, if it’s easier for you, the best LLC service. These details will be needed for your business license application once you have established your business.
- Name of the business
- An EIN (Employer Identification number) (or SSN if you are a sole proprietor).
- Type of business entity (LLC, partnership or corporation)
- An address for your business and a phone number
- A business plan which includes expected revenue and expenses
- Certificate of insurance (COI), for your business insurance policy
2. Get your Alabama business license
Once you have all the information you need, you can apply for the main Alabama business license, also known as a business privilege license. To find the correct forms and applications, visit the website of your county or city. The Alabama Department of Revenue provides a list of all county probate offices .
3. Find out which local licenses might be applicable
For each brick-and mortar store in Alabama, you will need to apply for a license. You can apply for this license via the website of your county or city.
4. You may apply for additional state licenses if you are eligible
A business tax registration is required if your business rents or sells tangible goods. This is usually handled by the Alabama state government. Register for your tax registration at My Alabama Taxes. For certain industries, additional licenses may be necessary. On their website, you can find the Alabama Department of Revenue’s complete list and contact information for the appropriate regulatory agencies.
5. Apply for federal tax treatment and licenses (if necessary).
Make sure you are familiar with the tax policies and licenses of the federal government. Although the federal government doesn’t issue general business licenses it may require you to obtain a permit for certain industries. For example, licensing for food is required for farming, fishing, and sales of alcohol. Transportation-related businesses may also need federal permits.
Are you required to obtain a business license in Alabama?
Nearly all Alabama businesses that are registered or do business in the state must have at least one business privilege license. The so-called “business privilege” license is an umbrella term. It refers to any number state or local licenses that businesses might be required to hold. These Alabama business licenses can be renewed each year from October 1 to September 30.
What is the best time to get a business license in Alabama?
Alabama’s business licenses are required for nearly all of the businesses that operate in any county or city. You will need licenses from the local municipality, federal government, and state to operate your business.
You will require a tax registration if you lease or sell tangible property. Each county in which your business has multiple locations will require a license.
Types of business licenses
Nearly all businesses in Alabama must have at least one license or permit to legally exist. The business privilege and the tax registration are the three main business licenses in Alabama. It can be difficult to determine which license (or combination of licenses) is required to operate in your industry. You may need to apply for federal, local, state, or county business licenses depending on the type of business that you run. To determine if you need additional licenses, consult the Alabama Department of Revenue.
Alabama Local Business Licenses
Alabama’s business privilege license is the most commonly used type of license. It is also known as a general license or a business license. These licenses are the most commonly used and can be applied to almost all kinds of businesses. They will be almost identical in all Alabama cities and counties.
Public-facing businesses that provide food or lodging to customers will need a public license. While some cities and counties don’t require a public license if it is at the state level, others require one. This permits may also require training and/or testing.
Additional local permits
You may need additional permits at the county or city level to start your business in Alabama.
- Land use permits and Zoning.
- Building permits. You will need one if you are building a new or renovating an old building.
- Fire department permits. This is required if your business uses inflammable materials and is open to the public, such as restaurants, daycare providers, hotels, or retirement homes.
These permits are not the exact same as business licenses. However, it is worth doing some research to determine if you need one before you start your business.
Alabama Statewide Licenses
Alabama also regulates businesses at a state level through what is known as a “business tax registry.” This registration is required for any business that plans to sell or lease tangible personal properties that would normally be subject to sales taxes if they were sold at retail. Register for your business tax registration on the My Alabama Taxes website.
For certain professions or businesses, a number of additional Alabama state licenses may also be required. This is a long list so be sure to consult the Alabama Department of Revenue (ADOR), to find out which professions need additional licensing. The ADOR provides a comprehensive list of all the professions that require licensing, as well as the contact information for the appropriate agencies and departments. See the spreadsheet .
Federal Permits and Licenses
A federal license may be required depending on the activities or size of your small business. A federal license is required if your small business operates within one of these sectors.
- Serving, distribution, or importing alcohol
- Explosives, ammunition, and firearms
- Wildlife and fish
- Commercial fisheries
- Transport maritime
- Drilling and mining
- Nuclear energy
- Broadcasting on radio and television
Alabama Business Licenses: How Much?
Registering for a business privilege license in Alabama is free. However, some specialty licenses can be subject to a fee at the local or state level.
Alabama Business License Renewal
All Alabama business privilege licenses, tax registrations, and store licenses must be renewed annually.