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What Business Licenses & Permits are Needed in Alabama?

What Business Licenses & Permits are Needed in Alabama?

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What Business Licenses & Permits are Needed in Alabama?

Starting a business in Alabama will mean potentially registering with several federal, state, and local agencies. Let’s take a look at common licenses and permits a business will register for in Alabama.

Before applying for any licenses, the business structure will need to be established. Learn more about the differences between the sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC)

Related: Comparison of Business Entities 

Also see: Steps to Starting a Business in Alabama

State & County Business Privilege Licenses

The State of Alabama requires anyone conducting business to obtain a Business Privilege License. While the Department of Revenue administers the licensing, the license is issued at the local level by the county Probate Judge or License Commissioner. It is important to note that one business may require several different types of Business Privilege Licenses depending on the business’s products or services. Most businesses will also need a Business Privilege License in every county where business is conducted. ​​​The Privilege License runs from October 1 through September 30 and must be renewed annually.

The costs for the Alabama Privilege Tax vary depending on the type of license required and, in some cases, upon the population of the area where the business is located or the business’s sales volume. Some businesses may require several different types of business privilege licenses depending upon the business’s services or products.

Additionally, some licenses first require applying for State Regulatory Permits, such as auto dealers, food establishments, and air conditioning contractors.


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For as little as $99, you can save a lot of time and know your business is in compliance with local, state, and federal requirements. 

City Business Licenses

Many cities in Alabama require businesses to be licensed in order to operate. Rules for business registration vary depending on location and what the business does. Below are a few cities that have licensing requirements.

Birmingham – The City of Birmingham requires an annual business license for certain businesses, including; those that sell alcoholic beverages, dance or pool table licenses, street vendors, and more.

Montgomery – The Montgomery Division of License and Revenue requires all businesses within city limits to apply for a business license.

Mobile – A business license is required to operate a business within the City of Mobile. The cost of a Mobile Business License is $130 and renews annually.

Huntsville – The Huntsville City Clerk Treasurer’s Office requires a business for commercial and residential-based businesses operating in city limits. Additional licenses are required for Airbnb rentals, businesses selling alcohol, taxis, or rideshare businesses.

Tuscaloosa – All businesses are required to get a business license from the City of Tuscaloosa. The cost of a Tuscaloosa business license varies depending on the type of business and annual sales.

Occupational Permit

Depending on the location of the business, it’s important to verify whether the business needs an occupancy permit or has specific regulations to operate in the zoning district. Even businesses operating out of the home may need approval from the city as well.

Alabama Sales Tax License

Alabama businesses collecting sales taxes, lodging taxes, or will have employees will need to register for an Alabama Sales Tax License with the Alabama Department of Revenue. The sales tax charged will vary by the product or, in some cases, the service sold. The state sales tax rate for most products sold in Alabama is 4%

While there is a state sales tax, some counties also levy an additional tax on the sale of tangible property at retail or from revenue generated from the operation of machines or places of entertainment or amusement.

Related: How to register for an Alabama sales tax license

Resale Certificate

Businesses purchasing merchandise to resell will usually want to obtain an Alabama resale certificate to not pay sales tax for merchandise that is resold to customers.

Related: How to get an Alabama resale certificate

Alabama Store License

Every person or business that opens one or more physical stores in Alabama is required to get a Store License for the privilege of operating in the state.

Licenses are obtained by filing with the Probate Judge or license commissioner of the county in which the store is located.

Vocation or Occupational Privilege License

A variety of occupations or professions in the state are regulated and need licensing before offering certain services. A few common occupations that require licensing in Alabama include; beauty shops, photographers, restaurants, diaper services, fruit stands, contractors, and many more.

Learn more about the types of occupational licensing requirements in Alabama from the Alabama Department of Labor.

Employer Identification Number (EIN)

Many businesses will register with the Internal Revenue Service (IRS) for an Employer Identification Number (sometimes referred to as a Federal Employer Identification Number or tax ID number). The EIN is the business equivalent of a Social Security Number for an individual.

Corporations, Limited Liability Companies, partnerships, and sole proprietorships with employees will all need to register for one.

Sole Proprietorships without employees can use the owner’s Social Security Number.

There is no cost for an EIN, and it only takes a few minutes to get.

Learn how to apply for an EIN

Assumed Name Registration

While not a business license, Sole Proprietorships and Partnerships operating under a name different from the full name of the owner(s) may register for a Trade Name (also known as a Doing Business As or DBA) with the Alabama Secretary of State.

Related: How to register for an Alabame trade name

The name registration doesn’t protect the name from anyone else using it.  To protect your name, look into registering a trademark.  

These are some of the most common business licenses, but there may be specific licensing that isn't listed. Before starting your business, be sure to check with the City Clerk, County Clerk, Chamber of Commerce, and/or Economic Developer in your area to get more information regarding business licensing.

For some additional peace of mind, companies like Incfile and LegalZoom can do the research and ensure you have all of the proper federal, state, and local licenses to start your business.

What Business Licenses & Permits are Needed in Alabama?

What Business Licenses & Permits are Needed in Alabama?

Greg Bouhl

Greg Bouhl

Welcome! My name is Greg Bouhl, and I am a serial entrepreneur, educator, business advisor, and investor.

StartingYourBusiness.com is here because of the many clients I worked with who made decisions based on inaccurate and outdated information.

Starting a business is hard, but here you will find the practical tools, resources, and insider tips to help you successfully start a business.

If there is a question about starting a business or help finding a resource, I'm here to help!

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2 Responses

  1. Hi Greg.I’m a ford dealer in newnan georgia. my neighbor wants to buy a new explorer and finance with ford credit. He wants to title it in his llc company name that he owns in alabama. He has lost his business license. Does he need a new business license for me to get his new vehicle tagged and titled in alabama? tks mike fitzpatrick

    1. Hi Mike – When you say lost his business license, does that mean it was taken away by the city/state or just can’t find it? Adding to the complexity, the state has a Business Privilege License but different cities may have a business license requirements as well. While the LLC and business license are two completely different things, if the state took away a business license, the LLC could be in jeopardy.

      Technically, if you do a search for the LLC on the Secretary of State’s website and the LLC shows that it is in good standing, then the LLC is still fully functional. He may want to get an Alabama attorney to weigh in on this though.


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