Starting a business in Alabama will mean potentially registering with a number of federal, state and local agencies. Let’s take a look at common licenses and permits a business will register for in Alabama.
Business Privilege License – 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 upon the products or services offered by the business. Most businesses will also need to get a Business Privilege License in every county where business is conducted.
Privilege licenses expire September 30th every year.
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 sales volume of business. Some businesses may require several different types of business privilege licenses depending upon the services offered or products sold by the business.
City Business Licenses – Many cities 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. In addition, additional licenses are required for Airbnb rentals, businesses selling alcohol, taxi or ride share 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.
Employer Identification Number (EIN) – Many businesses will register with the Internal Revenue Service (IRS) for an EIN or Employer Identification Number. The EIN is the business equivalent for 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.
Alabama Sales Tax License – 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.
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.
Resale Certificate – Businesses purchasing merchandise to resell will usually want to obtain an Alabama Resale Certificate in order to not pay sales tax for merchandise that is being resold to customers.
Professional License – A variety of professions in the state are regulated and need to be registered before offering certain services. A few common professions that require licensing in Alabama include; beauty shops, photographers, restaurants, diaper services, fruit stands, contractors and many more. Additional information, fees and licensing requirements for professions are available from the Alabama Department of Revenue.
Assumed Name Registration – While not a business license, Sole Proprietorships and Partnerships operating under a name that is 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.
These are a few of the most common business licenses, but there are far too many business licenses and permits in Alabama for us to keep track of. Before starting your business, check with the City Hall, County Clerk, Chamber of Commerce and/or Economic Developer in your area to get more information regarding business licensing. Additionally, there are companies like IncFile or CorpNet that can do the research to ensure you have the proper federal, state and local licenses.