How to Get a Small Business License in Alabama

Before you open for business, you must make sure you're following all of the regulatory laws that apply to your business. Specifically, you need to make sure you've obtained all of the necessary licenses and permits at the federal, state, and local levels.

Let's take a look at the different licenses, permits, and registrations you need to start your Alabama business.

Which Business Licenses Do You Need for Your Small Business?

When starting a business in Alabama, you must:

• register your business entity with the Alabama Secretary of State (SOS)
• file taxes with the Alabama Department of Revenue (ALDOR), and
• apply for business licenses and permits with your state, county, and town.

In general, your business structure, industry, and location will determine the types of licenses and permits you must apply for. The main types of business licenses, permits, and registrations are:

• general business licenses
• professional licenses
• seller's permits (sometimes called "sales tax certificate" or a similar name)
• zoning and building permits, and
• doing business as (DBA) registrations.

(For more general guidance, see our article on the legal requirements for starting a small business.)

General Business License in Alabama

In general, if you do business in Alabama, you must obtain at least one business privilege license. In Alabama, the term "business privilege license" actually is a blanket phrase that applies to any of a large number of state and local licenses that a business might be required to have. (Ala. Code §§ 40-12-1 and following (2023).)

Each business privilege license covers the period from October 1 through September 30 and must be renewed annually. You apply for licenses from the probate judge or license commissioner in the county where your business is located. In addition, you'll generally also need a license from every other county where you conduct business. For your convenience, the ALDOR has an online listing of county probate offices.

You'll likely need to pay a fee for your license. Your business license fee could depend on your type of business, number of employees, annual revenue, or other factors. You should check with your county for your specific license fee.

You might also need to apply for a license from your city. For example, both the City of Huntsville and the City of Birmingham require anyone operating a business in the city to apply for a business license. In your business license application, you'll need to provide information about your business, such as:

• your business name
• your business structure
• your federal employer identification number (EIN)
• business formation paperwork (such as a copy of your articles of incorporation)
• a description of your business activities
• ownership information
• physical business address and mailing address, and
• other basic information.

Business licenses typically must be renewed every year. You should visit your city's website or contact local officials to determine whether your business requires a license.

Professional and Occupational Licenses for Businesses and Individuals in Alabama

Before you open your business or start practicing, you need to make sure you have the licenses and certifications required for your industry. Depending on your field, you might be required to have two separate licenses: one for you and one for your business.

Unlike many other states, Alabama doesn't have a central department or agency that oversees professional and occupational licenses. Instead, you must directly consult the board, committee, or other regulating authority associated with your profession or occupation. For example, occupational therapists would consult the Alabama State Board of Occupational Therapy, and realtors would consult the Alabama Real Estate Commission.

The ALDOR provides a chart of the regulatory boards and agencies that require permits, certifications, or licenses.

Many of these regulatory authorities have websites where you can find useful information, including:

• how to apply and renew your license
• statutes and rules
• board meeting dates, agendas, and minutes
• industry news
• frequently asked questions
• board contact information
• education resources, and
• other topics.

Each profession or occupation will have its own rules and requirements. For example, your profession might require you to attend continuing education courses or to complete an exam every year to renew your license. Be sure to contact your regulatory authority if you're unsure about how to apply for or maintain your license.

Alabama Sales Tax License

In general, if your business plans to sell tangible personal property, then you're required to collect and pay sales tax in Alabama as long as you either:

• have a place of business in Alabama
• have qualified to do business in Alabama
• solicit or receive orders or purchases through an agent or salesperson; or
• distribute advertising materials (like catalogs) to Alabama residents.

Before you start collecting sales tax, you must apply for a sales tax number and license. You must register for a sales tax account through My Alabama Taxes (MAT).

After you register your business, you'll receive your sales tax number and license. You can also register for other business taxes—such as sellers use tax and withholding tax—using the same application.

To learn more, visit the sales and use section of the ALDOR website. The section has information about:

• sales tax rates
• sales tax due dates
• online services
• laws and administrative rules, and
• frequently asked questions.

Make sure you also check with your city or county to learn about their tax reporting requirements.

Local Zoning and Building Permits

In some cases—for example, if you'll be building a new space or renovating an existing space—you'll need to get special zoning and building permits from your city or county. Cities typically have a review process that involves an application, meetings, and inspections.

If your work is extensive, you might also need to submit site plans or hire a professional architect or engineer. At the end of the process, if everything is in order, you'll receive a clearance letter (or similar document) that allows you to start occupying your commercial space.

You should talk to your local officials or visit your city or county website for information related to building permits and inspections. You can sometimes find an online application for that kind of permit you need. In addition, you should review your local code and ordinances to determine which zoning and building requirements apply to your business and your planned operations.

Zoning laws. If your type of business isn't in line with the zoning code, it could be a good idea to look for another space for your business. Alternatively, you might be able to apply for a special use permit. A special permit can provide your business with an exception to the current use laws.

Building code. You can work with local departments and agencies to apply for building and construction permits. You'll likely need to have inspections related to your space's structural, electrical, mechanical, and plumbing features.

If you intend to lease a commercial space, make sure you have a section in the commercial lease that ensures that the building and your use of the space are in line with the zoning laws.

Registering a Trade Name in Alabama

If you have a sole proprietorship or general partnership and you use a name for your business that's different from your personal legal name, then you're using a trade name—also known as an "assumed name," "DBA," or "fictitious business name." For example, suppose Vinny Gambini opened a dry cleaning store under the business name "My Cousin's Dry Cleaning." Because the business's name doesn't include Vinny's personal name, Vinny would be using a trade name.

If you've registered your business with the SOS under one name but do business under a different name, then your business is also using a trade name. For example, suppose you formed your limited liability company (LLC) under the name "Park Bench LLC" but you open a chocolate store called "Life's Box of Chocolates." In that case, your LLC would be using a trade name because its store name is different from the name on its articles of organization.

If you use a trade name in Alabama, then you're not required to register it. But you can choose to register your trade name. While not required, registration provides benefits such as putting others on notice of your use of the name if you ever decide to register your trade name as a trademark.

In Alabama, unlike most other states, you must use your trade name before you can register it. In your trade name application, you must include real-life examples of your use of the trade name. You can submit your application online. As of 2023, the fee to register a trade name is $30. You should also check with your city or county to make sure there's no local business name registration requirement.

Other Licenses and Permits Your Business Might Need

Apart from the licenses and permits that are discussed above, you could be required to comply with other laws and regulations. For example, your business could need to apply for special licensing or follow special rules related to public health and safety and the environment:

• safety
• health, and
• the environment.

Sometimes these areas are encompassed within other licenses, permits, and registrations. Other times, the licenses and permits require a separate application process. If you're in a highly regulated field (for example, banking, pharmaceuticals, or fishing to name a few), you're more likely to need additional licenses and permits.

It's a good idea to check with your federal, state, and local governments for more information.

Government Resources for Alabama Small Businesses

You can find many useful government resources for your small business:

• The ALDOR offers various resources to small businesses through its program, Business Essential for State Taxpayers (BEST). Through BEST, you can access webinars, reference guides, checklists, and handbooks. The BEST website also links to Atlas Alabama, the Alabama Small Business Commission website. Atlas Alabama gives small business owners information and guidance on planning, launching, managing, and growing their businesses.
• The U.S. Small Business Administration (SBA) has district offices in Birmingham and Mobile. The office's website lists upcoming events, resources, and news for small businesses.
• The Alabama Small Business Development Center (ASBDC) has guidance on how to start, grow, and fund your business. The ASBDC website also includes information on training and small business events. There are multiple ASBDC locations throughout the state. The ASBDC is part of a national network of small business development centers.
• The Alabama Department of Commerce's Small Business Division has a section of its website dedicated to small businesses. The website has contact information for federal, statewide, and regional resources. You can also find information about incubator (support) programs, news, events, and publications.

Many of these organizations have staff that can help you over the phone or in person.

Additional Licensing Help for Alabama Small Businesses

If you're interested in learning more about forming and running your business in Alabama, check the small business section of our website. If want to dive in further, you can also find expanded information in many of our books, such as Legal Guide for Starting & Running a Small Business, by Fred S. Steingold (Nolo), and The Small Business Start-Up Kit, by Peri Pakroo (Nolo).

The process of applying for all the licenses and permits your business needs can quickly become complicated. You might need multiple permits for your industry. If you open multiple storefronts, you could need a license for each location. Many small business owners can navigate the process on their own. But if you have legal questions specific to your business or industry, you should talk to a local Alabama business lawyer. They can help you determine which licenses and permits you need and how you can continue to comply with federal, state, and local laws.