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How to Get a Business License in Alabama

A blue and white license image with a gold ribbon displaying a dollar sign and gold, light blue, and dark blue vertical bars to the right of the license.

If you want to do business in Alabama, you’ll most likely need at least one business license, if not multiple. The main business license in Alabama is the business privilege license, which you apply for through your county probate office. Depending on the type of business you have, you may need other local, state, or federal licenses as well. Since we know that navigating the state’s requirements can be daunting, we’ve created a guide explaining the most common business license requirements in Alabama.

Alabama Business Privilege License

The most common licensing requirement for Alabama businesses is the business privilege license, which is a license for the privilege of doing business in Alabama. Technically, the business privilege license is an umbrella term for many different licenses, which vary by profession and are issued by the county in which you do business.

How do I get a Business Privilege License in Alabama?

You must apply for a business privilege license through the county probate office in the county where you do business. You can check out the County Probate Office Directory provided by the AL Department of Revenue to find the contact information for your local office. The process of applying for a license will be a little different in each county. In most counties, you have to fill out an application form and pay a fee. Depending on your profession, you might need to complete other licensing requirements first before you can get the privilege license.

When you apply for your license, you’ll need to know the following information:

  • Business name
  • Business entity type (for example, sole proprietorship, LLC, or corporation)
  • Federal Employer Identification Number (EIN) or Social Security Number
  • Types of services or products you will sell
  • Detailed description of your business

Check out this Department of Revenue Business Privilege License Guide for more information.

Who needs a business privilege license?

Many—but not all—businesses in Alabama need a business privilege license. Business privilege licenses are categorized by industry, and you can find out if your industry requires this license by reviewing the list in the Department of Revenue Handbook of Privilege and Store Licenses (pg. 20-22). Even if you’re a sole proprietor or part of a general partnership and aren’t required to register your business with the Secretary of State, you’re still required to follow any licensing requirements for your industry, including getting a business privilege license.

How much does the Business Privilege License cost?

The cost of your business privilege license can depend on the population size of your county, the industry you’re in, and the number of employees you have. You can check out the Handbook of Privilege and Store Licenses to find out how much you can expect to pay. Or simply call the county probate office. If you apply for your business privilege license after April 1st, you may only need to pay for a half-year license.

Some veterans and disabled business owners can pay a reduced rate or have their license fee waived entirely. It’s a good idea to ask about this exemption when you apply for your business privilege license.

Does the business privilege license have to be renewed?

Yes. The license needs to be renewed every year by October 31st. If you don’t renew your license on time, you’ll be charged a 15% late fee, plus interest. Spooky!

Business Privilege License vs. Business Privilege Tax

The business privilege license is sometimes confused with the Alabama business privilege tax, but they are two separate things. The business privilege tax is a state tax that Alabama LLCs, corporations, LLPs, and LPs in Alabama need to pay each year to the Department of Revenue when filing their Alabama Business Privilege Tax Return. The business privilege license, on the other hand, is a license that you apply for through your county government.

Alabama Business Tax Registration

In addition to getting a business privilege license, most businesses in Alabama need a business tax registration, which is also called a seller’s permit. The tax registration allows you to legally sell goods to people in Alabama and collect sales tax. You can register on the My Alabama Taxes website.

Alabama Professional Licenses

Businesses that need specialized training before they can be performed safely require a professional license. Think doctors, contractors, and tattoo artists, among many others. These licenses are issued by the state board that regulates the profession. For example, hotels and food service establishments need to apply for a Permit to Operate from the AL Department of Public Health.

You can find the contact information for your regulatory board using the spreadsheet created by the Alabama Department of Revenue. If your business requires a professional license, you’ll need to obtain it before you can get your business privilege license.

Local Alabama Business Licenses

In addition to the business privilege license, you’re likely to need other local licenses as well. You should check with your municipal government to see what licenses they require. Here are some common local licenses and permits to be aware of:

  • Alcoholic beverage license
  • Health department permit
  • Fire department permit
  • Building permit
  • Zoning and land use permit

Federal Business Licensing

While not common, a few industries require a federal license as well. These include alcohol, tobacco, or firearms sales, commercial fisheries, aviation, transportation, and radio and TV broadcasting, among others. If you need a federal license, you must apply through the federal agency that regulates your industry.

This entry was posted in Opinion.