How to Get a Business License in Alabama

A crucial step in starting a limited liability company (LLC) in Alabama is acquiring all the licenses and permits required for your business. Depending on your industry and location, you may be required to get licenses and permits at the federal, state, and local levels. 

This is a must because, without them, you could face severe penalties, even the closure of your business. Lucky for you, this guide lays out all you need to know to ensure you’re in full compliance in Alabama.

Which Department Issues Business Licenses and Permits?

In most states, various departments issue licenses and permits depending on the type of business. For example, the Department of Revenue issues most licenses in Alabama, although the Alabama Public Health Department also issues a good number of licenses. 

In addition, you’ll register for a tax account, which requires detailed information about the products or services you sell.

At the county and municipal levels, various departments issue licenses and permits. Check with your local governments for requirements. 

Federally, different departments oversee different industries. Licenses and permits are generally industry-specific, except for health permits from the Occupational Safety and Health Administration (OSHA).  You may require U.S. Department of Agriculture licensing if you run a farm. 

You must register with the Bureau of Alcohol, Tobacco, Firearms, and Explosives if your business sells fireworks. Most industries, however, do not require licensing at the federal level. 

The Small Business Association (SBA) has put together a handy guide that details which licenses and permits are needed for various types of businesses. 

Common Business Licenses and Permits

Here are some standard licenses and permits you may need:

Federal Licenses

If a federal agency regulates your industry, you’ll need to be licensed by that agency. Some examples of federal agencies that may require you to be licensed include:

• The Department of Agriculture
• The Alcohol and Tobacco Tax and Trade Bureau
• The Bureau of Alcohol, Tobacco, Firearms, and Explosives
• Department of Transportation

State Licenses

Some standard licenses at the state level:

• Industry-specific licenses for certain professions and industries, such as construction, plumbing, electrical, childcare, food handling, liquor, architecture, and finance
• Health licenses and permits
• Doing business as (DBA) permits using a name other than your LLC.
• Sales tax permit

Local Licenses

At the municipal or county level, you may need the following:

• Building and zoning permits
• Health licenses and permits
• Fire permits
• Sign permits

How to Obtain a Business License in Alabama

In Alabama, you must get a business privilege license and other licenses and permits. 

1. You’ll contact the license commissioner in the county where your business is located to get a business privilege license. You’ll also need a store license for each of your business locations. The county also issues store licenses. 
2. Unless you’re operating as a sole proprietorship or partnership, you’ll need to register your business entity with the state, usually as an LLC or a corporation. You can do so online with the Secretary of State. 
3. You’ll need to register for sales tax on My Alabama Taxes if you sell goods or services.
4. Other licenses can be applied for with specific departments. For example, in Alabama, if you have a restaurant that serves alcohol, you’ll need a restaurant retail liquor license. In addition, you’ll need to apply with the Alabama Alcohol Control Board. 
5. Check with your local governments for licenses and permits at the local level. 

How Much Does a Business License Cost in Alabama?

License and permit fees vary. A sales tax permit, for instance, costs nothing in Alabama, while forming an LLC costs $200 plus $25 for name reservation and an $11 online processing fee. A restaurant retail liquor license costs $300.

Do Licenses and Permits Have to Be Renewed?

Some licenses and permits need to be renewed annually. For example, a sales tax permit in Alabama must be renewed annually on the My Alabama Taxes website. 

Check with issuing departments for renewal requirements for other licenses and permits.

In Closing

Obtaining licenses and permits is a critical step when starting an LLC in Alabama, so check with state and local government offices and fully comply with their requirements. If you operate without proper licensing, you could face steep fines or even the closure of your business. 

If you’re unsure of state or local regulations and need help, consult a business attorney, as proper licensing is an absolute must.