How to Get a Business License in Alabama

One of the most important elements of starting a business in Alabama is making sure you have all the requisite licenses and permits. The requirements vary by state, some of which have as many as 300 different licenses and permits. 

This article is too short to list them all, but it’s crucial that you’re aware of which ones your business needs and that you follow the steps for application and put your business on the road to success. 

In Alabama, businesses need certain licenses and permits to legally operate as a business. The regulatory hurdles required vary depending on the type of business, its location, and the products and services offered. 

To help you launch your new business, this article lays out the most commonly needed permits and licenses in Alabama — and details the steps required to acquire them. 

Why are business licenses required in Alabama?

Business licenses and permits are issued to certify that a business and its products and services are safe for the public. This explains why food businesses, for instance, require more licenses than most other business types. 

Which agency issues business licenses in Alabama? 

In Alabama, the Department of Revenue issues the vast majority of licenses and permits, though some are issued by the Department of Public Health and the Department of Public Safety. For instance, the Department of Public Health issues licenses to health care facilities, while the Department of Public Safety issues driver’s permits.  

Some licenses and permits are issued by cities or counties. So if you live in Birmingham, you’ll need to check with the city to see if licenses or permits are required for your business.

Before you apply, it’s important to know which state or local agency issues the license you need. Check the state’s guidelines here to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

Steps to Get an Alabama Business License

In Alabama, the steps for acquiring specific licenses and permits vary widely, so it’s important to be aware of what you need, and how to get it. 

Determine the Types of Licenses That You Need 

In Alabama, the main license a business needs to obtain is the business tax registration, or seller’s permit. You will need this license to sell or lease tangible personal property, admissions, or services as a retailer or wholesaler. 

In addition to obtaining a business tax registration, you may need additional licenses to run your business. For example, to run a home healthcare business, you’ll likely need a license or permit from the Department of Health. If you’re opening a bar or restaurant that serves alcoholic beverages, you’ll need a license from the Alabama Alcoholic Beverage Control Board.

Types of Business Licenses

Your business may need local, state, and/or federal licenses and permits, depending on your type of business. Fees for these vary, but most costs are minimal.

Federal regulations associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific permits. 

The most common permits and licenses include: 

1. Business operating licenses may be required by the city and the state to allow you to operate. 
2. Industry-specific licenses may be required, depending on your type of business. Businesses involved in construction, childcare, plumbing, electrical, food and liquor, insurance, finance, landscaping, and architecture all require licensing, for example. In some highly regulated industries, you may require licensing from a federal agency, such as the FDA or the Department of Transportation.
3. Zoning permits are issued by municipalities to ensure you’re operating in an area in which you’re allowed to operate.  
4. Building permits verify that the building you’re operating in is up to code. Home occupation permits, which some areas require, allow you to operate a business from your home.
5. DBA permits allow you to do business under a name that is different from your legally registered business name.
6. Sales tax permits allow you to sell products and collect sales tax. 
7. An employer identification number (EIN) is required if you plan to have employees, no matter what your business entity type. 
8. Health licenses and permits are required for certain businesses based on industry, and you will be required to maintain health and safety standards. Environmental permits are also required for certain industries in some locations.
9. Fire permits certify that your business is up to fire safety codes. Depending on your location, this may be required for all businesses, while in other areas, it’s required only if you work with flammable materials.
10. Sign permits may be required for your location or other signage if there are rules about sign size and location.

Check with state and local government offices for specific requirements for your location and industry.

Submit Your Business License Application

Various agencies and departments issue licenses and permits so you’ll need to apply with the relevant offices, and you can usually do so online. For example, you’ll apply for your business tax registration through the Alabama Department of Revenue’s My Alabama Taxes portal.

The Department of Revenue’s Business and License Division has information on how to apply for various licenses and permits. Some cities and local municipalities may have their own specific licensure requirements related to your type of business, so make sure you contact your local office for more information.

How much does an Alabama business license cost?

There is no cost associated with obtaining a business tax registration in the state of Alabama, all you need to do is submit your application. Costs for other business licenses vary greatly. Food sales and manufacturing licenses typically cost a few hundred dollars. Liquor licenses can cost thousands of dollars depending on the business type.

In Alabama and most US states, jumping through all the hoops to acquire the necessary licenses and permits can be exhausting. But if you want to operate your business, you’ll have to wade through all the red tape. So get started on these regulatory hurdles as early as possible and clear the way for your entrepreneurial journey to success. 

How fast can I get a business license in Alabama?

Business tax registrations are typically issued within three to five business days after the application is received. Processing times for other licenses and permits vary greatly. Obtaining a contractor’s permit or liquor license may take several weeks.

Renew Your Licenses When Needed

In Alabama, business tax registrations must be renewed annually, and there is no renewal fee. Specialized business licenses and permits may also require renewal. Most have annual renewal requirements and associated fees, but be sure to check with the issuing authority for specific guidelines.