8 October 2020
When you set out to open a small business, you may anticipate challenges along the way. If you're a small business owner in Alabama, though, it’s possible one of the most arduous processes may be getting your business license when you start out.
Navigating to all the necessary outlets for application and registration may lead you through the equivalent of an internet corn maze. But don't worry, we've helped find the way for you.
If you have questions about how to get a business license in Alabama, read on to find out if you likely need an Alabama business license, how to apply for one, how much it may cost you, and more.
The short answer here is: yes. If you own and operate a small business, then you'll typically need a business license. You also may see the license referred to as an Alabama privilege license. You also may need different permits depending on your business.
You can likely narrow down what you need on the Alabama Department of Revenue's website?.
Beyond needing a state of Alabama business license for compliance reasons, securing that license will do you a lot of good as a business owner. Having a business license can:
If you're moving forward and applying for your Alabama business license, you'll have to walk through a number of steps before you can reap the above benefits. We'll go over the process in the next section.
Remember how we mentioned that getting a state of Alabama business license was a bit difficult?
This is the part we were talking about. We recommend reading through all of these steps first, then taking action one step at a time, as there are different considerations to keep in mind, depending on what you do, where you live, etc.
Whether or not you need a business license or permits, as well as how many you'll need, often depends on where exactly you do business.
If you're looking for a business license in one town/city, then you typically need to only follow through with application requirements for that one local area. However, if your business serves more than one local area, you'll have to apply for business licenses in all locations.
First, decide which municipality or municipalities your business will serve. You can find yours in the Alabama League of Municipalities website directory here.
On top of needing an Alabama business license, you may be required to get a regulatory license first. This will depend on your specific profession or trade.
You can check to see if you'll need a regulatory license by going to your profession board. For example, if you're a cosmetologist, you would go here. If you're a general contractor, you can go here.
Finding the board for your profession is simple, and you can usually find it by typing "Alabama (PROFESSION) board" into Google or your search engine of choice.
Just as regulatory licenses are specific to certain trades and professions, so are state of Alabama business licenses. In many cases, each trade or profession has its own code corresponding to a separate license.
You can look for your code in the Handbook of Privilege and Store Licenses. The Handbook is hefty and has a lot of legal jargon, but try not to be put off by it.
When you have it open, skip ahead to Chapter 12, page 21, to look for your Alabama business license code number.
Keep in mind that depending on the nature of your business and what you do, you may need to apply for more than one license.
Each county has a different office where you'll have to apply for a probate. You can find your county's probate office number in the directory here. Unfortunately, you will have to call your probate office, rather than contacting them online. As a result, you may want to give yourself time for the call, in case you're put on hold.
Each office should be able to let you know how to apply for a probate in their county.
Keep in mind that if you do business in more than one county, you will most likely have to apply for multiple probates.
This is a process that you'll have to take care of each year (but that's OK, because we are here to walk you through!).
The Alabama business license year runs from October 1st to September 30th of the following year, meaning that you must renew your license each October.
If you don't renew your license by October 31st, you'll be subject to a 15% penalty (non-waivable) plus interest.
Some counties may mail reminders, but not all will, so we suggest you mark your calendars.
We know this may be confusing, but a business license isn't necessarily the same as a municipal license. You'll need a business license depending on which county you're conducting business in, but you also may need a separate municipal license.
Call your local county office (in the directory linked above) to find out if you'll need a municipal license in addition to your business license and permits.
If you sell your business, the state of Alabama typically allows you to transfer your business license. You can transfer the license within your county for a $1.00 transfer fee.
How much you'll pay for your business license usually depends on a variety of factors, including (but not limited to):
Each business license will likely have a different fee, depending on your profession. You can look for your profession's Alabama business license fee here.
In addition to the fee you find in the linked document above, you'll also be charged a $1.00 issuance fee. Beyond that, you may have to pay additional fees (e.g., for mailing), depending on where you live. This is the information that's current in present time (when the article was published), so we suggest you always double check the fees charged by the state before moving forward.
Keep in mind that if your business is seasonal and doesn't begin operations until after April 1st, you may be eligible to apply for a half-year license.
You can determine if you qualify for a half-year license by reading the Handbook of Privilege and Store Licenses. Scroll to page 13, and you'll see the specifics under clause 40-12-25, titled "License for Part of Year."
If you are a disabled veteran and/or a veteran of World War II, you may be eligible for a discount on your Alabama business license fees. You can find more information in the handbook here, on page 16-19.
If you still have questions, you can contact your county probate office using the County Probate Office Directory.
You may need to show proof of business insurance to get your license.
That’s where we come in. Compare free insurance quotes for policies as low as $22.50/month.*Start Here >
The rules around business insurance in Alabama may differ depending on your trade. For example, if you're a contractor, you may need an Alabama contractor's license, and applying for that may require you to have business insurance.
Regardless of what's required, having business insurance can be beneficial for you and your business.
As experienced as you may be and no matter how careful you are, there is still the chance that accidents could happen. You never know when something could go wrong — and it would be awful for one accidental misstep to result in your losing a customer, or worse — result in a lawsuit.
We recommend looking into a business insurance policy for your small business because it can:
Just like you can display on your storefront or website that you have a business license, you also can show proof to your customers that you're insured. Being able to demonstrate that you are prepared is a way to earn and secure your customers’ trust.
Speaking of preparation — if you plan on hiring any employees, then Alabama will require you to apply for workers compensation insurance. You can learn more about what's needed and how to apply here.
There's no beating around the bush here: getting an Alabama business license isn't easy.
There are so many factors that go into your business license:
Because there are so many variables that go into the application process when getting a business license, it takes a lot of attention to detail and patience to get through the process.
When it's all said and done, though, you can let the administrative work rest. Securing your state of Alabama business license is one necessary step, and once you're finished, you can focus on the real reason you're here: doing what you love!
* Monthly payment calculations (i) do not include initial premium down payment and (ii) may vary by state, insurance provider, and nature of your business. Averages based on January - December 2020 data of 10% of our total policies sold.
I’ve told stories since I learned to talk and written since I could hold a pen. As a small business owner myself - I'm a freelance writer and yoga teacher - I love contributing to the entrepreneurship community in different ways (including writing for Simply Business!). When I’m not drafting articles for SB, I can be found on my yoga mat, perusing an indie bookstore, and writing (with my cat nearby of course).
This content is for general, informational purposes only and is not intended to provide legal, tax, accounting, or financial advice. Please obtain expert advice from industry specific professionals who may better understand your business’s needs. Read our full disclaimer
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