How to Apply for Business Licenses and Permits in Alabama

Alabama business licenses and permits are essential regulatory approvals that ensure the legal operation of businesses within the state. Our business license report can help you determine what licenses and permits you need to start a business in Alabama.

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Opening an Alabama business is the beginning of endless opportunities. However, before you can get started, you need to know what licenses and permits are required by federal, state, and local regulations. This guide and our Business License Report service can help you get it done easily.

Permit and license requirements can depend on:

  • Your business’s location
  • The industry of your business
  • Services or goods offered by your business

Making sure the right permits are in place is a big part of keeping your business state compliant. If this sounds overwhelming, don’t worry. The guide below can help give you an idea of what permits and licenses your Alabama business needs and how our services can help. 

What is a business license?

To legally operate your business, you have to obtain permits and licenses to comply with federal, state, and local government regulations. Many businesses are required to hold several permits and licenses at a time. 

Some state and local governments require businesses to hold a business license to operate any business at all. On the other hand, some permits and licenses apply only to a specific activity or single project.

Unfortunately, there is no one-stop shop for licenses and permits, so you will need to be diligent and do a careful search specific to your county, city, and the type of business you’re running.

Step 1: Obtain an Alabama privilege license

Alabama requires businesses to obtain a business privilege license from the probate judge in every Alabama county that you plan to do business in. The privilege license remains valid for one year, from October 1st until September 30th. Privilege license fees vary by county.

Step 2: Search for any necessary Alabama general business licenses

Unlike some states, Alabama doesn’t require businesses to purchase a statewide general Alabama business license. Instead, Alabama requires businesses to obtain a privilege license from the probate judge in every county they operate in.

Step 3: Obtain applicable federal licenses for your Alabama business

The federal government forms regulatory agencies that issue licenses and permits for certain activities. If your business engages in activities regulated by the federal government, you may need to obtain a license or permit from one of these regulatory agencies. The federal agencies responsible for issuing these licenses and the activities they regulate are described in detail below.

  • The U.S. Department of Agriculture regulates the agricultural industry. The agricultural industry involves the import or transport of animals, animal products, biologics, biotechnology, or plants across state lines. 
  • The Alcohol and Tobacco Tax and Trade Bureau regulates the alcoholic beverage industry. The alcoholic beverage industry involves the manufacture, wholesale, import, or sale of alcoholic beverages at retail locations. The Alcohol and Tobacco Tax and Trade Bureau issues permits for these activities.
  • The Federal Aviation Administration regulates the aviation industry. The aviation industry includes businesses that operate aircraft, transport goods or people via the air, or perform aircraft maintenance. The Federal Aviation Administration issues the necessary certificates to pilots and other airmen and certifies airports and air carriers. 
  • The Bureau of Alcohol, Tobacco, Firearms, and Explosives, also called the ATF, regulates the firearms, ammunition, and explosives industry. The firearms, ammunition, and explosives industry includes any business that manufactures, deals, or imports firearms, ammunition, and explosives. The ATF issues the licenses necessary to engage in this industry.
  • The U.S. Fish and Wildlife Service regulates the fish and wildlife industry. The fish and wildlife industry includes businesses that engage in any wildlife-related activity, including the import or export of wildlife and derivative products. The U.S. Fish and Wildlife Service issues the necessary permits.
  • The National Oceanic and Atmospheric Administration Fisheries Service regulates the commercial fishing industry. The commercial fishing industry encompasses businesses that engage in any kind of commercial fishing. The National Oceanic and Atmospheric Administration Fisheries Service issues the fishing permits necessary for this industry.
  • The Federal Maritime Commission regulates the maritime transportation industry. The maritime transportation industry involves businesses that provide ocean transportation or facilitate the shipment of cargo by sea. The Federal Maritime Commission issues the required licenses for this industry.
  • The Bureau of Safety and Environmental Enforcement regulates the mining and drilling industry. The mining and drilling industry includes businesses involved in drilling for natural gas, oil, or other mineral resources on federal lands. The Bureau of Safety and Environmental Enforcement issues the permits that are required to engage in mining and drilling activities.
  • The U.S. Nuclear Regulatory Commission regulates the nuclear energy industry. The nuclear energy industry involves businesses that produce commercial nuclear energy, businesses that are fuel cycle facilities, and businesses involved in the distribution and disposal of nuclear materials. The U.S. Nuclear Regulatory Commission issues the necessary licenses.
  • The Federal Communications Commission regulates the radio and television broadcasting industry. The radio and television broadcasting industry includes businesses that broadcast information by radio, television, wire, satellite, or cable. The Federal Communications Commission issues the licenses that are required.

Prices for federally mandated licenses and permits vary widely across the different regulatory agencies. You can find the most up-to-date information by checking with the agency itself.

Step 4: Check for Alabama permits and licenses

The Alabama Department of Revenue provides information about the licenses required for Alabama businesses. 

The Department of Revenue requires many Alabama businesses to obtain a “store license.” Alabama considers any store or establishment used for the sale of goods, wares, or other merchandise a “store” for purposes of needing a store license. Business owners can secure a store license from the County Probate Office or County Licensing Commission in the county their store is located.

The Department of Revenue also provides Alabama business owners with a list of state-level regulatory boards that can issue necessary business and occupational licenses to Alabama businesses. Some of the regulatory agencies listed on the form and the licenses/permits they can issue are described below.

  • The Alabama Athletic Commission issues required permits/certificates to Alabama athletic trainers.
  • The Alabama Board of Polygraph Examiners issues required permits/certificates to polygraph examiners in Alabama.
  • The Private Investigation Board issues the necessary permits/certificates for private investigators operating in Alabama.

The Department of Revenue recommends that business owners search for their entity type or occupation on the list to locate the licenses, permits, or certifications required for that industry. 

This isn’t the end of the search into the licenses and permits your Alabama business needs. Localities like city and county governments impose license and permit requirements as well.

Step 5: Check with the city or county for local licensing in Alabama

Many cities and counties have their own licensing and permitting requirements for businesses that operate within their boundaries.

For example, the City of Tuscaloosa, Alabama, requires businesses that fall under the city’s jurisdiction to obtain a general business license. According to the city’s website, Tuscaloosa police’s jurisdiction extends to three miles outside the city limits of Tuscaloosa. If the location of your Alabama business falls within the city limits of Tuscaloosa or within the bounds of Tuscaloosa police’s jurisdiction, this business license requirement applies to you. Refusal to obtain a business license could result in a $500 fine and up to six months of jail time when the violation was “willful.” The cost of a Tuscaloosa business license depends on your business’s estimated gross receipts from the time your business opened through the end of that calendar year.

Before you can obtain a Tuscaloosa business license, you’re required to verify that your Tuscaloosa business operations won’t conflict with state or local regulations. Specifically, your business operations can’t conflict with public safety, health, or the welfare of the community. Additionally, the operations must comply with certain regulations, including:

  • Zoning laws
  • Building and safety codes
  • Fire codes
  • Health codes

Once you verify that your business has the approval of the necessary departments, the revenue department issues a code compliance certificate. Once you have this certificate, you can obtain your business license.

The required licenses and the process for obtaining them will vary depending on the city and county where your business operates.

Step 6: Search for applicable Alabama professional licenses

If your business offers professional services, you need to maintain your licensure with the state agencies that regulate your profession. Alabama creates regulatory agencies to issue licenses to the following professions:

  • Attorneys
  • Doctors
  • Pharmacists
  • Optometrists
  • Podiatrists
  • Chiropractors
  • Dentists

This represents a non-exhaustive list of professional occupations in Alabama. The agency responsible for issuing these professional licenses also outlines the process for maintaining and renewing the professional licenses.

Step 7: Obtain any other necessary Alabama business licenses and permits

Alabama businesses engaged in selling tangible personal property, also referred to as retail businesses, must register for a state sales tax license. Other tax licenses apply to certain business industries, such as:

  • Rental tax license
  • Lodgings tax license
  • Seller’s use tax license
  • Utility gross receipts tax license
  • Simplified seller’s use tax license

The Alabama Department of Revenue requires all tax licenses to be renewed annually. You can renew your tax license through your My Alabama Taxes (MAT) account. There is no cost associated with renewing a tax license.

Step 8: Apply for Alabama home-based business licenses

Alabama regulates home-based businesses at the local level. In most cases, cities lay out the requirements for business owners seeking to operate a home-based business.

For example, the City of Opelika, Alabama, passed a city ordinance addressing the requirements for home-based businesses within its boundaries. Opelika prohibits home-based businesses from commencing operations before obtaining a Certificate of Home Occupancy from the Zoning Administrator.

Depending on the business you plan to operate out of your home, you may need additional permits and licenses based on the items you sell or the services you offer. A home occupation permit does not absolve you of your responsibility to locate and obtain other permits and licenses that are required.

Step 9: Maintain your Alabama licensing

Some licenses and permits require renewal on an annual basis, while others apply only to one specific job or project. Keeping your permits and licenses up to date is an important step in making sure that your business is complying with federal, state, and local regulations.

Let us help keep your Alabama business compliant

As you can see, your business may need a wide variety of Alabama licenses and permits to operate legally. Locating all the permits and licenses you need can cause a huge headache for business owners that are dedicating their time and attention to operating their business. So let us handle this part for you.

If you don’t have time or the desire to do the research on your own, we offer a Business License Report that business owners can purchase to simplify the process of finding the licenses or permits that apply to your Alabama business. We partner with Avalara to research the permits and licenses that your business needs to operate in compliance with the law.

By purchasing a Business License Report, you can have peace of mind knowing that your business has the licenses and permits it needs to comply with federal, state, and local regulations.

Additionally, we offer a Worry-Free Compliance service that sends business owners alerts and notifications about upcoming compliance deadlines and monitors your business’s status to help you keep your business in good standing. Plus, our Worry-Free Compliance service includes two free amendments per year (you just pay the state fee).

Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

Alabama Licenses and Permits FAQs

  • Yes. All businesses operating within Alabama’s boundaries must secure a privilege license from the county or counties the business operates in.

  • If you’re selling an individual item to a friend or hosting a garage sale, you don’t need a license. However, all Alabama businesses must obtain, at minimum, a privilege license to operate legally.

  • Yes, Alabama allows entrepreneurs to operate home-based businesses. However, local governments can impose restrictions on home-based businesses, including the requirement that home-based businesses obtain a home occupation license and receive approval from local zoning authorities.

  • Business owners operating online businesses are subject to the same requirements as other businesses that collect sales tax on items sold. Thus, if you’re operating an online business in Alabama that sells goods, you will likely need a seller’s use tax license.

  • If you operate an out-of-state business that sells products to Alabama citizens through an approved marketplace like Amazon or Shopify, you don’t need a sales tax permit. The marketplace remits the sales tax paid by the customer to the state of Alabama.

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