Here's what you need in Alabama
Official state business portal: Atlas Alabama. Atlas Alabama is the state's guide for planning, starting and running a business, with county and city office directories.
| What you need | Who issues it | Official fee | Links | Checked |
|---|---|---|---|---|
| General state business licenseState and county business privilege license. Alabama has no single license for every business. Businesses listed in Title 40, Chapter 12 of the Code of Alabama need a state and county business privilege license from the county where they operate, and cities may require their own license. | Alabama Department of Revenue (issued by your county probate judge or license commissioner) | Fee not published.Ask the agency | Source | Nov 7, 2026 |
| Form an LLCCertificate of Formation (domestic LLC). File a Certificate of Formation with the Alabama Secretary of State. You must get a Certificate of Name Reservation before you file. | Alabama Secretary of State | $200 filing fee | Source | Nov 7, 2026 |
| Business name (DBA)Trade Name Registration. Alabama registers trade names at the state level with the Secretary of State, on the same application used for trademarks and service marks. Registration lasts five years. | Alabama Secretary of State | $30 registration fee | Applyat sos.alabama.govSource | Nov 7, 2026 |
| Sales tax permitSales tax license (My Alabama Taxes registration). Register for sales tax with the Alabama Department of Revenue online through My Alabama Taxes. Registration is free. | Alabama Department of Revenue | Free | Applyat myalabamataxes.alabama.govSource | Nov 7, 2026 |
| Unemployment insurance (once you hire)Alabama Unemployment Tax Account (Form SR-2). Open an unemployment tax account by filing Form SR-2 as soon as you become liable, usually when you start paying wages. You can apply online through the department's eGov site. | Alabama Department of Workforce | You pay tax on wages | Applyat labor.alabama.govSource | Nov 7, 2026 |
| Federal tax ID (EIN)Employer Identification Number (EIN). You need an EIN if you have employees or pay certain federal taxes, and banks often ask for one. Apply online with the IRS and you get the number in minutes. | Internal Revenue Service (IRS) | Free | Applyat irs.govSource | Nov 7, 2026 |
Costs after you start
What an LLC in Alabama pays or files after it is formed.
| What you need | Who issues it | Official fee | Links | Checked |
|---|---|---|---|---|
| Business Privilege Tax Return (Form PPT)An Alabama LLC files Form PPT, the business privilege tax return, with the Department of Revenue by the due date of its federal income tax return. The tax is worked out from the business's net worth. For tax year 2026, a business that would owe only the minimum tax of 100 dollars does not have to file. | Alabama Department of Revenue | Tax based on net worth; nothing to file if it is $100 or less | Applyat myalabamataxes.alabama.govSource | Nov 7, 2026 |
Licenses by type of business
State level licenses. Your city or county may add its own permits.
| What you need | Who issues it | Official fee | Links | Checked |
|---|---|---|---|---|
| Hair salon, barber shop or nail salonShop License. Salons, barber shops and nail salons need a shop license from the Alabama Board of Cosmetology and Barbering, which covers both cosmetology and barbering. | Alabama Board of Cosmetology and Barbering | $200 for a new shop, $150 to renew | Applyat aboc.alabama.govSource | Nov 7, 2026 |
| Child care in your homeDay Care Home or Group Day Care Home License. Family day care homes and group day care homes need a license from the Alabama Department of Human Resources before they open. Apply through the department's online system; its checklist for homes lists no license fee. | Alabama Department of Human Resources, Child Care Services Division | Fee not published.Ask the agency | Applyat dhr.alabama.govSource | Nov 7, 2026 |
| Selling alcohol (bar or restaurant)Retail alcohol license. Bars and restaurants get retail alcohol licenses from the Alabama ABC Board through the licensing office for their county. The state fee depends on the license type. | Alabama Alcoholic Beverage Control (ABC) Board | $300 state fee for a restaurant liquor license; other types vary | Source | Nov 7, 2026 |
| General contractorGeneral Contractor License (prime contractor). Alabama licenses general contractors and subcontractors through the Alabama Licensing Board for General Contractors. Prime contractors must also pass a business and law exam. | Alabama Licensing Board for General Contractors | $300 for a prime contractor, $150 for a subcontractor | Source | Nov 7, 2026 |
| Selling homemade food (cottage food)Cottage Food Law (Cottage Food Review Form). You can sell baked goods, jams, candy and other foods that need no refrigeration from your home directly to buyers in Alabama. Take an approved food safety course and send a Cottage Food Review Form to your county health department. | Alabama Department of Public Health (your county health department) | Set by each county | Source | Nov 7, 2026 |
What is different in Alabama
- At $200, the LLC filing fee is among the highest: only 4 of 49 verified states charge more.
- Business names (DBAs) are filed with the state, at the Alabama Secretary of State. At $30, the state DBA fee is near the middle: 21 of 33 verified states charge less and 10 charge more.
- There is no yearly sales cap for homemade food in Alabama, one of 1 states in our data with no cap.
- Contractor licensing in Alabama: Alabama licenses general contractors and subcontractors through the Alabama Licensing Board for General Contractors. Prime contractors must also pass a business and law exam.
- At $200, the salon or shop license fee is among the highest: only 9 of 36 verified states charge more.
- Business Privilege Tax Return (Form PPT): Tax based on net worth; nothing to file if it is $100 or less. An Alabama LLC files Form PPT, the business privilege tax return, with the Department of Revenue by the due date of its federal income tax return. The tax is worked out from the business's net worth. For tax year 2026, a business that would owe only the minimum tax of 100 dollars does not have to file.
Steps to start a business in Alabama
Pick a structure and register it
Sole owners can start under their own name. To form an LLC, file the Certificate of Formation (domestic LLC) with the Alabama Secretary of State ($200).
Get a free EIN
Apply on irs.gov. You need it to hire, and banks usually ask for it. Never pay a website for an EIN.
Register your business name
If you trade under a name that is not your legal name, file a DBA with the Alabama Secretary of State.
Register for sales tax
If you sell taxable goods or services, get your permit from the Alabama Department of Revenue before your first sale.
Get the state business license
State and county business privilege license, from the Alabama Department of Revenue (issued by your county probate judge or license commissioner).
Get a state license for your type of business
Salons, child care, alcohol, building work and home food each have their own state rules. See the table above.
Check city and county permits
Ask about a local business license, zoning, health and building permits before you sign a lease.
Register as an employer when you hire
Open a state unemployment insurance tax account with the Alabama Department of Workforce.
City and county permits
Cities and countys in Alabama can require their own business license, zoning approval, health permit or building permit. Rules change from place to place, so ask your city hall and county clerk before you sign a lease. Home businesses often need a home occupation permit.
Questions about business licenses in Alabama
Do I need a business license in Alabama?
Only some businesses. Alabama has no single license for every business. Businesses listed in Title 40, Chapter 12 of the Code of Alabama need a state and county business privilege license from the county where they operate, and cities may require their own license.
How much is an LLC in Alabama?
The Alabama Secretary of State charges $200 filing fee to file the Certificate of Formation (domestic LLC). File a Certificate of Formation with the Alabama Secretary of State. You must get a Certificate of Name Reservation before you file.
How much does an LLC cost per year in Alabama?
Business Privilege Tax Return (Form PPT): Tax based on net worth; nothing to file if it is $100 or less. An Alabama LLC files Form PPT, the business privilege tax return, with the Department of Revenue by the due date of its federal income tax return. The tax is worked out from the business's net worth. For tax year 2026, a business that would owe only the minimum tax of 100 dollars does not have to file.
Does an LLC need a business license in Alabama?
Yes, if your type of business or your location requires one. Forming an LLC only registers your company with the state; it is not a license. An LLC in Alabama still needs any state license for its type of business and any local business license from its city or county.
Do I need a sales tax permit in Alabama?
Yes, if you sell taxable goods or services. Register for sales tax with the Alabama Department of Revenue online through My Alabama Taxes. Registration is free. Official fee: Free.
How much is a DBA in Alabama?
Alabama registers trade names at the state level with the Secretary of State, on the same application used for trademarks and service marks. Registration lasts five years. Official fee: $30 registration fee.
Can I sell homemade food from home in Alabama?
You can sell baked goods, jams, candy and other foods that need no refrigeration from your home directly to buyers in Alabama. Take an approved food safety course and send a Cottage Food Review Form to your county health department. Fee: Set by each county. Sales cap: No sales cap.
Do contractors need a state license in Alabama?
Alabama licenses general contractors and subcontractors through the Alabama Licensing Board for General Contractors. Prime contractors must also pass a business and law exam. Official fee: $300 for a prime contractor, $150 for a subcontractor.
Do I need an EIN?
You need an EIN if you have employees or pay certain federal taxes, and banks often ask for one. Apply online with the IRS and you get the number in minutes. It is free: never pay a website for an EIN.
Sources
Every fact on this page comes from an official government page, checked on the date shown. Facts we could not confirm are marked Not yet verified and show no number. How we check.
- General state business license Alabama Department of Revenue (issued by your county probate judge or license commissioner) Checked Nov 7, 2026
- Form an LLC Alabama Secretary of State Checked Nov 7, 2026
- Business name (DBA) Alabama Secretary of State Checked Nov 7, 2026
- Sales tax permit Alabama Department of Revenue Checked Nov 7, 2026
- Unemployment insurance (once you hire) Alabama Department of Workforce Checked Nov 7, 2026
- Official business portal State of Alabama Checked Nov 7, 2026
- Hair salon, barber shop or nail salon Alabama Board of Cosmetology and Barbering Checked Nov 7, 2026
- Child care in your home Alabama Department of Human Resources, Child Care Services Division Checked Nov 7, 2026
- Selling alcohol (bar or restaurant) Alabama Alcoholic Beverage Control (ABC) Board Checked Nov 7, 2026
- General contractor Alabama Licensing Board for General Contractors Checked Nov 7, 2026
- Selling homemade food (cottage food) Alabama Department of Public Health (your county health department) Checked Nov 7, 2026
- Business Privilege Tax Return (Form PPT) Alabama Department of Revenue Checked Nov 7, 2026
- Federal tax ID (EIN) Internal Revenue Service (IRS) Checked Nov 7, 2026