Though it ranks #31 in CNBC’s top states for business, being an entrepreneur in Alabama can be surprisingly easier than most feel. Let’s find out the cost of acquiring a business license in Alabama.
What is the cost of a business license in Alabama? A business license can cost up to $260 in Alabama. It’s free to register for a business in Alabama, but a few specialty licenses have some fees associated with them.
But there’s a catch. Did you know that Alabama has three types of licenses? Yep. In Alabama, you can register for one of these three licenses:
- Business Privilege License that’s issued by the County Probate Office or the County Licensing Commission.
- Store License that’s also issued by the same.
- Municipal Business License that’s not administered by the Alabama Department of Revenue.
How much will it cost to get a suitable license?
As there are three licenses, it really boils down to the type of business you have.
A business privilege license is a license for all companies, corporations, firms, and individuals engaging in any occupation, profession, business, or vocation.
Store licenses are for mercantile establishments that are being operated within Alabama. This license applies to both, retail and wholesale stores. If you are running any type of store, this is what you (additionally) need.
Municipal business licenses are for all agencies and regulatory boards that work as a business entity. A permit is required for this license.
The state of Alabama divides companies by industries (a total of 127). Each industry then has a license amount depending on the city’s population, county, etc. For example, the category “Restaurants, cafes, cafeterias, etc.” is one of the longest categories in terms of sub-categorization based on population, and here are its details:
| City population | License amount | Fee | Total | |
| 1 | 40,000 and over | |||
| 10 people or less | 15 | 1 | 16 | |
| 10-20 people | 22.5 | 1 | 23.5 | |
| 20-35 people | 45 | 1 | 46 | |
| Over 35 people | 75 | 1 | 76 | |
| 2 | 15,000 to 40,000 | |||
| 10 people or less | 11.25 | 1 | 12.25 | |
| 10-20 people | 18.75 | 1 | 19.75 | |
| 20-35 people | 37.5 | 1 | 38.5 | |
| Over 35 people | 52.5 | 1 | 53.5 | |
| 3 | 5,000 to 15,000 | |||
| 10 people or less | 7.5 | 1 | 8.5 | |
| 10-20 people | 15 | 1 | 16 | |
| 20-35 people | 22.5 | 1 | 23.5 | |
| Over 35 people | 37.5 | 1 | 38.5 | |
| 4 | Less than 5,000 | |||
| 10 people or less | 7.5 | 1 | 8.5 | |
| 10-20 people | 11.25 | 1 | 12.25 | |
| 20-35 people | 15 | 1 | 16 | |
| Over 35 people | 22.5 | 1 | 23.5 |
Here are some pointers for the general trend of business license cost in Alabama:
- Some companies are charged a flat rate regardless of their location, such as coffins and caskets manufacturers are charged a license amount of $150 and a fee of $1.
- Generally, more common businesses have a tabulated slab-wise licensing charge.
- In most cases, the maximum license fee is $151.
- A few categories have a remarkably higher license amount, such as real estate brokers are charged at $751 anywhere in Alabama, or vending machines can cost up to $1,001 (for more than $10,000,000 worth of sale).
- Similarly, a few licenses are extremely cheap, like those to playing cards stores ($4), veterinary surgeons ($6), photographers ($8.50), and sandwich shops ($8.50).
You can find the full list here.
How do I get a business license in Alabama?
Obtaining a business privilege license or store license is fairly straightforward. The first step is to either register online or through your county’s probate’s office. You will find the contact information of your local office using the County Probate Office Directory.
Note that sole proprietors or self-employed individuals don’t need a business license to practice their trade or profession. However, whether or not you require some form of licensing or registration depends completely on the type of trade you have, so make sure you are operating in a way that complies with Alabama’s regulations.
On the other hand, what if you are running a multi-faceted operation? By law, in Alabama, any firm, corporation, or individual running more than a single business has to pay the tax on each branch of said business.
A business license in Alabama is a personal privilege and consequently, each license provides a particular individual or business the right to do a specific trade or business activity, which cannot be exercised by anyone else (on the same license). Personal privileges are strict when it comes to exercising them.
However, it’s possible to get more than one license on the same business. So, if you have a specific partnership arrangement that requires more than one individual or business to hold licenses, it can be done so through the probate judge.
Other information regarding business licensing and registration in Alabama
Here are some other pieces of information that you should know about when getting a license for your business in Alabama:
- A small business is looking at an initial investment of $260-280 for the first year for a business license in most scenarios. Renewal fees are $50 annually.
- Business licenses (as well as tax licenses) renew annually. They become due on October 1 of each year and end on September 30 the following year. They become delinquent on November 1 each year, if not renewed, after a grace period of one month.
- A seller’s permit is sometimes required in addition to a business privilege license (and a store license in the case of stores) to do business.
- Note that having other documentation (such as an EIN from the IRS or an LLC registration) does not qualify as having a business license.
- If you are in the broadcasting, drug manufacturing, or investment advising industries, then you need a nationwide or federal business license, not a state license.
- A business license in Alabama has transferability. As such, a license can be transferred for a fee of $1 with an application.
Here are the business license costs in other states: