Alabama Business License Requirements for an LLC

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An Alabama business license gives your Limited Liability Company (LLC) permission to operate in a certain location or within a specific industry.

While we can’t walk you through any applicable license applications step-by-step, we do provide helpful resources like:

  • information about state licensing rules
  • instructions for researching municipal licenses

And if you want to just hire a company to do the research for you, we have a recommendation below.

Alabama Business License Requirements

Business License

After you form an Alabama LLC, you will need to obtain a business license.

Your license and permit requirements are determined by the industry you are in and where your Alabama Limited Liability Company is located.

Because of the large number of industries and all of the municipalities in Alabama, it’s not possible for us to explain them all. However, you can use the search tools below, call your local municipality, or hire a company for help.

Need to save time? We recommend hiring MyCompanyWorks (for $99) to handle the business license research for you.

How to get a Business License in Alabama

You can obtain a business license in Alabama by applying with the relevant licensing or regulatory agency. The agency you apply with will depend on where your business is located and what business activities it engages in.

The business license application typically requires basic information, such as your LLC name, EIN Number, business address, and contact information. Many also include a questionnaire that asks about your business activity.

There are three main licensing jurisdictions:

  • State licensing
  • Local licensing, such as county, city, township, etc.
  • Federal licensing

Does Alabama Require a Business License?

Yes. Every Alabama LLC must obtain a Business Privilege License from the county where the LLC is located.

And your LLC might need other licenses or permits, but that depends on where your business is located, and what it does.

State-Level Licenses

There are two types of state-level business licenses:

  • a general business license
  • and an occupational license

Alabama General Business License

Some states have a general license requirement, which means all businesses operating in those states must have the license, regardless of what they do.

Alabama is slightly unusual. Because of the Business Privilege Tax requirement, every business must have a Business Privilege License. But although the requirement comes from the state (the Alabama Department of Revenue), the actual license is obtained from the county.

Meaning, your Alabama LLC doesn’t need to get a general business license from the state of Alabama. But your LLC will need to get a license from the county (discussed below).

And depending on what type of business you run, your LLC might need an occupational license.

Alabama Occupational License

Most states have occupational business license requirements. This means a license or permit may be required depending on what your business does or what your occupation is. For example, if you sell used cars, or run a hair salon, you may need an occupational business license. But a license may not be required for other types of businesses.

The Department of Revenue’s Business and License Division website can help you determine if your Alabama business needs an occupational license or permit, and which agency to contact about applying for the license.

This Quick Reference Guide from the Department of Revenue lists all the occupational licenses in Alabama.

You can also contact the Department of Revenue Business and License Division with questions.

Note: Alabama business licenses are not issued by the Secretary of State. The Secretary of State is responsible for business entity administration, for example Limited Liability Company formation.

How much is an Alabama Business License?

The filing fee for your Business Privilege License will vary depending on where you’re doing business and what industry you’re in. To be honest, we can’t predict your specific Alabama business license cost.

For example, licenses issued by a county that contains a large city are usually more expensive than licenses in less populated, rural counties. And licenses for regulated industries, like child care facilities, are usually more expensive than generic business licenses.

See LLC Cost in Alabama to learn about all the possible LLC fees.

Municipal Business License

Municipal business licenses can be issued by the city, town, county, parish, township, borough, etc. We refer to all of these as a “municipality” to keep things simple.

There are two types of municipal business licenses:

  • general business license
  • industry-specific license

For example, if a municipality has a general business license requirement, all businesses operating in that municipality must have the license, regardless of what they do.

Alabama requires every business to get a Business Privilege License. The Business Privilege License is issued by the county where your LLC is located.

You only need a Business Privilege License for your “home” county, where your LLC is located. You don’t need to get a separate license for any other county where your business operates.

Which Business Privilege License you need, and how much it costs, depends on what your business does.

Said another way, Alabama Business Privilege Licenses are industry-specific business licenses. For example, the license type and cost differ if you operate a food truck, or run a daycare, or if you’re purchasing or leasing real estate.

The Probate Judge or License Commissioner for the county handles Business Privilege License applications. You can contact your county to check on their local licensing requirements: Alabama Counties

Alabama Sales Tax License

If you sell products to consumers in Alabama, you may need to collect sales tax and file a Sales and Use Tax Return.

If your business activities are subject to sales and use tax, your LLC must register with the Department of Revenue.

Note: This requirement will apply whether you sell products online or in a physical location in Alabama.

You can learn more about sales tax with these resources:

Tip: Save time by hiring an expert. We recommend using TaxJar. They'll help you register for, collect, and pay sales tax.

Do I need any federal business licenses?

Most businesses in Alabama don’t need a federal business license. However, certain industries do need federal licenses:

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Check out the Small Business Administration’s Licenses and Permits page for a full list of industries with federal license requirements.

If your business isn’t one of these special cases, then the only federal requirements are that your LLC get an Alabama EIN Number (aka Federal Employer Identification Number) and that you file taxes.

Alabama Business License FAQs

The cost of a Business Privilege License depends on which type of license you need (based on what your LLC does) and what county you get it from. The base issuance fee is only $1, but each county adds its own fees to that.

Said another way, the fee varies depending on your LLC’s location, and what type of business or industry you’re in. Unfortunately, we can’t say what your LLC’s business license costs would be, because it depends on several factors and the cost of Alabama licenses varies.

No, an LLC is not a business license. They are two completely different things.

An LLC is a type of business structure created by filing a document with the state government.

And a business license is a document that gives a person, or a company, the right to transact business. It doesn’t create an LLC.

Sometimes a new business owner chooses to operate as a Sole Proprietorship in Alabama instead of an LLC.

Even if you’re just trying out a business idea as a Sole Proprietorship, you will still be subject to license requirements at the state and county levels. Which type of license you need will depend on what you will be doing, and where you will be operating your business.

No, the Alabama Secretary of State doesn’t handle licensing requirements. Instead, they manage business entity formation and registration. For example, depending on business entity type, business owners file different paperwork with the Secretary of State to create their business entity.

For more information, or to determine if there is an Alabama business license cost for your business, we recommend contacting the Alabama Department of Revenue and/or your county government. For example, your local county or city government will have information about any local licenses.

Here are the steps to starting an LLC in Alabama:

  1. Select a business name for your Alabama LLC
  2. Choose your Registered Agent
  3. File the LLC Certificate of Formation with the state
  4. Complete and sign an LLC Operating Agreement
  5. Get a Tax ID Number (EIN) from the Internal Revenue Service (IRS)
  6. Open an LLC bank account
  7. Check whether you need a business license or tax permits in Alabama
Matt Horwitz
Matt Horwitz
Founder & Educator, LLC University®
Matt Horwitz has been the leading expert on LLC education for the past decade. He founded LLC University in 2010 after realizing people needed simple and actionable instructions to start an LLC that other companies weren't offering. He's cited by Entrepreneur Magazine, Yahoo Finance, and the US Chamber of Commerce, and was featured by CNBC and InventRight.
 
Matt holds a Bachelor's Degree in business from Drexel University with a concentration in business law. He performs extensive research and analysis to convert state laws into simple instructions anyone can follow to form their LLC - all for free! Read more about Matt Horwitz and LLC University.

4 comments on “Business License in Alabama”

Disclaimer: Nothing on this page shall be interpreted as legal or tax advice. Rules and regulations vary by location. They also change over time and are specific to your situation. Furthermore, this comment section is provided so people can share their thoughts and experience. Please consult a licensed professional if you have legal or tax questions.

  1. I just want to say THANK YOU THANK YOU THANK YOU!!!! My llc is officially formed, thanks to you!! your steps were clear as the blue seas of Florida!!

    Reply
    • FANTASTIC!! You’re so welcome Laquitta. Wishing you nothing but success!:)

      Reply
  2. You “How much does it cost to form an LLC” link states that if you complete the free online course it will not cost you anything. I’ve completed the course and am wondering what to do next.

    Reply
    • Hi Alisa, if you went through the lessons and formed your Alabama LLC, then there’s nothing else to do in terms of LLC formation. You can open an LLC bank account and then just make sure to take care of your tax filings every year. We recommend working with an accountant. Please see how to find an accountant. Hope that helps.

      Reply

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