Whether you have decided to form an LLC or a Partnership or register as a Corporation, it is essential to obtain an Alabama company license to begin operation. You may require permits as well in different counties. The question is how do you determine what license or permit is required for your type of business and more importantly, do you require a license at all?
Business license is important and a necessity when it comes to operating within the state. In order to determine the type of license or permit, your business requires, it is important that you determine the type of federal, state, county, or city requirements that need to be met. You need to also determine whether the business you are trying to establish, will be allowed in the area or city you are proposing to register in.
Types of Business License in Alabama
According to 2006 Alabama Code – Section 40-12-40, an individual, company, firm, association, or corporation engaged in any occupation, vocation, business, or profession will need to procure a state or county Business License or Permit prior to beginning operations in the state. It is important to understand that state/county business privilege licenses are issued via the local county probate offices.
Business license in Alabama can be classified under three categories and they are:
Business Privilege License
A business privilege license is required by each individual, company, firm, or corporation that is engaged in any type of occupation, business, profession, or vocation as described in Title 40, Chapter 12, Code of Alabama 1975. Some of the businesses that require this Business License include Abstract Companies, Advertising Agencies, Automobile Dealers, Credit Agencies, Gasoline Stations with pumps, Machinery repair shops, Real Estate Brokers and Agents, Restaurants, Cafes, Cafeterias, Tourist camps, and Warehouses among others.
How to get this license
This type of Alabama company license is issued by the Commissioner of Licenses or Department of Revenue, County Probate Office or County Licensing Commission. The license needs to be renewed each year. You will need to pay the license fee which is due on October 1 of each year and it will be valid for a period of one year, ending on September 30. If you are unable to renew by end of October then delinquency will prevail on November 1. The fee varies from county to county and based on the type of business.
For example: Advertising Companies situated in a county with a population of 200,000 or more have to pay a Business License fee of $226.00 and if it is situated in a county where the population is less than 30,000 then the License fee will be $23.50.
This is a type of Business License in Alabama that is applicable to any store or stores or any mercantile establishments that are owned, maintained, operated, and controlled by an Individual, Corporation, Firm, Co-Partnership, or an Association, which is either Foreign or Domestic, and in which merchandise, goods, or wares of any type are sold. The store could be a retail or wholesale store.
How to get this license
This type of Alabama company license is issued by the Commissioner of Licenses or Department of Revenue, County Probate Office or County Licensing Commission. The license needs to be renewed each year. You will need to pay the license fee due on October 1 of each year and it will be valid for a period of one year, ending on September 30. If you are unable to renew by end of October then delinquency will prevail on November 1. The fee varies from county to county and based on the type of business.
For example: An Automobile Accessory Dealership store that sells motor vehicle accessories, including motor vehicle parts, air conditioning units, automobile bumpers, automobile radios, motor vehicle batteries and tires, seat covers, parts & accessories for self-propelled tractors etc., will pay annual license tax and/or fee based on the county population. If the Automobile Accessory Dealership is situated in a county with a population of 100,000 or more they will have to pay a business license fee of $61.00 and if it is situated in a county where the population is between 2,000 and 5,000 then the license fee will be $16.00.
Municipal Business Licenses
There are specific businesses, which require a Municipal Business License but this license can only be issued after such businesses have acquired a permit or certificate from the Regulatory Agency or Board. This type of business license in Alabama is required by Act 2006-586 for business entity and occupations.
How to get this license
This type of Alabama company license is issued by the Municipal Board or Agency for each type of business. The fee of Municipal License varies according to type of business/entity, board or agency managing it, and the county it is situated in. For example: Alcoholic Beverages (Clubs, Restaurants, etc) require certification issued by Alcoholic Beverage Control Board (ABC Board) prior to applying for Municipal License while Ambulatory Health Care Services-Onsite Pharmacy require certification from the Pharmacy Board prior to applying for Municipal License.
Hence, it is important that you identify beforehand whether your business requires a Business Privilege License, Municipal License or a Store License. This will ensure quick processing of your business license in Alabama and once you have the license, you are ready to begin operations in the state.