How to Get a Business License in Alabama?

When you form a new company or if you plan to start one then there are several business requirements to be fulfilled at the federal, state, and local level. You will need different types of documents for operating such a business. One of the primary requirements is that of obtaining an Alabama business license although not all businesses will need a formal license. Most often than not, businesses engaged in specific activities or based in certain areas or localities will be required to apply for one. This guide will provide you with information on who requires licenses, types of licenses or permits required, and how you can obtain Alabama business licenses and permits.

Business License in Alabama

One of the most important aspects of any new business formation is choosing the right structure and reserving a company name. Once this is done, you can register your company according to the state laws but will you be able to operate such a company? Yes, but first you will need to apply for and obtain an Alabama privilege license or an operational permit. If you conduct business without proper business licenses then it will be deemed as unlawful and this may lead to penalty for violation of state or local ordinances requiring licenses and permits. You may have to pay a hefty fine and can even be imprisoned according to 2020 Alabama Code – Section 11-51-93.

Who needs an Alabama business license?

An Alabama business license can be defined as a mandatory permit or approval, which is normally issued by a state or government agency authorizing a domestic or foreign entity to operate within a specific city, county, or jurisdiction. In order to understand whether your company needs to apply for and obtain Alabama business licenses and permits, it is important to understand why licenses and permits are essential. The state issues different types of licenses based on certain criteria as the primary objective is to hold businesses accountable for any action as well as behavior while ensuring safety and protecting the health of the public (consumers).

Different states have different criterias and licensing regulations. Also, different types of licenses like professional or occupational licenses are meant to indicate the level of skills or expertise a professional possesses. Similarly, if you are selling taxable goods then you may need to apply for a sales tax license or permit. In most states including Alabama, primary business activity is a defining factor for issuance of licenses. Hence, it is also important to conduct a proper Alabama business license search to identify the license required according to the type of business activity. The licensing laws in Alabama are the same for both domestic and foreign entities.

What business license do I need in Alabama?

Some states in the USA have a general license for all forms of businesses but Alabama does not have any statewide general license. Instead, the state requires individuals, firms like LLC or corporations engaging in any trade, commerce, business, occupation, or profession for the sole purpose of profit or gain will be required to apply for an Alabama privilege license. It is one of the few states where a privilege license exists. Apart from this you may also be required to apply for and obtain an Alabama business license based on specific activity, the location of the business, and municipal licenses among others.

It is important to conduct an Alabama business license search as it will help you to identify the permits applicable for your business in this state. It is also important to remember that if your work or business area revolves around an activity or industry that has been regulated by a federal agency like alcohol, nuclear energy, and broadcasting then you will need to also apply for a professional license. You don’t have to apply with a federal agency to obtain an Alabama business license for any regulated profession as the same can be applied with the state.

Obtain Applicable Federal Licenses

If you are planning to start an LLC or a corporation in Alabama then you would need to apply for several different Alabama business licenses and permits depending primarily on the business activity. One of the important licenses that some businesses may require are Federal licenses. The federal government has formed regulatory agencies in each state, which are responsible for issuance of licenses and permits for certain regulatory activities. If your company is engaged in any activity that has been regulated by the federal government then you have to obtain a license or permit for the same from the state regulatory agency. You will need to conduct appropriate Alabama business license search for regulated business activities. Let’s look at an example to understand the same.

Example: If you start a food establishment and plan to serve alcohol in the premises then this will come under regulated activity. You will need to check with the Licensing and Compliance Division of the Alabama Alcoholic Beverage Control (ABC) Board for the type of license required by your establishment and the corresponding fee. If you want to sell Beer (Retail – on or off premises) then the Alabama business license fee will be $150. Now, if you want to expand into Lounge Retail Liquor – Class I then you will need to apply for a separate Lounge Retail Liquor License for on-premises and off-premises consumption pursuant to AL Admin Code R 20-X-12-.04. The fee for this type of Alabama business license and permits is $300.

Obtain a Professional License

If you start a business where-in the primary business activity is defined as a profession then you will need to apply for a professional certification or license prior to conducting business or transaction in the state.

What is a professional license in Alabama?

A professional license is a type of permit, registration, license, certificate, temporary license or permit, qualification, or temporary registration. This type of Alabama business license and permits can be issued to individuals as well as firms. It is also referred to as a non-transferrable authorization that is required for carrying out a specific activity. You will need to conduct an Alabama business license search and identify the required license as well as the State Licensing Board responsible for issuance of that license. Different professional licenses will be issued by different agencies. For instance, the Alabama State Board of Public Accountancy provides licensing and fee information for Certified Public Accountants (CPA), Public Accountants (PA), and CPA/PA Firms.

Which professions required licensing in Alabama?

If you start a business, you may not need to apply for a professional license. Again, there are some businesses that may even require both Alabama privilege license as well as a professional license. Here is a list of professions that will require you to apply for and obtain a professional license in the state.

Accountancy
Architecture
Behavior Analysis and Therapy
Communication Disorders and Sciences
Counseling and Rehabilitation Education
Dental Hygiene
Engineering Programs
Forestry
Geology
Health Care Management – Long Term Care Administration
Human Nutrition and Dietetics
Interior Design
Law
Mortuary Science and Funeral Service
Nursing
Occupational Therapy
Physical Therapy
Physician Assistant
Psychology
Public Health
Radiologic Science
Recreation Professions
Social Work
Teacher Education

Other Alabama Business Licenses

Whether you start a small company, startup, large enterprise, or even a home-based business, the licensing requirements in the state will vary according to the activity and the location of your company. Apart from the Alabama privilege license, you may even require permits and licenses in the county you are conducting your business in. Let’s look at the various other forms of Alabama business license and permits that may be required by any company operating in the state.

City or county for local licensing in Alabama

The most common type of business license required by businesses is the county license also known as municipal license or local license. Depending on the city or county where your business is established, you can conduct an Alabama business license search to identify the permits required. It is also important to note that if the municipality where you are conducting your business, has a business license ordinance, then you will be required to obtain a license or permit. Once you obtain an Alabama business license you will need to renew them as well. Most municipal business licenses are due on January 1 each year and hence you need to renew them to avoid penalties.

There is also a possibility that you may be required to obtain multiple licenses and permits. This requirement will be determined by the business activity and in such cases, the 10 percent rule will be applied. The business license fee in a specific municipality can also be based on gross receipts

Building & Zoning Permits

One of the important forms of Alabama business license and permits is the building or zoning permit. Each county or city in Alabama has their own local ordinances, which define the need for such permits. Some cities and counties may have separate building code ordinances as well. The issuance of license and zoning permits vary from one county to another depending on these ordinances. Let’s look at an example:

Example: If you start a business within the jurisdiction of the Jackson County, AL. Since the county does not have any zoning laws, you will not be required to apply for building or zoning permits in this county. Now, if you start a business in the City of Lake View, AL then this city has building and zoning ordinances. You will be required to apply for the appropriate Alabama business license. It is also recommended to contact the Building Department and Planning Commission of the City of Lake View in order to gain information pertaining to licensing.

Alabama home-based licenses

Over the years, the small businesses sector has witnessed a steady growth with many home-based businesses mushrooming across the USA. Alabama has also seen a rise in the number of startups becoming operational from the home or residence of an individual. Such businesses are often in the form of sole proprietorships but some have even formed partnerships and LLC’s (both single and multi-member). Once you have gone through the planning and new business formation stage, it is important to focus on the business licensing aspect. It is important to note that a startup from home may also require an Alabama privilege license as it is mandatory for every individual or firm that is engaged in a business activity, profession or occupation as mentioned in Title 40, Chapter 12; Code of Alabama 1975. A home-based business may also be required to obtain an Alabama business license or a professional license along with municipal and local licenses depending on the primary business activity and the location of the company.

If you are planning to start a home-based business then the local licensing regulations will vary from one county or city to another.

Example: If you start a home based business in the City of Opelika, AL then it is important to study their Home Occupation ordinance prior to beginning operations. This will also help you to conduct an Alabama business license search and also inform you regarding various limitations. One important limitation is that you will not be able to operate a home-based business without procuring a valid permit from the zoning administrator. Similarly, if you start a home-based business in the City of Madison, AL then you will need to complete a Residential Zoning Compliance Certificate and submit it with the Madison Planning and Economic Development Department. Once you receive your home occupation permit, you can apply for and obtain an Alabama business license using the Business License & Tax Application for the City of Madison.

Alternatively, you can opt for IncParadise “Business License Research Report” service. This is a research report, which contains a list of filing instructions, supporting document requirements, and fees for all business licenses and permits applicable in the state of Alabama.

Need any Assistance in Obtaining Your Alabama Business License?

If you are planning to start a small business or a medium enterprise in the state of Alabama then certain compliances need to be met to ensure the business becomes operational. You will need to apply for state and local Alabama business licenses and permits to enable you to transact in the state with ease. The Alabama business license or permit application, fees, and renewal processes will vary according to the type of license and municipality your business is operating from.

We, at IncParadise can guide you towards obtaining the necessary business licenses and permits in this state. We also provide additional services to new and existing Alabama businesses like EIN Tax ID and Foreign Qualification among others.