Alabama Licensing Information

Important Points:

  • A state business license (called privilege license) is required for all types of business in Alabama.
  • City and county officials determine what local licenses and permits are necessary for business. Check with the city office of where you conduct business to confirm what licenses you may need.

How to Get a Business License in Alabama:

  • If you plan to hire at least one employee, contact Internal Revenue Service to get an Employer ID Number (EIN), and to request your w-4, SS-4, Circular E and Publication 334 forms.
  • Register your business entity with the Alabama Secretary of State.
  • An Alabama business license for an automotive dismantler & parts recycler, motor vehicle dealer and retail stores can be obtained through the Alabama Department of Revenue Business Licensing Section. For other businesses, contact your county probate judge or license commissioner for information on requirements and to obtain local business licenses.

Alabama State Sales Tax:

  • Alabama has a state sales tax of 4%.
    • Automotive rate- 2%: New and used automotive vehicles, truck trailers, semi-trailers, and house trailers
    • Agricultural rate- 1.5%: Machines and equipments used for agricultural product, livestock, or poultry on farms
    • Machine rate- 1.5%: Machines and parts for machines used in mining, quarrying, compounding, processing, and manufacturing tangible personal property
  • Local sales tax- Rates vary for each city and country. Find your city and county tax rates.

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