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Business Guides

How to start a business in Alabama

Updated August 2026 Alabama-specific rules only

Every state has its own formation rules, licensing requirements, and tax obligations. These guides cover the Alabama-specific steps — county license before day one, mandatory name reservation, no LLC annual report since October 2024 — that generic "how to start a business" guides miss entirely.

1

Choose your structure

LLC for liability protection, sole proprietorship if you're testing the idea first. Most Alabama businesses form an LLC.

2

Reserve your name & file

Alabama requires name reservation before the Certificate of Formation — a two-step sequence no neighboring state requires.

3

Get your county license

Required before you open. October 31 renewal. Required in every county where you conduct business — not just where you're based.

4

Register a trade name

Operating under anything other than your LLC's legal name requires a DBA with the Alabama SOS Trademarks Division — $30, use-first rule.

5

Get your EIN

Free from the IRS at irs.gov. Required for employees, corporate tax treatment, or most business bank accounts.

6

Industry licenses & permits

Some business types require state board licensing beyond the county privilege license. Each guide covers what applies to that industry.

The Alabama rules most guides don't cover

No LLC annual report
Eliminated October 2024 under Act 2024-213. Only corporations file. If a service sells you an LLC annual report in Alabama, ask what it actually files.
Name reservation is mandatory
You must reserve your name before filing the Certificate of Formation. $28 online, instant approval. No neighboring state requires this step.
County license before day one
No grace period. Required in every county where you conduct business. Delinquent November 1 if not renewed. October 31 is the annual deadline.
Multi-county rule
A cleaning service, contractor, or lawn care business that works across county lines needs a license in each county — not just where the LLC is registered.
No TOD deed for real estate
Alabama has no transfer-on-death deed. Real estate must go through probate or into a properly funded trust. Relevant for property-holding LLCs.
BPT threshold — most LLCs owe $0
Business privilege tax eliminated for LLCs computing $100 or less in tax (Act 2022-252). Most small single-member LLCs don't file or pay.
Home Services

The most common North Alabama business types — trades, cleaning, and lawn care. All require a county license before opening and face the multi-county rule.

Professional & Freelance

Service businesses, consultants, and freelancers — typically lower startup cost but still require the county license and LLC formation steps.

Food & Hospitality

Food businesses in Alabama layer county licensing over state health department permits — both are required before serving a single customer.

Child & Personal Care

Ready to form your Alabama LLC?

Northwest Registered Agent handles your Certificate of Formation and registered agent service — flat $125/year, no price increases.

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Formation & Compliance Guides

The foundation every Alabama business needs — regardless of industry.