Who issues the business privilege license in Alabama?

The county Probate Judge or License Commissioner issues the state and county business privilege license in the county where the business is located. A license is generally required in every county where you conduct business.

When does the Alabama business privilege license expire?

The business privilege license year runs from October 1 through September 30 of the following year. The license must be renewed annually to keep the business in compliance.

Do I need a city business license in Alabama?

Usually yes. Alabama cities require their own municipal business licenses, which the Department of Revenue does not administer. Check with each city where you operate to confirm the license and fee that apply.

Business License in Alabama: Requirements & Cost (2026)

Q: Does Alabama require a statewide business license?

No. Alabama has no single statewide general business license. Most businesses instead need a county business privilege license under Title 40, Chapter 12 of the Code of Alabama, issued by the county Probate Judge or License Commissioner where the business operates.

Q: How much does an Alabama business license cost?

County business privilege license fees vary by business type under the schedule in Title 40, Chapter 12. The Alabama sales tax license from the Department of Revenue is free. City business license fees are set separately by each municipality.

Q: Do I need a sales tax license in Alabama?

Yes, if you sell taxable goods. Register for a sales tax license through My Alabama Taxes with the Department of Revenue before making sales. Registration is free, and the state sales tax rate is 4% plus local rates.

Fact-checked by the LegalGlass editorial team against primary sources · Published Aug 6, 2026 · Last updated Aug 6, 2026

Alabama has no single statewide general business license. Instead, most businesses must obtain a county business privilege license under Title 40, Chapter 12 of the Code of Alabama, issued by the county Probate Judge or License Commissioner where they operate. Separately, if you sell taxable goods you register for a free sales tax license with the Alabama Department of Revenue through My Alabama Taxes, and many cities require their own municipal license on top of the county one.

Quick Answer

Statewide license?: No general statewide business license in Alabama
County license: Business privilege license (store/privilege license), Title 40, Ch. 12
Issued by: County Probate Judge or License Commissioner - in each county you operate
License year: October 1 – September 30, renewed annually
Sales tax license: Free - Alabama Department of Revenue via My Alabama Taxes
City license: Usually required separately by each municipality
State sales tax rate: 4% state, plus local rates

Does Alabama Have a Statewide Business License?

Alabama does not issue a single, one-size-fits-all statewide business license. There is no state office that hands every new company a general "license to do business." Instead, Alabama's licensing system is layered: a county-level business privilege license, state-level tax registrations administered by the Alabama Department of Revenue, municipal licenses issued by individual cities, and profession-specific licenses issued by state boards. Whether you need each layer depends on what you do, where you do it, and what you sell.

This structure catches many owners off guard because "business license" means different things at each level. The most important takeaway is that forming your LLC or corporation with the Secretary of State is a separate step from getting licensed to operate. If you have not formed the entity yet, start with how to form an LLC in Alabama, then work through the licenses below. For the national overview, see our business license hub.

The County Business Privilege License (Title 40, Ch. 12)

The closest thing Alabama has to a general business license is the business privilege license - sometimes called a "privilege license" or "store license." It is required of virtually every person, firm, company, or corporation engaged in a business, vocation, occupation, or profession that is described in Title 40, Chapter 12 of the Code of Alabama 1975. The license is a prerequisite to lawfully doing business in the state, and it is administered through the Alabama Department of Revenue's Business and License Tax Division along with the counties.

Two features define it. First, it is county-based: unless a statute says otherwise, you need a license in every county where you conduct business, not just where you are headquartered. Second, it is annual: the license year runs from October 1 through September 30, and it must be renewed each year. The specific fee depends on your business type and, for some categories, on population or gross receipts - the schedule is set out across Chapter 12. Because the amount varies so widely by activity, confirm your category and fee against the state's Handbook of Privilege and Store Licenses before you file.

Where and How to Get the County License

You obtain the state and county business privilege license from the county Probate Judge or License Commissioner in the county where your business is located. Many counties let you apply and pay in person at the courthouse; some offer online or mail options. The general process is:

Confirm your business activity's license category and fee under Title 40, Chapter 12.
Gather your entity information and federal EIN.
Apply with the Probate Judge or License Commissioner in each county where you operate.
Pay the applicable license fee and keep the issued license on file.
Renew before the October 1 start of each new license year.

If you operate in multiple counties, budget for a license in each. Home-based and online sellers are not automatically exempt, so verify with your county office. See our business license overview and the state's Alabama LLC cost page for how licensing fits the overall budget.

The Alabama Sales Tax License (My Alabama Taxes)

If your business sells tangible goods at retail, you must register for an Alabama sales tax license before making sales. You register with the Alabama Department of Revenue through the My Alabama Taxes (MAT) portal, and registration for the account is free. The same portal handles related accounts such as sellers use tax, simplified sellers use tax, rental tax, lodgings tax, and income tax withholding, so you can set up everything the state administers in one place.

Alabama's state sales tax rate is 4%, and cities and counties add their own local rates on top, so the combined rate at the register is often significantly higher. Once registered, you collect the tax and remit it on the schedule the Department assigns. A sales tax license is a tax registration, not a substitute for the county privilege license - most retailers need both. Learn more in business tax and Alabama LLC tax filing.

Municipal (City) Business Licenses

Alabama cities issue their own municipal business licenses, and the Department of Revenue explicitly does not administer them. If you operate within a city's limits - or in some cases within its police jurisdiction - you likely need that city's license in addition to the county privilege license. Each municipality sets its own fee structure, often based on business type or gross receipts, and its own renewal cycle. The practical rule: contact the city clerk or revenue office in every city where you have a location, employees, or regular activity, and confirm the license and fee before you start operating there.

Professional and Occupational Licenses

Certain occupations require a state professional or occupational license issued by a licensing board, regardless of the county and city licenses above. Examples include contractors, cosmetologists, electricians, real estate agents, accountants, health-care providers, and many others. These licenses are about competence and consumer protection, and they are handled by the relevant Alabama board, not by the county or the Department of Revenue. If your field is regulated, budget time for exams, education requirements, and board fees. When in doubt, check whether a state board governs your profession before you assume a county privilege license is enough.

Other State Registrations You May Need

Beyond licensing, a few registrations often go hand in hand with opening an Alabama business. If you have employees, register for income tax withholding and set up unemployment insurance. If you use a trade name, you may file a DBA. Form your entity and appoint a registered agent through the Alabama Secretary of State's business services, and obtain a federal EIN from the IRS - free - which you will need for tax accounts and most licenses. For the annual state filings that apply, see our Alabama annual report guide.

Alabama Business License Fees and Renewal (2026)

Because Alabama licensing is layered, there is no single price. The table summarizes the pieces most businesses encounter; verify current amounts with the county, city, and Department of Revenue, since county and municipal fees are set locally.

License / registration	Issued by	Fee (2026)
County business privilege license	County Probate Judge / License Commissioner	Varies by business type (Title 40, Ch. 12)
Sales tax license	Department of Revenue (My Alabama Taxes)	$0 (free)
Municipal (city) business license	Each city	Set by the city
Professional / occupational license	State licensing board	Set by the board
Federal EIN	IRS	$0 (free)

All licenses renew on their own cycle - the county privilege license on the October 1 – September 30 year, city licenses on each city's schedule. Track every renewal date to avoid a lapse.

Penalties for Operating Without a License

Operating without a required license in Alabama is not a technicality. Doing business without the proper privilege license can expose you to back license fees, penalties, and interest, and in some cases misdemeanor liability. Cities can likewise assess penalties for operating without a municipal license, and unregistered retailers remain liable for sales tax they should have collected plus penalties. The cost of getting licensed up front is almost always far lower than the cost of being caught operating without one, so treat licensing as a first-week task, not an afterthought.

Frequently Asked Questions

Does Alabama require a statewide business license?

No. There is no single statewide general business license. Most businesses need a county business privilege license under Title 40, Chapter 12, plus tax registrations and any city or professional licenses. See our business license hub.

Who issues the business privilege license?

The county Probate Judge or License Commissioner in the county where you operate. You generally need one in each county where you do business.

How much does an Alabama business license cost?

County privilege license fees vary by business type under Title 40, Chapter 12. The sales tax license is free. City fees are set by each municipality. See Alabama LLC cost.

When does the business privilege license expire?

The license year runs October 1 through September 30 and must be renewed annually.

Do I need a sales tax license in Alabama?

Yes, if you sell taxable goods. Register free through My Alabama Taxes with the Department of Revenue. The state sales tax rate is 4% plus local rates. See Alabama LLC tax filing.

Do I need a city business license too?

Usually. Alabama cities issue their own licenses, which the state does not administer. Check with each city where you operate.

Sources

Alabama Department of Revenue - Business and License Tax Division.
Alabama Department of Revenue - Business Privilege License overview (county issuance; October 1 – September 30 license year).
Alabama Department of Revenue - Handbook of Privilege and Store Licenses (PDF).
Code of Alabama 1975 - Title 40, Chapter 12, Licenses.
Code of Alabama 1975 - § 40-12-2, License required; how license obtained.
Code of Alabama 1975 - Title 40, Chapter 23, Sales and Use Taxes.
Alabama Department of Revenue - Sales and Use Tax (My Alabama Taxes registration).
Alabama Department of Revenue - Sales and Use Tax Rates (4% state rate).
Alabama Department of Revenue - Withholding Tax (employer registration).
Alabama Secretary of State - Business Services (entity formation, registered agent).
IRS - Apply for an EIN Online (free EIN).
IRS - Business Structures.
IRS - Starting a Business.

LegalGlass provides general information for educational purposes and is not a law firm or a substitute for advice from a licensed attorney or tax professional. Licensing requirements and fees vary by county and city and change over time; verify current requirements with the Alabama Department of Revenue and your county and city offices before acting.