Birmingham Business License: How to Register and What It Costs

If you are starting a business in Birmingham, you need two licenses: a Jefferson County business license and a separate City of Birmingham business license. This guide walks you through both, explains what to expect, and helps you avoid common delays.

What You Need to Know First

Alabama requires every person and business operating in a county to hold a business privilege license issued by that county. Birmingham sits in Jefferson County, so you start there. But the City of Birmingham also issues its own business license, and both are required if your business operates within city limits.

Importantly, a business license is not the same as filing your business structure (LLC, corporation, sole proprietorship, or partnership). You must file your business structure with the Alabama Secretary of State first or operate as a sole proprietor, then apply for your licenses. A license gives you permission to operate; incorporation or LLC formation establishes your legal entity.

Materials You'll Need

Gather these before you start:

• Your legal business name (or your personal name if you are a sole proprietor)
• Your federal Employer Identification Number (EIN), if you have one. Sole proprietors can use their Social Security Number
• Your physical business address in Birmingham or Jefferson County
• A description of your business activity (what goods or services you sell)
• Your personal ID (driver's license or passport)
• Payment method: cash, check, or card, depending on where you file
• If your business structure is an LLC, corporation, or partnership: a copy of your Secretary of State filing receipt or Certificate of Formation

Step-by-Step Process

Step 1: File Your Business Structure (If Needed)

If you are operating as a sole proprietor using your own name, skip this step. If you are forming an LLC, corporation, S-corp, partnership, or using a business name other than your legal name, you must file with the Alabama Secretary of State first.

An LLC formation takes 10 minutes to 24 hours depending on whether you file online. A corporation takes the same. Visit the Secretary of State Online Services portal to file online (most efficient) or mail your formation document to the Secretary of State office in Montgomery. The filing fee for an LLC or corporation is $200.

Once you have your Certificate of Formation, you are ready to get your business licenses.

Step 2: Register for Alabama Business Privilege Tax

Before you apply for your Jefferson County business license, register with the Alabama Department of Revenue. This is free and happens through My Alabama Taxes.

Log in or create an account, then register your business. You will receive an account number and a confirmation email within 3 to 5 days. Save this number; you will need it for your Jefferson County license application.

The state does not issue a license document at this step. You are simply registering so the state tracks your business for the Business Privilege Tax, which is due each year based on your net worth in Alabama (graduated from $0.25 to $1.75 per $1,000 of net worth, capped at $15,000 for most entities). If your tax bill is $100 or less, you are exempt from filing a return as of 2024.

Step 3: Obtain Your Jefferson County Business License

Contact the Jefferson County Probate Judge's office or the county license commissioner. They issue the county business privilege license required in Alabama. The process and fees vary by county, so confirm the current fee and application method directly with Jefferson County.

You will need to provide:

• Your business name and address
• Your Alabama Department of Revenue account number (from Step 2)
• Your EIN or SSN
• A description of your business
• Payment for the license fee

Processing is usually same-day or within a few days. You will receive a license document to display at your business location.

Step 4: Obtain Your City of Birmingham Business License

Once you have your county license, apply for your City of Birmingham business license. Contact the City of Birmingham Finance Department or Business Licensing Division directly to confirm the current process, fees, and requirements.

Typically you will need:

• Your business name and Birmingham address
• Your county business license number (from Step 3)
• Your EIN or SSN
• Proof of your business structure (if not a sole proprietor)
• Payment for the city license fee

Processing is often same-day. Keep both licenses posted or accessible at your business location.

Step 5: Apply for Specialized Licenses (If Required)

Depending on your industry, you may need additional state or local licenses. For example:

• Sales Tax Permit: If you sell tangible goods, register for a sales tax permit through My Alabama Taxes (free). Alabama's state sales tax is 4%, plus local city and county additions.
• Food Service License: If you sell food, contact the Jefferson County Health Department.
• Professional License: If you are an accountant, electrician, contractor, real estate agent, or other licensed profession, verify your license with the relevant state board.
• Liquor License: If you sell alcohol, apply through the Alabama Alcoholic Beverage Control Board.

Do not skip this step if it applies to you. Operating without a required license can result in fines and business closure.

Tips and Common Mistakes to Avoid

Mistake 1: Skipping the county license because you have a city license. Both are required. The city license alone is not valid for county compliance.

Mistake 2: Not registering with the state tax authority first. You need your Alabama Department of Revenue account number before your county license. This only takes minutes online.

Mistake 3: Using an unregistered business name. If your name is different from your legal name, file an LLC, corporation, or sole proprietor DBA registration with the Secretary of State or state business tax authority first. Operating under a name you have not filed is technically operating without a license.

Mistake 4: Forgetting to display your license. Both your county and city licenses must be visible to customers or accessible upon request. Inspection officers may issue citations if licenses are missing.

Tip 1: Call ahead. County and city offices have different hours and processes. A 10-minute phone call clarifies fees, required documents, and appointment availability.

Tip 2: Apply for a sales tax permit immediately if you are selling goods or certain services. This is free and protects you legally. You will need it to collect and remit sales tax.

Tip 3: Keep a copy of all licenses and permits in one folder. You may need to show them to inspectors, your bank, or your accountant during the year.

Tip 4: Check the renewal deadline. Business licenses typically expire on a set date each year. Mark your calendar and renew before expiration to avoid a lapse in legal operation.

Expected Timeline and Costs

Assuming you are starting from scratch with no prior business structure:

• Secretary of State LLC or corporation filing: $200 fee. Online filing: same day to 24 hours. Mail filing: 5 to 10 business days.
• Alabama Department of Revenue registration: Free. Account number arrives in 3 to 5 days.
• Jefferson County business license: Fee amount varies; confirm with Jefferson County Probate Judge or license commissioner. Processing is usually same-day.
• City of Birmingham business license: Fee amount varies; confirm with the City of Birmingham Finance Department. Processing is usually same-day.
• Sales tax permit registration: Free. Registration is immediate online through My Alabama Taxes.

Total typical cost: $200 (state entity formation) plus county and city license fees. Confirm the county and city fees directly with those offices, as they change and vary by business type.

Total timeline: If you file your LLC or corporation online, you can have all licenses in hand within 1 to 2 weeks. If you mail your entity formation, add 5 to 10 business days.

Important Disclaimer

This article is informational only and does not constitute legal or tax advice. Business licensing rules are complex and vary by business type, location, and industry. Before you apply, consult the official websites of the Alabama Secretary of State, Alabama Department of Revenue, Jefferson County Probate Judge, and the City of Birmingham to confirm current requirements and fees. If your business involves regulated activities (food service, alcohol, contracting, professional services), consult an attorney or accountant to ensure you meet all requirements. The cost of professional guidance upfront is far less than the cost of operating without proper licenses.

Key Contact Information

• Alabama Secretary of State: https://www.sos.alabama.gov/business-entities, File your LLC, corporation, or other business structure here.
• Alabama Department of Revenue: https://www.revenue.alabama.gov/ and My Alabama Taxes portal, Register your business and apply for sales tax permits.
• Jefferson County Probate Judge or License Commissioner: Contact your county for business privilege license details.
• City of Birmingham Finance Department: Contact the city directly for business licensing information.
• Alabama Small Business Development Center (ASBDC): https://www.asbdc.org/, Free business guidance and support.