How To Apply For An Alabama Sales Tax License (Apr. 2026)

After forming a Limited Liability Company (LLC) in Alabama, you must secure all required licenses to legally operate, one of which is the Alabama Sales Tax License.

You must obtain a Sales Tax License if your LLC is subject to the Sales and Use Tax in Alabama. This is a mandatory requirement if your business is involved in the sale of tangible personal property or services. To obtain one, you need to register your in-state retail business with the Alabama Department of Revenue (ALDOR) online via the My Alabama Taxes (MAT) portal.

In this article, I’ve written a comprehensive overview of the Alabama Sales Tax License. You’ll learn how to apply for a Sales Tax License in Alabama, the requirements, and the associated fees.

An Overview Of The Alabama Sales Tax License

All LLCs performing taxable activities must obtain a Sales Tax License from the ALDOR under the Code of Alabama § 40-23-6(a). The Sales Tax License is the official authorization for your LLC to legally collect and remit Sales Tax in Alabama.

This must be done in advance before conducting the taxable activities or services.

If your LLC has a nexus with the state, it’s considered to be engaging in business in Alabama. The table below summarizes the types of nexus, who is liable, and the required licenses. You can use it as a useful reference point before reading the sections below.

You do not need to pay the registration or renewal fee when getting the Sales Tax License. However, you still need to renew the license each year to keep it active. You can find more details about this further below the article.

After obtaining the Sales Tax License, you will have to file the return. The Alabama Sales and Use Tax is split into two primary layers: state taxes and local taxes.

• State Sales Tax rate: This is generally set at 4%. However, some goods and/or services may be taxed at a lower or a higher rate.
• Local tax rate: This varies across counties and municipalities

How To Register For Your State Of Alabama Sales Tax License

You must use the online application method when applying for your Alabama Sales Tax License. This has to be done via the MAT portal.

To begin, visit the website using the link provided above. Click “Register a business/Obtain a new tax account number” to begin your Alabama Sales Tax License application.

1. Enter Your ID

First, enter the necessary data into the applicable boxes:

• Type of business entity: Choose “Limited Liability Company” from the dropdown menu.
• Employer Identification Number (EIN): Enter your EIN twice to confirm it with the system.
• Existing taxpayers: Select “No.”

2. Select Applying Tax Types

Your Alabama LLC has to fulfill its Sales Tax obligations at the local and state levels. Therefore, select both tax types in this section:

1. Sales Tax (state).
2. Local taxes (city and county).

3. Taxpayer Details

Next, you need to provide the ALDOR with your core business information so they can classify your LLC for Sales Tax purposes. State the following details:

• Who you are.
• Where you operate.
• What you do.

a. Applicant Info

In the first section, add your core LLC information. This should include your:

• Legal name: This should be exactly as registered with the Alabama Secretary of State.
• Trade name (Doing Business As – DBA): Only complete this section if you operate under a different registered business name.
• Business entity subtype: State if your LLC is using a single-member or multi-member business structure.
• Incorporation date: You can find this on your LLC formation documents.
• Whether the LLC is a foreign entity: Choose “No.”
• Whether IRS Form 8832 has been filed: Form 8832 is used if you elect to be taxed as a corporation by the Internal Revenue Service (IRS). Answer this section based on your situation.

b. Primary Business Location

The address you state in this section determines your local (city and county) Sales Tax jurisdiction. Therefore, make sure it accurately reflects where your sales activity usually occurs.

• Enter your physical address. This must include the city, ZIP code, county, and state (Alabama) accurately.
• Click “Verify” to validate your address, then click “Save.”

c. Business Description

In the last section, provide a brief business description. This is so the state can understand the nature of your business activities.

Enter the following data:

• Nature of business: Choose a suitable option from the dropdown menu. This is mostly wholesale, retail, or both.
• Secretary of State Entity ID: Provide your formation number (optional).
• Home-based business: Choose the option that applies to your LLC.
• NAICS code: Enter it manually (if you know it) or click to search using a keyword.

4. Contact Info

After completing your taxpayer details, you need to add your LLC contact information. This will be used by the ALDOR for official communication regarding your LLC.

a. Business Contact Information

First, provide your Alabama Sales Tax account primary contact details:

• Enter your primary contact name, phone number, and email address.
• Add your business phone and fax (optional).
• Enter the name of the person completing your filing.

b. List Members For Your Business

The state needs to know about your LLC members so it can identify your business ownership and responsible parties for tax administration purposes.

Follow these steps to list your LLC members:

1. Click “Add a member” and enter each LLC member’s name, ID type and number, title/role, contact phone number, and start date.
2. Repeat the same process for each LLC member.

5. Mailing And Records Address

You must state your:

• Mailing address: Where the ALDOR should send official correspondence.
• Record address: Where your business records are kept.

Select “Yes” if these are different from your primary business location. The system will generate a pop-up window so you can insert the relevant details.

If you choose “Yes”, enter the following details (if applicable) in the pop-up window:

• Full address, city, ZIP code, and address verification.
• You can provide a second address (optional).

6. Additional Business Locations (If Applicable)

Once you’ve provided your mailing and record addresses, you’ll be asked to add any additional business locations. Therefore, indicate whether your LLC operates at more than one physical location.

• Choose “No” if you only operate at one business location.
• Choose “Yes” if you have multiple operating locations. These may be stores, offices, warehouses, or sales locations in the state.

If you choose “Yes,” you’ll be taken to a different screen. Follow these steps:

1. Check all boxes, as Sales Tax is governed at the local and state levels.
2. Click “Enter your address.” This will open a window similar to the previous one. You can then add each business location by repeating the previous steps.

7. Account Information

Next, discuss your account information. Choose your tax year end by selecting “Month end” from the dropdown menu. Most LLCs choose the tax year running from January 1 to December 31. Therefore, I advise choosing “December” in this section.

8. Local Sales Taxes

Under the account information section, you need to discuss your local taxes.

The answers you provide here will determine your LLC’s Local Sales Tax rates and the date when your local Sales Tax filing obligations begin.

• Commence date: This is the date that your LLC starts making taxable sales.
• State: This is Alabama in most cases (Optional).
• County: This is where your business location operates from.

9. State Sales Tax

Completing the State Sales Tax section activates your Alabama State Sales Tax account. Here’s what you need to include:

• Select the date you began selling or purchasing items for resale.
• Confirm your state: Leave the default as Alabama.
• Select the correct operating county.

10. Sales Tax – Bond Requirement

First, indicate if your LLC will sell beer, wine, or tobacco at retail. If it does, you’ll face additional requirements and taxes.

• If you choose “No”: You’re NOT required to provide a bond.
• If you choose “Yes”: A $25,000 Sales Tax surety bond is required.

If you’ve selected “Yes,” you must complete these additional steps:

1. Upload your valid surety bond document.
2. Enter your bond number, bond company, amount, start date, and end date.

11. Registration Summary

In this section, carefully review all entered information to ensure it is correct and free of errors. Then, click “Submit” once everything seems correct.

After this, the online system will generate a pop-up asking for your email and confirmation. Click “OK” once you’ve provided the required information, and then click “Submit.” Following this, your registration will be sent to the ALDOR.

12. Receive Your Alabama Sales Tax License

It generally takes around 3-5 business days to receive your account number. The state will mail your license at a later date.

Alabama Sales Tax License Requirements

Your Alabama LLC is NOT necessarily fully compliant once it obtains a Sales Tax License. The state has additional requirements that must be followed.

1. Multiple Business Locations

Your state Sales Tax account must be updated using the MAT system if your LLC expands and has multiple business locations.

• Completing the MAT update is enough for locations within a municipality and/or county where the state provides tax administration.
• You need an additional license from your local government if you operate in a non-state-administered location. You can find more information at the Local Government Contact Information resource.

2. Displaying Rules

Each of your business locations must display an Alabama Sales Tax License in a conspicuous place, regardless of how many operating locations you have. This is set under the Code of Alabama § 40-12-313.

Who Must Have An Alabama Sales Tax License

As I’ve mentioned earlier, you must obtain a Sales and Use Tax License if you’re an LLC carrying out taxable activities that have established nexus with the state. This refers to the connection between the state and your business entity. You can establish nexus in Alabama through:

1. Physical presence.
2. Economic nexus.

1. LLCs With Physical Presence

As a domestic Alabama LLC, you most likely have at least one of the following in the state:

• A business office, location, or retail store.
• Agents, employees, or independent contractors.
• Inventory or a warehouse in the state. This includes third-party fulfillment centers such as Amazon FBA.
• Owning or leasing delivery vehicles or physical property in the state.
• Attending conventions or trade shows where you take orders and/or make sales.

As stated under the Code of Alabama § 40-18-31.2, you establish physical nexus in the state if one of these bullet points applies to your business. You must obtain an Alabama Sales Tax License once you engage in these taxable activities.

2. Economic Nexus (Out-Of-State LLC)

Economic nexus is established by sales activity alone if you’re an out-of-state (Remote) seller without a physical state presence.

According to Rule 810-6-2-.90.03, Alabama has set the sales threshold at having more than $250,000 in retail sales shipped to state customers during the previous calendar year.

You have a nexus in the state and are subject to the license registration requirements once you meet this threshold.

• This regulation applies regardless of the number of transactions.
• Only direct sales (Sales via your own website) count if sales are made online.
• Sales made through a marketplace facilitator (For example, Etsy or Amazon) that must collect tax on behalf of your LLC are excluded from your personal threshold calculation.

How Much Does An Alabama Sales Tax License Cost?

You can complete your Sales and Use Tax annual renewal process every year starting November 1. You can find step-by-step instructions from the ALDOR here: Instructions for License Renewal.

Your Sales Tax License may be cancelled if you do NOT renew it by December 31 each year. If this happens, you lose the ability to legally collect tax and issue a Sales Tax License until you re-register.

Why Do You Need An Alabama Sales Tax License

1. Responsible For Uncollected Tax

Your LLC is not free from the obligation of collecting and remitting Sales Tax to the state if you don’t have a Sales Tax License while carrying out taxable activities. This is stated under Rule 810-6-4-.06.

Furthermore, you face significant civil penalties for the unpaid tax:

• Failure to timely pay: A 10% penalty on the unpaid tax amount.
• Failure to timely file: A 10% penalty of the tax due or $50 (Whichever is more).
• Interest: This is due at the current rate.

2. Penalties For Operating A Taxable LLC Without A Sales Tax Permit

Under the Code of Alabama § 11-51-93, you face these potential penalties if you’re already aware of your registration obligations but decide to operate without a valid license:

• A fine of up to $500.
• Imprisonment for up to 6 months.
• Or both.

Contact Information

Contact the ALDOR if you have any issues or problems when applying for your Sales Tax License.

• Address: 375 South Ripley Street, Montgomery, AL 36104 (operating hours are Monday to Friday, 8 A.M. to 5 P.M.).
• Taxpayer Service Centers.
• Sales & Use Tax contact number: 334-242-1584 (for registration enquiries) or 334-242-1490 (For general information).

Frequently Asked Questions