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Alabama is a highly desirable location to start a business due to its low tax rates and low cost of living. Alabama’s pro-business strategy demonstrates the state’s support for small enterprises, which has helped many firms do well in recent times.
Owing to the availability of free development centers and business support networks, small businesses have the opportunity to follow in the footsteps of Mercedes, Hyundai, Honda and other major brands who have decided to call Alabama home.
Below is a step-by-step guide that covers what you need to know before starting a business in Alabama.
Still on the hunt for the right business idea? Use the Wix Business Launcher to discover various business ideas based on skill match and profitability. Simply chat with AI to receive a full market analysis, earning strategies and launch kit that helps you take any idea from concept to reality.
Start a business in Alabama in 7 steps
01. Come up with a business idea
It goes without saying that the first thing you need to do is finalize a business idea. Your initial product or service offering will determine how you introduce your brand to the world, so remember to do your research. Think about the pain point or need you want to meet, and delve into the solutions that already exist in the market.
To help you brainstorm, we’ve jotted down a few unique business ideas that could fare well in Alabama.
Mobile food truck: Alabama is renowned for its Southern cuisine, so a mobile food truck featuring traditional dishes could be a real hit (see how to create a food truck business plan).
Event planning: Alabama is home to many events and festivals throughout the year, creating a high demand for event planning services. Tap into niche event markets and cater to people’s needs by providing rental or coordination services for events such as weddings, parties or corporate events. You could even start a flower business that provides decorations for these events.
Home renovation business: Having a sleek home is very in vogue these days. There are many opportunities for you to offer services that specializes in renovating and remodeling homes (or even starting a handyman business), primarily targeting older homes that need a bit of TLC. Within this niche you could also consider starting a plumbing business or similar.
Landscaping: Alabama's warm climate makes for a good opportunity for starting a landscaping business as well as starting a lawn care business. These also make for great small town business ideas depending on your exact location i the state.
Health and wellness: No matter where you’re based, you might find a growing interest in health and wellness services, such as yoga, acupuncture and massage therapy. amongst other fitness businesses to start examples
Online retail: With the rise of eCommerce, starting an online retail store could certainly be a profitable business opportunity—and a relatively easy business to start from the comforts of your home.
Solar panel installation company: Alabama’s wonderfully warm climate sees tons of sun year-round. Consider a business that specializes in installing solar panels for residential and commercial customers.
02. Choose a business structure
Alabama supports several types of businesses, as listed below:
Sole proprietorship: A business that’s owned and operated by a single person who assumes total responsibility for business debts and obligations.
Limited liability company (LLC): A business that has one or more owners (called members) and offers liability protections, as well as tax benefits, without the formalities of a corporation. Learn more about how to start an LLC.
Partnership: A business that’s owned and operated by multiple people who partner shares in the profits and losses of the business. The most common types of partnerships include general partnerships and limited partnerships.
Corporation: A business that’s considered a separate legal entity from its owners and provides limited liability protection. Corporations can either be C corporations or S corporations.
Nonprofit: An organization that’s created for religious, charitable, educational or scientific purposes and is tax-exempt.
Each business type has its own tax implications, management structure and requirements. If you’re not sure which is right for you, consult an attorney or business advisor.
03. Select the best name for your business
Get your business name right, and you can set your business up for even greater success. Brainstorm, research and get creative as you embark on the process of finding the best name for your business.
Just be sure to make sure it's available by performing a business entity search on the Alabama Secretary of State’s website. Make sure that there aren’t any existing trademarks either by searching the United States Patent and Trademark Office (USPTO) website.
When choosing a business name, keep the following tips in mind:
Make sure your name is unique and not likely to be confused with another brand’s
Consider your target audience and choose a name that links to what you’re offering
Pick a catchy, memorable name that’ll stick with your customers
Select a name that’s easy to pronounce
Double check that the name is available as a domain name and social media handle
Tip: Need help finding the perfect business name? Use Wix’s business name generator for ideas and inspiration.
04. Write a business plan
A business plan is an essential part of starting a business in any state. This plan will lay out the foundation of your business and its path to profitability. At minimum it should include an executive summary, funding plans, hiring plans and marketing and advertising strategies. If you’re not sure where to start, begin with your mission, business idea and business model—then build your plan from there.
05. License and register your business in Alabama
In order to get your business off to a solid start, it’s crucial to license and register your business properly. To do this in Alabama, you will need to follow these steps:
Register your business with the Alabama Secretary of State. If you’re starting an LLC, corporation, partnership or nonprofit, you’ll have to register your business with the Secretary of State’s office. The process will vary depending on your business structure.
Get an Employer Identification Number (EIN) from the IRS. An EIN is used for tax purposes, and may also be required if you’re looking to open a business bank account or apply for a loan (among other things).
Register for state taxes with the Alabama Department of Revenue. In Alabama, most businesses are required to register and collect taxes—but if you’re not sure, you’ll want to consult a business advisor or attorney.
Obtain additional licenses and permits (if required). The exact permits and licenses depend on the type of business you’re starting. Find the full lists of licenses and regulatory agencies on the Alabama Department of Revenue’s site.
Register with the Alabama Department of Labor if you plan on hiring employees. By registering with the department of labor, you can get workers’ compensation insurance.
Get the appropriate insurance. Depending on your industry and the nature of your business, you may need to obtain certain types of insurance, such as general liability insurance or unemployment insurance.
06. Secure business funding
There are many ways to raise funds to get your business off the ground, including personal assets, potential investors, bank loans and government grants. More specifically, consider the following sources:
Alabama Small Business Development Center (SBDC): SBDC offers counseling, training and resources to help small businesses start, grow, and succeed.
Alabama Industrial Development Training (AIDT): The AIDT provides training, recruiting and screening services to Alabama companies, and can assist with site location and development.
Alabama Launchpad: Alabama Launchpad is an early-stage seed fund investor, which also startup competition that provides funding and resources to early-stage companies in Alabama.
Alabama Innovation Fund: The Alabama Innovation Fund is a program that provides funding for technology-based startups and small businesses in Alabama.
Minority Business Development Agency (MBDA): The MBDA provides funding and resources to help minority-owned businesses start, grow and succeed.
The Small Business Administration (SBA): SBA offers a variety of loan programs, including the 7(a) loan program, which provides funding for small businesses.
07. Create a business website
Building your online presence with a business website is a must for small businesses. By creating an eCommerce website, you can promote your products or services and build customer loyalty. You can also create a fundraising website to help secure initial funding for your business.
Websites are also a great business tool for building a brand and reaching a larger audience. Regardless of where you choose to start your business, consider building a business website to get your brand off the ground. You can read our full guide on how to make a business website for help getting started.
How to start a business in Alabama review
Looking to start a business in a different state? Check out our 7 steps to starting a business in Massachusetts, how to start a business in California or how to start a business in Oregon.
How to start a business in Alabama FAQ
How much does a business license cost in Alabama?
Anywhere from US$15-1000 depending on your business and license type.