Starting a service business in Alabama

Form your business in Alabama

Alabama makes you reserve the name before you form. A name reservation is $25 on the Secretary of State fee schedule (revised August 2023, current as listed in October 2026), and a copy of the reservation certificate has to be attached to the Certificate of Formation. The Certificate of Formation for a domestic LLC carries a $200 filing fee as listed by the Secretary of State in October 2026; the form notes that the office passes $100 of that to the county treasurer where your registered agent's office is located. You can file online or mail two typed copies to the Secretary of State, Business Services, P.O. Box 5616, Montgomery, AL 36103. The registered office must be a street address in Alabama, and the name must contain "Limited Liability Company", "L.L.C." or "LLC". The filing is effective on the date the office receives it, unless you choose a delayed effective date on the form.

Ongoing state filings

Alabama's yearly report for an LLC is the Business Privilege Tax Return and Annual Report, filed with the Alabama Department of Revenue (Form PPT for LLCs taxed as pass-through entities, Form CPT for those taxed as corporations), due on the same date as the matching federal income tax return. The tax is figured on your Alabama net worth. The Department's 2026 instructions say that for taxable year 2026, a business that would owe only the $100 minimum has no filing requirement, and a newly formed company files an initial return (Form BPT-IN) within two and a half months only if its privilege tax calculates to more than $100. Single-member LLCs should not use the owner's Social Security number or EIN on the return.

Using a business name (DBA)

Alabama does not run a county-by-county assumed name filing. The Secretary of State registers trade names alongside trademarks and service marks: you file an application with three specimens of the name in use, the fee is $30 as listed on the Secretary of State fee schedule in October 2026, and registration lasts five years. The office notes that being denied a registration does not stop you from using a name, so a search of the Secretary of State's entity and trademark records before you print a truck wrap is the practical step.

Not sure whether you need an LLC at all? Read LLC vs sole proprietor for contractors, then get your free EIN from the IRS.

Licensing for service trades

Alabama licenses construction and mechanical trades through separate boards, and the triggers are dollar amounts and specific tasks. The Home Builders Licensure Board covers anyone who builds, remodels, repairs or improves a residence of up to four units for someone else when the job, labor and materials together, exceeds $10,000; for residential roofers the line is $2,500. Single-trade work such as siding can be licensed "with limitation". Commercial and other non-residential work falls under the Licensing Board for General Contractors once the undertaking reaches $100,000 (raised from $50,000 by Act 2024-277, effective October 1, 2024). HVAC, electrical, and plumbing and gas fitting each have their own board, and the Department of Agriculture and Industries licenses pest control and horticulture businesses. Cities and counties also issue their own business licenses, so check with each one where you work.

• Alabama Home Builders Licensure Board: Residential building, remodeling and repair over $10,000; residential roofing over $2,500
• Alabama Licensing Board for General Contractors: Commercial and non-residential projects of $100,000 or more
• Alabama Board of Heating, Air Conditioning and Refrigeration Contractors: HVAC and refrigeration installation, service and repair, including duct cleaning and filter changing services
• Alabama Board of Electrical Contractors: Electrical contractors and journeymen
• Alabama Plumbers and Gas Fitters Examining Board: Plumbers and gas fitters

Workers' compensation

Alabama's workers' compensation law applies once you regularly employ five or more people, counting full-time and part-time employees, corporate officers and LLC members, according to the Department of Workforce's Workers' Compensation Division. Below five, coverage is not required by the state, with one important exception: businesses that build, or help build on site, new single-family detached homes are not covered by that small-employer exemption. Alabama has no state fund. You buy a policy from an approved commercial carrier, join a group self-insurance fund, self-insure if you qualify, use the assigned risk pool if carriers turn you down, or cover workers through an employee leasing arrangement. Many general contractors and property managers will ask for a certificate of insurance even when the law does not, so price a policy before you bid your first subcontract job.

More on coverage: business insurance for contractors.

Sales tax on services

The Alabama Department of Revenue describes sales tax as a tax on the retail sale of tangible personal property, so a service-only invoice (mowing, cleaning, pressure washing) is generally outside it, while products you sell to the customer are taxable. Contractors who improve real property are treated as consumers of the materials they install, so they pay sales tax to the supplier (or use tax on out-of-state purchases) and do not charge it on the finished job. Local sales taxes apply on top of the state rate, and the state administers more than 200 city and county taxes; some localities collect their own. Register and file through My Alabama Taxes, and ask the Department if your mix of labor and goods is unclear.

Recording business calls in Alabama

Alabama's eavesdropping law defines the offense as recording a private communication of others without the consent of at least one person in it, so you may record a call you are part of. When you record callers in other states, the stricter state's rule may apply, so a short notice at the start of the call is the safe habit; see our guide on recording business calls.

See our guide to recording business calls before you turn on call recording or an AI receptionist.

How the seasons shape the work

Alabama's long, humid summers make May through September the peak for lawn, pest and AC service calls, and mowing runs most of the year in the southern half of the state. Spring brings severe storms and tornado outbreaks across the north and central counties, which drive tree, roofing and cleanup demand, and the Gulf Coast around Mobile and Baldwin County sits in the Atlantic hurricane season from June through November. Pollen in spring and mildew in late summer keep pressure washing busy well into fall.

Landscaping and lawn treatment can need a state license

The Department of Agriculture and Industries issues a Horticulture Professional Services License to businesses that design and plant landscapes, do tree surgery, or control pests on ornamentals and turf, and each license requires a certified operator. As listed in October 2026 the annual license is $175, running October 1 to September 30. Pest control inside buildings falls under a separate Structural Professional Services License ($175 for a main office, plus $100 for each certified category). If you plan to plant beds, cut trees or spray lawns, start with the Professional Services page.

Home builders must disclose insurance in writing

Under Ala. Code § 34-14A-19, a licensed residential home builder has to tell the homeowner in writing, before work starts, whether the builder carries liability insurance, and the disclosure is signed. Build it into your proposal template so it goes out with every estimate over the license threshold.

Then set up the back end that gets you hired

The paperwork makes you legal. Customers still have to find you, reach you and pay you. Before your first job, set up a business phone number, email on your own domain, a Google Business Profile, a simple website, and a way to send quotes and take card payments. The launch checklist lays out the order.

Alabama questions