How to Start a Sole Proprietorship in Alabama

by Christopher Carter; Updated September 26, 2017

A sole proprietorship in Alabama is simple and inexpensive to start. A sole proprietorship doesn't have to register the business with the state, as explained on the Business.gov website. This feature enables a sole proprietorship in Alabama to avoid paying fees to file documents with the state. Sole proprietorships in Alabama start automatically when a single person or married couple decide to go into business. A sole proprietorship in Alabama doesn't have a separate legal existence from the owner of the business.

Step 1

Decide on a name for the sole proprietorship. An Alabama sole proprietorship will automatically assume the same name as its owner. Sole proprietors in Alabama may operate under a different name other than the owner's legal name by filing a trade name with the state. Sole proprietors in Alabama aren't required to file a trade name with the state to begin operating.

Step 2

Confirm name availability. The state of Alabama doesn't allow businesses to share business names that appear too similar to one another. Check with the Alabama secretary of state's online database to ensure your proposed business name isn't in use or held on reserve by another entity in the state. Determine if a local business may be using a similar business name by browsing through your local telephone book.

Step 3

Download the application to register a trade name from the Alabama secretary of state's website. In other instances, you may drop by the Alabama secretary of state's office in person to get a trade name application. Go to: RSA Union Building 100 N. Union St., Suite 770 Montgomery, AL 36103-5616.

Call 334-242-5325 to have a trade name application sent to you by mail.

Step 4

Provide the length of time the Alabama sole proprietorship has been using the proposed trade name. Alabama sole proprietors must include their name, address, phone number, Social Security number, as well as the nature of the company's business activities. Pay the applicable fee by check, debit card, money order, credit card or cash. As of 2010, sole proprietors in Alabama must pay $30 to file a trade name with the state.

Step 5

Get licenses and permits for the business. Contact the county clerk's office where the Alabama sole proprietorship operates to get a general business license and other local licenses and permits. The licenses and permits an Alabama sole proprietor will need to operate the business may vary depending on the nature of the business. For example, a chiropractor who operates a sole proprietorship in Alabama must obtain the appropriate state-issued occupational license.

Step 6

Get an employer identification number from the Internal Revenue Service. This is an optional step, since an Alabama sole proprietor may use her Social Security number instead of an EIN. Alabama sole proprietors may get an EIN by fax, phone, mail or online. Alabama sole proprietors that apply by phone or by using the IRS website will receive an EIN for immediate use. Faxing form SS-4 to the IRS will allow the Alabama sole proprietor to receive an EIN within four business days. The IRS may take up to four weeks to process Form SS-4 by mail.

Step 7

Register for taxes with the Alabama Department of Revenue. A sole proprietorship in Alabama may register for state taxes by completing the online registration form located on the Alabama Department of Revenue website. Provide information such as the legal name of the business and the nature of the company's activities. Include either the sole proprietor's Social Security number or an EIN. The registration form may be submitted to the Alabama Department of Revenue free of charge.

About the Author

Christopher Carter loves writing business, health and sports articles. He enjoys finding ways to communicate important information in a meaningful way to others. Carter earned his Bachelor of Science in accounting from Eastern Illinois University.