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How to Start a New Business in Alabama

Published By Janet Gershen-Siegel at April 11th, 2019

How to Start a New Business in Alabama

Starting a Business in Alabama

A new business in Alabama is within your reach. So are you looking for how to start a new business in Alabama? And more importantly, can I do so no matter what the economic conditions are? Can I start a new business in Alabama during a recession?

Starting a New Business in Alabama: Pluses and Minuses

Business Insider put Alabama into its bottom ten worst places to start a business. The state does have a low cost of living, but that seems to be its sole virtue in this area.

The state has poor startup activity and productivity. There is also a low rate of new entrepreneurs and few startup companies.

Plus Alabama has the fifth lowest GDP per capita in the nation.

These few positives and several negatives are all going to be important considerations if an entrepreneur wants to start business in Alabama.

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Start a New Business in Alabama – Alabama Business Names

By filing for a trade name or “Doing Business As,” a business owner can legally give their Alabama business a name that is independent from their own personal name or even the registered name of a corporation or partnership. The Alabama Secretary of State’s Trademarks webpage offers forms for registering trademarks, service marks and trade names. It is advisable to also perform a trade name search to ensure that the name a business owner intends to use is not already in use by another business. The business owner can conduct a search through existing trade names on the Secretary of State’s website.

Start a New Business in Alabama – Alabama Top Industries

Top industries, according to the Alabama Department of Commerce, include automotive and aerospace. The state is also known for agriculture and forestry products, along with bio science and chemicals, and metals and advanced materials.  

Enterprising business owners can take advantage of the bigger industries and find opportunities catering to these niches. This can be in the forms of (for example) transportation of goods by way of trucking, selling parts, or even technical services like managing big data for preexisting science-oriented businesses or managing and interpreting the data from large drug trials.

Here is everything that you need to start a business in Alabama.

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Alabama New Business Secretary of State Requirements

Register a Business Name

By filing for a trade name or DBA, you can give an Alabama business a name independent from a personal name or the registered name of a corporation or partnership. The Alabama Secretary of State’s Trademarks webpage has forms for registering trademarks, service marks and trade names.

Be sure to perform a trade name search to ensure that the intended name is not already in use by another business. And an entrepreneur can also search through existing trade names on the same website, and also reserve a business name.

Business Permits and Licenses

A business owner can get these at a local County Probate Office in the town where they will be doing business.

Make sure to and check at the Alabama Department of Revenue website for any licenses you may need.

Local Permits and Licenses

Be sure to check with your local city or county office or website. This is to find out if there may be any local licensing or permit requirements.

For example, in in the city of Montgomery, you will need to go to License and Revenue.

Business Registration

The Alabama Secretary of State handles business registrations.

This office’s website is where you can find all of the forms that you are ever going to need.

Tax Registration

Be sure to check out the Alabama Business Tax Online Registration System. Learn about any taxes you need to register for.

Virtual Offices

Alliance offers Alabama virtual business offices in Birmingham, Huntsville, Mobile, and Mountain Brook. For other areas of the state, business owners might want to try Regus.

Or they could also try to seek out local entrepreneurs or possibly even computer user groups in an effort to find some help in this area.

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Business Credit Building when Starting a New Business in Alabama

For every business across the country, business credit building will take you far – even startups!

Small business credit is credit in a company’s name. It doesn’t connect to an owner’s individual credit, not even when the owner is a sole proprietor and the solitary employee of the small business.

Accordingly, an entrepreneur’s business and consumer credit scores can be very different.

The Advantages

Because company credit is separate from consumer, it helps to safeguard a small business owner’s personal assets, in the event of legal action or business insolvency.

Another advantage is that even start-ups can do this. Going to a bank for a business loan can be a recipe for frustration. But building business credit, when done correctly, is a plan for success.

Personal credit scores depend on payments but also various other components like credit use percentages.

But for company credit, the scores actually only depend on if a business pays its invoices in a timely manner.

Building small business credit is a process, and it does not occur without effort.

Company Fundability for Starting a New Business in Alabama

A small business has to be fundable to lenders and vendors.

Hence, a business will need a professional-looking website and email address. And it needs to have website hosting from a vendor like GoDaddy.

In addition, business telephone numbers should have a listing on ListYourself.net.

At the same time, the business phone number should be toll-free (800 exchange or comparable).

A small business will also need a bank account dedicated solely to it, and it needs to have every one of the licenses essential for operating.

Kicking Off the Business Credit Reporting Process for a New Business in Alabama

Begin at the D&B web site and get a totally free D-U-N-S number. A D-U-N-S number is how D&B gets a business in their system, to produce a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s web sites for the small business. You can do this at www.creditsuite.com/reports. If there is a record with them, check it for accuracy and completeness. If there are no records with them, go to the next step in the process.

By doing this, Experian and Equifax will have something to report on.

Vendor Credit

First you should build trade lines that report. This is also called vendor credit. Then you’ll have an established credit profile, and you’ll get a business credit score.

These varieties of accounts have the tendency to be for the things bought all the time, like marketing materials, shipping boxes, outdoor work wear, ink and toner, and office furniture.

But first of all, what is trade credit? These trade lines are credit issuers who will give you starter credit when you have none now. Terms are ordinarily Net 30, versus revolving.

Hence, if you get an approval for $1,000 in vendor credit and use all of it, you will need to pay that money back in a set term, such as within 30 days on a Net 30 account.

Vendor Credit – It Helps a New Business in Alabama

Not every vendor can help in the same way true starter credit can. These are merchants that will grant an approval with marginal effort. You also need them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

You want 3 of these to move onto the next step.

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Monitor Your Business Credit When Starting a New Business in Alabama

Know what is happening with your credit. Make certain it is being reported and attend to any mistakes ASAP. Get in the habit of taking a look at credit reports. Dig into the specifics, not just the scores.

We can help you monitor business credit at Experian, Equifax, and D&B for 90% less than it would cost you at the CRAs

A Word about Business Credit Building

Always use credit smartly! Don’t borrow more than what you can pay off. Track balances and deadlines for payments. Paying on time and completely will do more to elevate business credit scores than nearly anything else.

Establishing business credit pays. Excellent business credit scores help a company get loans.

Business credit is an asset which can help your business for years to come. 

Learn more here and get started toward opening a new business in Alabama.

Want to start a new business someplace else in America? Then check out our handy guide to starting a business in any state in the country.

Alabama’s Response to the COVID-19 Situation

Here’s what’s happening in Alabama. On March 13, Governor Kay Ivey declared a state of
emergency. The Governor has submitted a request to the SBA for Economic Injury Disaster
Loans.
See: governor.alabama.gov/newsroom/2020/03/state-of-emergency-coronavirus-covid-19

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