How to Register for a Sales Tax Permit in Alabama

Who Needs a Sales Tax Permit in Alabama

In Alabama, businesses that sell tangible personal property or offer services subject to sales tax are required to collect and remit sales tax to the state. This includes brick-and-mortar stores, service providers, and online sellers. 

The economic nexus threshold in Alabama mandates that businesses with over $250,000 in sales in the state must collect sales tax, even if they don’t have a physical presence there. 

Some common examples include a local retail shop, a contractor providing taxable services, and an out-of-state online retailer surpassing the sales threshold.

Steps to Register for a Sales Tax Permit in Alabama

Follow the steps below to register for a sales tax permit in Alabama. 

1. Prepare Your Documents

You will need to provide the following information: 

• Legal Business Name: Ensure consistency with the name registered with the Alabama Secretary of State.
• Physical Business Address: A valid street address is mandatory; P.O. boxes are typically not accepted.
• Federal Employer Identification Number (FEIN): Obtainable from the IRS if not already acquired.
• Contact Information: Include phone numbers and email addresses for primary business contacts.
• North American Industry Classification System (NAICS) Code: This code classifies your business industry.
• Date of Business Commencement in Alabama: Specify when your business operations began or will begin in the state.

2. Register Online via My Alabama Taxes (MAT)

To register, visit My Alabama Taxes (MAT), click on “Register a business/Obtain a new tax account number,” provide all necessary information accurately, review your application, and submit it through the portal.

3. Wait for Approval

Typically, it takes 3-5 business days to receive your account number after online registration. Upon approval, you’ll receive your sales tax permit, authorizing you to collect sales tax in Alabama.

We know how overwhelming all of this can feel, especially when you’re trying to run and grow your business at the same time. doola’s Bookkeeping services are the perfect solution to speed things up and take the stress off, we’ll guide from A to Z of the process, and make sure you are 100% compliant. 

Understanding Your Sales Tax Responsibilities in Alabama

Businesses in Alabama are typically required to file sales tax returns on a monthly, quarterly, or annual basis, depending on their sales volume. It’s essential to apply the correct sales tax rates, which can vary by location, including state, county, and city levels. Alabama also offers specific exemptions and rules, such as tax-free holidays and the use of resale certificates, which can impact how and when tax is collected.

Common Mistakes to Avoid

• Failing to register for a sales tax permit when required.
• Collecting incorrect sales tax rates for different local jurisdictions.
• Missing filing deadlines and incurring penalties.
• Overlooking exempt sales and not maintaining proper documentation for resale certificates.

How to Maintain Compliance & File Sales Tax Returns

To file sales tax returns in Alabama, access the MAT portal, where you can submit your returns and remit payments electronically. You can also  use automated solutions to simplify tax collection and ensure accuracy. 

Remember that doola is here to help with books and taxes, ensuring your business maintains compliance effortlessly. 

FAQs About Sales Tax Permits in Alabama

How long does it take to get a sales tax permit? 

Typically, it takes two to three weeks for the Alabama Department of Revenue to process a tax permit application.

Do I need to renew my sales tax permit? 

No, once issued a sales tax permit in Alabama does not require renewal, assuming compliance is maintained.

What happens if I stop doing business in Alabama? 

You must formally close your sales tax account by notifying the Alabama Department of Revenue.

Are online sellers required to collect sales tax in Alabama? 

Yes, if they exceed the $250,000 economic nexus threshold, online sellers must collect Alabama sales tax.

Stay Compliant With doola 

Registering for a sales tax permit is crucial for any business operating in Alabama. Staying compliant requires awareness of deadlines, accurate tax collection, and understanding exemptions. 

Businesses should seek professional help to ensure everything is handled correctly. For financial solutions, doola can provide guidance to ensure compliance, making it easier for your business to thrive. 

Remember to visit the Alabama Department of Revenue website for additional information and resources.