Starting a business in Alabama is an exciting venture, but it’s crucial to understand the legal requirements that come with it. A common area of confusion for many new business owners is understanding the need for a Sellers Use Tax in Alabama, also known as a sales tax permit or seller’s permit. This permit allows you to collect sales tax on taxable products and services from customers in Alabama.
This blog will guide you through each step of applying for a sales tax permit, with clear instructions to help you and your business begin collecting sales tax effortlessly.
Related Topics:
Who Needs a Seller’s Permit in Alabama?
A business must register for a sales tax permit in Alabama if:- you meet physical or economic nexus within the state and
- you are selling taxable products or providing taxable services to customers in Alabama
How to Register for a Seller’s Permit in Alabama?
When applying for an Alabama sales tax permit, you can use the online application process on the Alabama Department of Revenue’s (ALDOR) website to complete your sales tax registration.1. Where to Apply for a Seller’s Permit in Alabama?
The first step to register for a sales tax permit online is to go to My Alabama Taxes (MAT) and click on “Register a business/Obtain a new tax account number” found in the “Businesses” section. For the tax type, choose either of the following options:- Sales Tax: These are only for companies with a physical presence in Alabama
- Sellers Use Tax: Seller’s Use Tax is similar to the State Sales Tax but applies to the sale of tangible personal property sold outside the state and shipped to the consumer in Alabama. The Seller’s Use Tax (charges 4%) also has a component for local taxes, where applicable, depending on the location of the buyer/customer within Alabama.
- Local Taxes: When applying for Sellers Use Tax, it’s important to choose this option as well.
- Simplified Sellers Use Tax: For businesses that find managing local tax rates challenging, Alabama offers a Simplified Sellers Use Tax program. Participants in this program collect a flat 8% use tax (subject to change), of which a portion is distributed to local governments.
2. What Information Do You Need to Get a Seller’s Permit in Alabama?
To successfully acquire a seller’s permit in Alabama, it’s important to prepare and provide specific information and documents. The following is a list of the necessary information and documents required to register a sales tax permit in Alabama:- Business Identification Information: Legal Business Name, Physical Address, Mailing Address
- Business Entity Structure (i.e., Sole Proprietorship, Partnership, Subchapter S Corp., Corporation, LLC, etc.)
- Federal Employer Identification Number (EIN or FEIN)
- Accomplished Form 8832 (for LLCs and LLPs)
- Name, Address, and SSN of Owners, Partners, or Officers
- Business Activity Details: Date & State of Incorporation, Start Date with the State of Alabama (Nexus Start Date), County where you will collect Local Sales Tax (if applicable)
- NAICS Code
3. How Much are the Fees for Applying for and Renewing a Seller’s Permit in Alabama?
Registering for a sales tax permit in Alabama is free, and you won’t need to provide payment details to acquire your permit. Alabama sales tax permits and Sellers Use tax permits need to be renewed annually through your MAT account every November or December of each year.4. What are Other Ways to Register for a Seller’s Permit in Alabama?
- Use TaxHero. Registering for a seller’s permit, mainly when it involves multiple permits, can be a tedious and time-consuming task requiring much effort. Let the experts at TaxHero save you from this hassle, and let us handle the registration process in all states where you have nexus as part of our all-inclusive sales tax service.