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Starting your business

You’re thinking about starting a new business. Are you a self motivator? Are you a good decision maker? Do you have the drive to operate a business? Are you willing to put forth the effort to get your new business running? These are just a few of the questions you will need to consider before starting a new venture. Here are helpful links to get you started:

Developing your business plan

Developing a business plan doesn’t have to be hard. In its simplest form, a business plan is a guide for your business that outlines goals and details how you plan to achieve those goals. We have provided steps to writing a business plan and a detailed business plan outline. For more information visit our business plan info page.

Choosing your business structure
Business name

Choosing a name for your business is an important step in the business planning process. Not only should you pick a name that reflects your brand personality, but you also need to make sure it will be a name that lasts for the long term. You should also give a thought to whether it is ready for the web and if the domain name is even available. If you would like to see if your business name is available, check the Secretary of State’s online database.

Startup costs

Startup expenses are the expenses experienced before your business is up and running. Many people miscalculate startup costs, and start their business in a disorganized, unplanned way. Even though this can work, it is usually much harder. To get started in the right direction use the startup costs calculator to estimate startup expenses for your business.

How do I obtain a Employee Identification Number (EIN)?

All businesses must have an Employer Identification Number (EIN). An EIN is also known as a Federal Tax Identification Number, and is used to identify a business entity. You may apply for an EIN in many different ways. To get started you can use the EIN Helpful Steps guide or proceed below:

  • Apply Online – You can apply for an EIN online without filling out a SS-4 from. The online assistant will ask you the questions and you give us the answers. After all validations are done you will get your EIN immediately upon completion. You can then download, save, and print your EIN confirmation notice. Apply here.
  • Apply by Fax – You can download this form and fax your completed SS-4 form to 215-516-3990
  • Apply by Mail – You can download this form and mail your completed form to:

Internal Revenue Service Attn: EIN Operations Philadelphia, Pennsylvania 19255

  • Apply by Phone – International applicants may call 267-941-1099 (not a toll-free number) 6:00 a.m. to 11:00 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

Alabama Income tax withholding number

All businesses in Alabama that hire employees and pays wages must file with the State of Alabama to obtain an Alabama income tax withholding number. To request your Alabama Income Tax Withholding number please download this form.

Alabama sales tax number

All businesses in Alabama that sell personal property to a user and collects sales tax must have an Alabama Sales Tax Number. For more information on acquiring an Alabama Sales Tax Number go to the Alabama Department of Revenue’s website. If you would like to receive more information about Alabama state tax reporting go to this site. The Alabama Business Tax Online Registration System is located here.

City and County Tax Rates

All city and counties have different tax rates across the State of Alabama. You can enter the city and county you will be opening a business to see the tax rates via the Alabama Department of Revenue’s website.

City and County Business Forms

City and County business forms can be obtained from your local city and county business license office. To find your County website, Small Business Development Center, Taxpayer Service Center, Business License office(s), and Chamber(s) of Commerce in your area, please visit our Local Resources page.

Business License

Almost every business needs some form of license or permit to do business legally. Licensing and permit requirements can vary depending on the type of business you are operating, where it is located, and what government rules apply. To help you identify the specific licenses or permits your business may need visit the Alabama Department of Revenue’s Business Licensing website or look though our list of forms by city and county (add link here to the city/county form page)

Alabama income taxes

When filing Alabama Income Taxes the following forms may be mandatory for businesses, (A-1, A-6, A-3, A-4 forms). To access the forms visit the links below:

Unemployment compensation fund

The Alabama Unemployment Compensation law provides that, except for certain non-profit organizations and government entities, an employer becomes subject for taxes when any one of the following conditions are met:

  • 1. Non-Farm Business Employers – When the employer has had in employment one or more workers on some day in 20 or more different weeks, whether or not consecutive, during the current or preceding calendar year. Has paid wages of $1,500 or more in any calendar quarter during the current or preceding calendar year.
  • 2. Household Domestic Employers – Domestic employers become subject when the employer pays domestic workers in a private household, college club, fraternity or sorority house a total of $1,000 or more in cash wages in any calendar quarter during the current or preceding calendar year
  • 3. Agricultural Employers – When the employer has had in employment 10 or more agricultural workers on the same day in 20 or more different weeks during the current or preceding calendar year or has paid a total of $20,000 in cash wages to agricultural workers during any calendar quarter of the current or preceding calendar year.
  • For more information please visit the Alabama Department of Labor’s website.

Workers compensation insurance

The way by which you choose to insure your workers’ compensation liability is your decision. If you have any questions concerning Workers Compensation Insurance you can contact the Workers Compensation Division at (334) 242-2868 or toll free at 1-800-528-5166. For more information please visit the Alabama Department of Labor’s website.

Federal Taxes

Employers are required to withhold federal income taxes, Social Security, and Medicare taxes. There are several factors that determine how much federal income tax a business must withhold. The federal government levies four basic types of business taxes: Income tax, self-employment tax, taxes for employers, and excise taxes. To learn more about these taxes please visit the IRS guide to business taxes. More information can be found by reading this publication.

Income Tax
Social Security and Medicare Taxes (FICA)

Employers generally must withhold part of social security and Medicare taxes from employees’ wages and you pay a matching amount yourself. If you would like to figure out how much tax to withhold, use the methods described in the IRS’s Employer’s Tax Guide and Employer’s Supplemental Tax Guide. Beginning January 1, 2013, employers are responsible for withholding the 0.9% Additional Medicare Tax on an employee’s wages and compensation that exceeds a threshold amount based on the employee’s filing status. You are required to begin withholding Additional Medicare Tax in the pay period in which it pays wages and compensation in excess of the threshold amount to an employee.

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