This article provides three key state business startup requirements for self-employed sole proprietors and general partners who run residential house cleaning businesses in Alabama. Information from the Secretary of State, the Alabama Department of Revenue and selected city and county government sources were used to research this article.
Be aware that sole proprietor and general partner startup requirements in this state are always changing. Some requirements even vary from county to county. It is important that you call or visit your local county or city government to find out local requirements for residential house cleaning businesses and home-based businesses. This article is not intended to be exhaustive or a substitute for qualified legal or tax advice.
Business Name Registration
A sole proprietor or general partnership business name that includes the owner’s full legal name(s), does not have to register their business name with the state of Alabama. Sole proprietors and general partners who want a business name that does not include the owner(s) full names (for example, Janice Smith’s Cleaning Service or Martha Harris and Tom Graham’s Maid Service) need to find out whether the name they want to use is available in the state of Alabama. Start with a statewide corporate business name search to avoid legal problems and customer confusion.
Then do an online search for names similar to the one you plan to use. For example, if you want to use the name, Crystal Clean Maid Service, do simple Google searches for “Crystal Clean Maid Service+Alabama” plus Crystal Clean Maid Service+your county” and “Crystal Clean Maid Service+your town or city”. Search beyond the first page of results. Go at least five pages deep into the search results to see if the name you want or similar names are being used in your state, county or city.
Sole proprietors and general partners can choose to register a fictitious name or Trade Name with the state of Alabama and with the county where the business is based. Businesses are required to have the application notarized before filing with the state.
In the state of Alabama, filing a fictitious or Trade Name does not guarantee a business sole rights to the use of that name. Other businesses in the state may also register the same Trade name. Ownership of a Trade Name is achieved through public use of the name, not registration. Registered businesses are expected to legally defend their trade names.
Business License Registration
Sole proprietors and general partners must apply for a privilege license issued by the Probate Judge or License Commissioner in the county where the business is based. Additional licenses are required in every county where business is conducted. Find a County Probate office.
In Alabama, a general partnership is created when two or more owners form an oral or written agreement to start a business together. While general partners are not required to file any documents with the Secretary of State, it is advisable to file for a trade name and have a written partnership agreement drawn up by a lawyer. Partnership agreements do not have to be filed with the state.
Sole proprietors and general partners may apply for an Employer Identification Number (EIN) from the IRS even if they do not plan to hire employees. Getting an EIN may make it easier to open a bank account and reduce your risk of identity theft. You can apply for an EIN online. In addition, some business registration forms will require a a NAICS business classification number for the house cleaning industry.
Business Tax Registration
Register to pay state tax through the online tax portal for Alabama Department of Revenue.
Residential housecleaning services are not taxable in Alabama. House cleaning services do not have to collect and send sales taxes to the Department of Revenue.
Business tax for sole proprietors and partnerships is paid through individual Alabama state income taxes. Sole proprietors and general partners are responsible for paying estimated self-employment income taxes in Alabama (on Form 40 ES) similar to the way self employment taxes are paid to the federal government. Get more information about estimated tax requirements by calling the Alabama Department of Revenue at a Taxpayer Service Center.
Alabama general partnerships that file a Federal partnership information Form 1065, may need to file state income tax Form 65. Get more information from a CPA or qualified tax preparer to find out if your partnership must file those returns.
Sole Proprietors and general partners do not have to pay the state Business Privilege Tax.
Selected Alabama City Licenses
Auburn Business License: https://www.auburnalabama.org/revenue/business-licenses/
Birmingham Business License: https://www.birminghamal.gov/about/city-directory/finance/tax-and-license-division/
Decatur Business License: https://www.decaturalabamausa.com/departments/revenue-department/business-license/
Dothan Business License: http://www.dothan.org/index.aspx?nid=344
Hoover Business License: http://www.hooveral.org/151/Business-Licenses
Huntsville Business License: https://www.huntsvilleal.gov/business/licensing-permits/business-licenses/
Mobile Business License: https://www.cityofmobile.org/government/revenue/
Montgomery Business License: https://www.montgomeryal.gov/city-government/departments/finance/license-and-revenue
Tuscaloosa Business License: https://www.tuscaloosa.com/business/business-license