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Taxpayer Guide

Starting a New Businesses?

Here is the Pathway to Registration;
newbusiness

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All New Businesses:

Contact the Internal Revenue Service (1-800-829-1040 for tax information, or 1-800-29-3676 for forms and publications) in order to determine if:

  • A Federal Employer’s Identification Number (FEIN) is needed (Form SS-4).
  • Requirements for Federal Estimated Income Tax are met (proprietors, partners, corporate shareholders, etc.), (Form 1040ES).
  • Federal Self-Employment Tax is required.
  • or request the following forms and/or publications: SS-4 (FEIN application form), W-4′s
  • (Federal Exemption Certificates), Circular E (Federal Tax Tables), 1040ES
  • (Federal Declaration of Estimated Income Tax), Publication 334 (Tax Guide for Small Businesses) and/or other forms or publications.
  • Contact the Alabama Department of Revenue, Individual Income Tax Section at (334) 242-1000 to determine if requirements for Alabama Individual Estimated Income Tax (Form 40ES) are met (proprietors, partners, corporate shareholders, etc.).

Proprietors, partners and certain other individuals must report estimated earnings and remit the income tax on those earnings quarterly. (See Alabama Form 40ES and Federal Form 1040ES.)

At year-end, individuals must file Alabama Form 40 and Federal Form 1040 to report actual yearly earnings. (See Forms 40, 1040, and Schedule C for instructions.)

You must keep all financial and accounting records that clearly reflect income and expenses from three (3) to six (6) years.

If you are late with any tax return, contact the appropriate agency immediately. Instructions will be given as to what course of action you must follow. Reply to all correspondence from these agencies immediately.

All New Businesses That Have Employees:

Contact the IRS in order to determine if federal withholding requirements apply (see previous).

To register for a withholding tax account number contact the Alabama Department of Revenue, Central Registration Unit, 334-242-1170 and request Form COM-101 (Combined Registration Form), A-4′s (Alabama Exemption Certificates), and Alabama Withholding Tax Tables. These forms and tables can also be obtained from the Department’s Web site at www.ador.state.al.us (Withholding Tax).

Contact the Alabama Department of Industrial Relations to obtain requirements for Worker’s Compensation Insurance at 334-242-2868 or 1-800-528-5166 and State Unemployment Compensation tax at 334-242-8830.
Additional information can be obtained at www.dir.state.al.us.

Have all employees complete Forms A-4 (state) and W-4 (federal) and keep these on file.

Withhold income tax from your employees according to the Alabama Withholding Tax Tables and the Federal Circular E using the information on the A-4 and W-4.

Forward your Alabama Form A-1 along with a check for Alabama income tax withheld to the Department of Revenue. Forward Federal Forms 940 (Federal income tax withheld, social security and medicare) and 941 (Federal unemployment) along with checks to the appropriate agencies. (See the appropriate forms and booklets for the due dates, penalties, etc.)

At the end of the year, complete Form A-3 (state) and Form W-3 (federal) and send them to the appropriate agency along with the proper copy of W-2′s.

Furnish each employee with a copy of the employee’s W-2 on or before the last day of January.

If you have “Contract Labor,” please contact the Alabama Taxpayer Service Center in your area for verification. (See list of offices at the end of this publication.)

All Retail Businesses (businesses which sell tangible personal property to the end user or the consumer.)

Check previous categories to determine if any apply.

Contact the Alabama Department of Revenue, Central Registration Unit, 334-242-1170 and request Form COM-101 (Combined Registration Form), to register for a sales or seller’s use tax license*. This form can also be obtained from the Department’s web site at www.ador.state.al.us (Sales and Use Tax).

All Wholesalers (businesses which sell exclusively to retailers, manufacturers, or other wholesalers) and/or Manufacturers

Check previous categories to determine if any apply.

Contact the Alabama Department of Revenue, Sales, Use & Business Tax Division, or any local Taxpayer Service Center to determine if a Certificate of Exemption, Consumer’s Use Tax License, or other registration is required.

All Corporations and Limited Liability Entities

Check previous categories to determine if any apply.

Contact the Secretary of State’s Office.

Foreign corporations (those that are incorporated in states other than Alabama) must qualify to do business in Alabama with the Alabama Secretary of State. Call the Secretary of State’s office at 334-242-5324 or visit www.sos.state.al.us to obtain an application for certificate of authority (Form CD-2). Form CD-2 must be filed with the Secretary of State along with a $175 qualification fee and a certified copy of the articles of incorporation.

Domestic corporations (those that are incorporated in Alabama) must incorporate by first reserving the corporate name with the Alabama Secretary of State and then filing articles of incorporation (original and two copies) and the certificate of name reservation with the probate judge of the county in which the corporation has its initial registered office, along with the appropriate filing fees ($50 for Secretary of State and a probate judge fee of a minimum of $35).

Contact the Alabama Secretary of State’s office at 334-242-5324 or visit www.sos.state.al.us for questions regarding organizing domestic (those that are created in Alabama) or registering foreign (those that are created in states other than Alabama) limited liability entities (Limited Partnerships, Limited Liability Partnerships and Limited Liability Companies).

File and remit Alabama Business Privilege Tax.

All corporations and limited liability entities (Limited Partnerships, Limited Liability Partnerships and Limited Liability companies) are required to file and pay Alabama Business Privilege Tax no later than 30 days after the taxpayer comes into existence, qualifies, or registers to do business or commences to do business in Alabama. Contact the Alabama Department of Revenue at 334-242-7923 or www.ador.state.al.us (Business Privilege Tax) to obtain an initial Form PSA.