15 Fascinating Alabama Small Business Statistics


The Yellowhammer State has invested considerably in heavy industries and in aerospace engineering. Corporations such as Mercedes Benz, Hyundai, Toyota, and Honda operate large facilities in the state, and organizations such as Boeing and the Marshall Space Center have created jobs for much of the state’s educated class.

Despite these investments, Alabama continues to have the seventh highest poverty rate in the US. According to a 2017 report by the UN Special Rapporteur Philip Alston, rural Alabama has living conditions poorer than anywhere he had been in the developed world.

Continuous investment in large industries, particularly in large cities like Birmingham, has left much of the rural parts desperate for state support to improve their living and economic situations. Private farms have declined at a steady rate since the 1960s, as land has been sold to developers, timber companies, and large farming conglomerates.

As for small businesses (SMBs), they are a major part of the state’s economy and employ a huge segment of the population. The state government has provided incentives to these entities to ease the economic burden on their owners.

Here’s a list of small business statistics from Alabama:

  • There are 401,717 small businesses in the state, making up 99.4% of all Alabama businesses.
  • SMBs employ 802,920 people, who represent 47.5% of Alabama employees.
  • To form a corporation, you need to acquire a Certificate of Formation for $177 (minimum). This includes a probate judge fee of $50. There is also a $100 filing fee to the Secretary of State and a $27 name reservation fee. Lastly, your corporation is required to pay an initial minimum privilege tax of $100.
  • In 2019, firms with fewer than 20 employees generated 14,913 net jobs while those with 100–400 employees created 3,353 net jobs.
  • Anyone conducting business in Alabama must obtain a business privilege license in each county where the business operates. Many cities also require businesses to be licensed by the city in order to operate.
  • Certain businesses, like hairdressers, diaper services, fruit stands, contractors, and restaurants, require occupational/professional licensing in order to operate.
  • Alabama state law requires that every new Alabama LLC designates an Alabama registered agent that will be available during regular business hours at a physical address within the state.
  • Self-employed individuals who run their own incorporated businesses have an average median income of $50,000. Those whose businesses don't have an LLC in Arizona have an average median income of $24,000.
  • There are 3,386 small businesses in the export sector that account for 14.1% of Alabama’s $20.6 billion in total export revenue.
  • Small firms in the health care and social services sectors account for 45.7% of private employment in the same sectors, with 120,272 out of 252,774.
  • Alabama has both the business privilege tax, which ranges from $.25 per $1,000 in net worth to $1.75 per $1,000 of net worth and corporate income tax, which is charged at a flat rate of 6.5% of taxable net income.
  • Partnerships are not subject to the business privilege tax nor the corporate income tax. Instead, the net income is passed down to the individual partners and taxed on both their federal and state tax returns.
  • There are 47,222 small firms in the construction industry, 39,917 are nonemployer firms, 7,305 have 1–499 employees while 6,467 have fewer than 20 employees.
  • There are 260 small firms in the utilities sector. Of those, 171 are nonemployer firms, 89 have 1499 employees and 61 have fewer than 20 employees.
  • Alabama has an estimated poverty rate of 15.5%, which is the lowest recorded since the year 2000 but still sits above the national average.


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