Small Business Statistics for Alabama’s Factory Economy

Alabama is one of a handful of states where factories employ more workers than any other private industry and also out-produce every other, a double lead built on cars, aerospace, steel and poultry. Around that industrial core sits a broad small-business economy of 465,610 firms, 99.4% of all the businesses in the state.

Those small firms employ 816,850 people, 46.0% of everyone working in Alabama, which the SBA notes “exceeded the national small business employment share.” Most are one-person operations: 390,228 of the 465,610, roughly 84%, have no employees. And they do the hiring. Small firms added a net 4,814 jobs in the year to March 2024, better than 80% of everything the state gained. What the factories make, where the self-employed gather, and what Alabama charges to register a business round out the page.

Links to every source, federal and Alabama-state alike, sit at the foot of the page.

The Shape of Alabama’s Small-Business Base

Behind the headline count, Alabama’s small businesses divide sharply by size. Only 75,382 of them employ anyone, and just 9,995 have 20 workers or more; the other 390,228 are nonemployers, self-employed owners carrying no payroll. The SBA’s 2025 profile puts the small-firm payroll at $38.9 billion in 2022, 41.3% of all private wages in the state.

• The 390,228 nonemployer businesses booked $20.2 billion in receipts in 2022, and about 90% of them are sole proprietors.
• Turnover ran positive: 16,141 establishments opened against 13,115 that closed in the year to March 2024, a net gain of 3,026.
• Small firms are 96.4% of all Alabama employers yet pay 41.3% of private wages, the split you would expect in a state where a few large plants sit on top.

A State That Still Makes Things

Manufacturing is what sets Alabama apart. It employs 285,184 people, more than any other private sector, and it produces $50.0 billion of output, about 15.4% of the state’s economy and again the largest single share. Being first in both jobs and dollars is unusual; in most states health care or retail leads on headcount while the factories trail. Alabama’s plants pay $73,670 on average, above the statewide private figure of $61,241.

The factory base is broad. Cars are the biggest piece: vehicle assembly and parts together run about 57,258 jobs, with the parts cell alone at 30,297 and the assembly cell paying $89,611. Aerospace adds 15,748 jobs at $106,550, gathered in the north around Huntsville. Poultry and food processing is the largest food-manufacturing cell, 24,636 jobs. And the old primary-metals base around Birmingham is still turning, 5,307 in iron and steel at $119,263, alongside 4,028 in shipbuilding down at the Port of Mobile. Pay inside manufacturing ranges widely, from $47,819 in poultry processing to well past $100,000 in aerospace, steel and the paper mills.

What Else Alabama Does

Away from the factory floor, Alabama looks like most states. Retail is the second-largest employer at 239,581, health care and social assistance third at 231,581, and restaurants and hotels fourth at 187,537, the lowest-paid big sector at $23,398. Professional and technical services, fifth at 125,893, pay the most of the large sectors, $100,468, lifted by the engineering and defense work up north. Administrative services (120,533), construction (106,835), wholesale trade (79,715) and finance (75,088) fill in the middle of the table.

• The top-paying cells are utilities ($133,719), management of companies ($120,454) and mining ($105,534), each small in headcount.
• Professional and technical services ($100,468) and finance and insurance ($96,846) are the two large high-wage sectors.
• At the bottom are restaurants and hotels ($23,398) and arts and recreation ($25,780); the statewide private average is $61,241.

Birmingham and the Self-Employed

Jefferson County, metropolitan Birmingham, is Alabama’s largest labor market, 367,081 jobs at an average of $71,562, behind only Huntsville among the state’s major metros. It is also where the state’s self-employed concentrate. The Census counts 57,954 nonemployer businesses in Jefferson County in 2022, self-employed owners with no staff, and 98,351 across the wider Birmingham metro. A narrower measure, of people who call self-employment their main job, puts about 13,600 in the county and 3,100 inside the city, which are different counts of different things. The city’s poverty rate, 25.2%, is a reminder that the metro’s gains are unevenly shared.

Each of the other big counties has its own character. Huntsville and Madison County post the highest pay among Alabama’s major counties, $77,051 on average, on an aerospace and defense engineering cell that by itself averages $121,088. Mobile is the port and shipbuilding county on the Gulf, while Montgomery, the state capital, and Tuscaloosa both lean on auto assembly. Baldwin, next to Mobile, is the beach economy, where retail and a big seasonal tourism sector cluster along the coast. Statewide, the same pattern as Birmingham holds: more than eight in ten of Alabama’s small businesses run without any employees.

The Pace of New Applications

New business applications in Alabama have held roughly steady. Counting the new tax-ID applications that mark an intent to open, the state logged about 70,466 in 2025, near its 2021 level of 75,518 after a dip to 65,324 in 2024. About 18,132 of them were high-propensity filings, the ones likeliest to become employers. Because these arrive monthly and the yearly figure just sums them, read the totals as approximate.

A Wide, Mostly Solo Ownership Base

Ownership in Alabama carries the state’s demographics. Women own 46.3% of its businesses while making up 47.4% of the workforce, veterans own 7.8%, and Hispanic owners 4.0%. The most striking figure is in Black-owned business: Alabama has 104,027 of them, one of the larger counts anywhere in the South, but only 3,027 have employees. The other 101,000 are self-employed, a base that is wide but, so far, thin on payroll. All the owner figures are for 2022.

Loans on the Books, Goods on the Docks

Lenders covered by the Community Reinvestment Act extended $1.2 billion in new loans to Alabama businesses under $1 million in revenue in 2023, the cleanest tier-1 read on small-business credit in the state. Exports run larger and more concentrated. Alabama firms shipped $25.8 billion in goods abroad in 2023; almost 80% of those exporters were small, 3,337 of 4,181, but small firms accounted for just 16.4% of the value, about $4.2 billion, with a few large manufacturers carrying the rest.

The State’s Output, and Its Visitors

Alabama’s economy came to $341.2 billion in 2025, up from $325.3 billion the year before, and grew about 2.0% once inflation is removed. That is roughly $66,000 for every resident. Manufacturing leads output just as it leads jobs, $50.0 billion or about 15.4% of the total. Government is close behind at $49.0 billion, real estate third at $40.2 billion, and retail and health care follow; below them the economy spreads thin across many smaller sectors.

What the Gulf Coast Draws

Tourism set records again in 2024: $23.9 billion spent by 28.9 million visitors, supporting 248,590 jobs. The Gulf beaches of Baldwin County pull the largest single share, close to 29% of the state’s travelers, though Birmingham, Huntsville, Mobile and Montgomery round out a top five that draws most of the rest.

Setting Up, and What Alabama Taxes

Filing the Certificate of Formation

Starting an Alabama LLC means one filing with the Secretary of State, a Certificate of Formation, for $200, and since 2021 it goes straight to the state rather than through a county probate judge. One step comes first: reserving the company name with the Secretary of State, which runs about $25 to $28. Our guide to starting an LLC in Alabama takes the name reservation and the formation in order.

The Taxes, Old and New

Alabama has quietly lightened a few business taxes. The Business Privilege Tax, once a floor every entity paid, no longer touches small firms: for tax years after 2023, a company whose calculated tax is $100 or less owes nothing and files no return, though larger firms still pay on their net worth. Income is taxed at a top rate of 5% for individuals and 6.5% for corporations. The general sales tax is 4% before local add-ons, but the tax on groceries has come down twice, from 4% to 3% in 2023 and to 2% on September 1, 2025. Alabama sets no minimum wage of its own, so the federal $7.25 an hour, and $2.13 for tipped workers, is the floor.

A registered agent with an Alabama address is required too. For owners weighing outside help, our reviews cover the registered agent services in Alabama and, separately, the best LLC services in Alabama, ranked on price and turnaround.

Alabama Self-Employment and Tax Questions

Sources

• For the small-business figures, counts, jobs, payroll, ownership and exports, the source is the SBA Office of Advocacy’s 2025 Alabama Small Business Profile.
• The 2024 numbers by sector and by county, jobs and wages alike, come from the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages.
• The Birmingham self-employment counts are the Census Bureau’s Nonemployer Statistics and, for the labor-force measure, its American Community Survey.
• New business applications are the Census Bureau’s Business Formation Statistics.
• State output, in current and inflation-adjusted dollars, is the Bureau of Economic Analysis‘s, and the bank-lending figure is FFIEC Community Reinvestment Act data reported in the SBA profile.
• The LLC fee, Business Privilege Tax, income-tax and sales-tax rules are the Alabama Secretary of State’s and Department of Revenue’s.
• Visitor spending and tourism employment for 2024 are the Alabama Tourism Department’s.