Alabama Payroll Tax Registration

A Step-by-Step Guide for Employers

By US TAX BAY

If you're hiring employees in Alabama, it’s essential to register for the proper payroll tax accounts before issuing paychecks. From state income tax withholding to unemployment insurance, Alabama has specific requirements for employers. This guide from US TAX BAY will walk you through the process of getting compliant—fast and efficiently.

Why Alabama Payroll Tax Registration Matters

Before processing payroll, every employer must register with the appropriate state agencies. In Alabama, this typically includes:

• Alabama Employer Withholding Tax

• Alabama Unemployment Insurance Tax (SUI)

Whether you’re a startup hiring your first employee or an established company expanding into Alabama, understanding these requirements is critical for legal compliance and smooth operations.

Step 1: Register for Alabama Employer Withholding Tax

Who Needs to Register?

You must register for withholding tax in Alabama if you:

• Employ individuals who work in Alabama, or

• Employ Alabama residents working remotely from another state.

Agency:

Alabama Department of Revenue (ADOR)

How to Register:

1. Obtain a Federal Employer Identification Number (EIN):Apply for your EIN online at irs.gov.

2. Register Online with ADOR:

   • Visit My Alabama Taxes (MAT).

   • Click “Register a business / Obtain a new tax number.”

   • Follow the step-by-step wizard and select "Payroll Withholding Tax" as your tax type.

3. Begin Withholding Taxes: Once your registration is approved, you must begin withholding both state and federal income taxes from your employees' paychecks.

Filing Method:

Online via the MAT portal

Processing Time:

Typically 3–5 business days to receive your account number(s).

Step 2: Register for Alabama Unemployment Insurance Tax (SUI)

Who Needs to Register?

If you hire employees in Alabama, you may be required to pay state unemployment insurance (SUI) taxes.

Agency:

Alabama Department of Labor (ADOL)

How to Register:

1. Determine Liability:Complete and submit Form SR-2 – Application to Determine Liability.Download the form and instructions here.

2. Register Online:Go to ADOL eGov portal to complete your online registration.

   
   

Important Compliance Note: New Hire Reporting

The Alabama Department of Labor strictly enforces the Employer New Hire Reporting Law. Employers must report all newly hired or rehired employees (after 60 days of separation) within 7 days of their hire date.

• Failure to comply can result in a $25 penalty per occurrence.

• Avoid penalties by reviewing your hiring records regularly and reporting promptly.

Penalties for Non-Compliance

Failure to register for Alabama payroll tax accounts or meet your filing/payment obligations may lead to:

• Late Filing Penalties

• Late Payment Penalties

• Interest Charges

• Potential Criminal Charges for willful noncompliance

Timely registration and ongoing compliance are key to avoiding costly fines and legal consequences.

Governing Laws

• Alabama State Laws – Enforced by ADOR and ADOL

• Federal Laws – Governed by the Internal Revenue Code (IRC), enforced by the IRS

  
  

Why Work with US TAX BAY?

At US TAX BAY, we simplify payroll tax registration for businesses of all sizes. Whether you're registering in Alabama or multiple states across the U.S., we help you:

• Register quickly and correctly

• Avoid penalties and compliance issues

• Stay ahead of deadlines

Let us handle the paperwork—so you can focus on growing your team.

Ready to Register in Alabama?

Contact US TAX BAY today to get started with payroll tax registration in Alabama or any other U.S. state. We're here to help your business stay compliant and payroll-ready—on time, every time.