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Alabama Payroll Tax Registration for Employers
Updated: Aug 23
A Step-by-Step Guide to Alabama Payroll Tax Registration
If you're hiring employees in Alabama, you may need to register for applicable state payroll tax accounts before running payroll. Alabama employers may have requirements related to state withholding tax, unemployment insurance, new hire reporting, and payroll tax compliance.
U.S. TAX BAY helps businesses understand their Alabama payroll tax registration requirements and coordinate applicable state tax account setup.
Why Alabama Payroll Tax Registration Matters
When you hire employees in Alabama, your business may need to establish the appropriate Alabama payroll tax accounts before processing payroll.
Depending on your business and workforce, Alabama payroll requirements may include:
Alabama employer withholding tax
Alabama unemployment insurance tax
State payroll tax account registration
New hire reporting
Payroll tax filing and payment requirements
If you are expanding your workforce into multiple states, each state may have separate registration requirements. This is why multi-state payroll tax registration should be reviewed before running payroll in a new state.
Step 1: Register for Alabama Employer Withholding Tax
Who Needs an Alabama Withholding Tax Account?
If you are an employer with employees working in Alabama, you must register with the Alabama Department of Revenue (ALDOR) for a withholding tax account number. Alabama provides registration through My Alabama Taxes (MAT).
Alabama Withholding Tax Agency
Alabama Department of Revenue (ALDOR)
How to Register for Alabama Withholding Tax
Employers can register through My Alabama Taxes (MAT).Through MAT, businesses can register for applicable tax accounts and manage tax filings and payments.
Information You May Need
When registering an Alabama business tax account, you may need information such as:
Legal business name
Business address
Contact information
Owner or officer information
Federal Employer Identification Number (FEIN)
Date of organization or qualification
NAICS code
Entity subtype
Business commencement date
The Alabama Department of Revenue lists these items as registration information for entities using MAT.
Alabama Withholding Tax Account Number
Once registered, Alabama assigns a withholding tax account number. ALDOR notes that new withholding account numbers begin with an “R” and advises employers to provide the correct account number to their payroll software provider.
Step 2: Register for Alabama Unemployment Insurance Tax
Who Needs an Alabama Unemployment Tax Account?
Alabama unemployment insurance requirements depend on the type of employer, workforce, wages, and other applicable conditions.
Alabama's employer guidance provides specific liability criteria for regular non-farm employers and other employer categories. Employers should determine whether they are liable for Alabama unemployment insurance before registering.
Alabama Unemployment Tax Agency
Alabama Department of Workforce
Alabama SUI Registration
Employers can register for an Alabama unemployment insurance account through the Alabama employer system.
The state uses the SR-2 Application to Determine Liability as part of the unemployment registration process.
Alabama SUI and Withholding Tax Registration
Alabama payroll tax registration can involve two different state tax areas:
Alabama Withholding Tax
State income tax withholding is administered by the Alabama Department of Revenue.
Alabama SUI / Unemployment Tax
Unemployment insurance is administered through the Alabama Department of Workforce.
The exact registration requirements depend on your business and employees, so employers should review the applicable state requirements before beginning payroll.
Alabama New Hire Reporting
Alabama employers are also required to report newly hired, recalled, or rehired employees.
The Alabama Department of Workforce states that employers must report each new hire, recall, or rehire within seven days of hiring.
Required information can include:
Employer FEIN
Employer name
Employer address
Employee Social Security number
Employee legal name
Employee address
Date of hire
State of hire
New Hire Reporting Penalties
Failure to report newly hired or recalled workers may result in a $25 penalty per occurrence, according to the Alabama Department of Workforce.
What Information Is Needed for Alabama Payroll Tax Registration?
Before starting an Alabama payroll tax registration, businesses should generally have:
Legal business name
FEIN
Business address
Business structure
Owner or officer information
NAICS code
First payroll date
Employee information
Existing state tax account information, if applicable
The exact information required can vary depending on the type of registration and the employer's circumstances. Alabama's tax registration guidance identifies legal, contact, FEIN, NAICS, entity, and commencement information among the required registration details.
Alabama Payroll Tax Registration for New Employers
If you are hiring your first employee in Alabama, it is important to review your state payroll tax registration requirements before processing payroll.
A typical setup may involve:
1. Obtain your FEIN
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2. Determine applicable Alabama payroll tax accounts
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3. Register for Alabama withholding tax
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4. Determine unemployment insurance liability and register if applicable
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5. Complete new hire reporting requirements
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6. Provide tax account information to your payroll provider
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7. Maintain ongoing payroll tax compliance
Multi-State Payroll Tax Registration
Businesses with employees in more than one state may need to establish payroll tax accounts in each applicable jurisdiction.
This is particularly important for:
Remote employees
Businesses expanding into new states
Companies hiring their first employee outside their home state
Startups growing across multiple states
Employers using ADP, Gusto, QuickBooks Payroll, Paychex, Paylocity, Rippling, or other payroll platforms
Payroll platforms may require state tax account numbers before they can properly configure payroll and tax filings. Gusto, for example, describes state income tax withholding and state unemployment insurance registration as part of its state tax setup process.
How U.S. TAX BAY Can Help
U.S. TAX BAY helps employers navigate Alabama payroll tax registration and related payroll compliance requirements.
Our support can include:
Alabama withholding tax registration support
Alabama SUI registration support
State payroll tax account setup
Multi-state payroll tax registration
Payroll provider coordination
Payroll tax account updates and maintenance
Payroll compliance support
New employer registration guidance
Whether you are hiring your first employee in Alabama or expanding your workforce across multiple states, we can help you understand the applicable registration requirements and next steps.
Need Help With Alabama Payroll Tax Registration?
Alabama Payroll Tax Registration Process
1. Review Your Business Information
We review your legal business information, FEIN, employee locations, payroll details, and existing state accounts.
2. Identify Applicable Payroll Tax Accounts
We help determine which Alabama payroll tax registrations may apply based on your business and workforce.
3. Prepare and Coordinate Registration
We assist with the applicable state registration process and coordinate the required information.
4. Update Your Payroll System
Once account information is available, the applicable Alabama account details can be provided to your payroll provider or payroll system.
5. Maintain Your Payroll Tax Accounts
If your business information, employee locations, payroll provider, or state registration requirements change, we can also assist with payroll tax account maintenance and updates.
Frequently Asked Questions
Do Alabama employers need a payroll withholding tax account?
If you are an employer with employees working in Alabama, you must register with the Alabama Department of Revenue for a withholding tax account number.
How do I register for Alabama withholding tax?
Employers can register through My Alabama Taxes (MAT) and obtain an applicable tax account number.
How do I register for Alabama unemployment tax?
Employers can use the Alabama Department of Workforce employer system to determine liability and register for an unemployment insurance account when applicable. The state identifies the SR-2 Application to Determine Liability as part of this process.
Does Alabama require new hire reporting?
Yes. Alabama requires employers to report newly hired, recalled, or rehired employees, with the Alabama Department of Workforce stating a seven-day reporting requirement.
Can U.S. TAX BAY help with Alabama payroll tax registration?
Yes. U.S. TAX BAY can help review your Alabama payroll tax registration requirements and coordinate the applicable state payroll tax account setup.
Can you help if my business has employees in multiple states?
Yes. U.S. TAX BAY provides multi-state payroll tax registration support for businesses hiring employees across multiple U.S. states.
Ready to Register for Alabama Payroll Taxes?
If you're ready to set up your Alabama payroll tax accounts, or you're unsure which registrations your business needs, U.S. TAX BAY can help.
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