Before You Begin
This guide is a general orientation only. It is not legal, financial, tax, or licensing advice. Requirements, fees, and bond amounts are set by the State of Alabama and change from time to time.
Always confirm every current requirement directly with the Alabama Department of Revenue, Motor Vehicle Division before you spend money or submit anything.
The authority on this process
Alabama Department of Revenue (ALDOR), Motor Vehicle Division. Applications are submitted electronically through the Alabama Partner Registration portal in MyDMV.
The governing law: Code of Alabama 1975, Sections 40-12-390 through 40-12-400, and Section 40-12-264 for dealer license plates.
revenue.alabama.gov →MyDMV portal →
Welcome — and congratulations
Opening a dealership is a serious undertaking, and the licensing process is the first real test of it. Alabama's process is more streamlined than some states — there is no state-mandated pre-licensing class, and the application is filed online — but it has its own particulars, especially around plates, privilege licenses, and ongoing insurance.
Wayne Reaves has worked alongside independent dealers for years. We are not a licensing service and we do not file on your behalf — but we have watched a lot of people go through this, and we know what the road looks like. This guide lays out the shape of it so you know what is coming.
We would like to be the software that runs your dealership — and the smart move is to put us in place before you open, not after. While you work through licensing, we can be getting your system, your website, and your training ready, so opening day is a sale, not a setup project.
The Shape of the Process
Alabama runs this in two stages, and the order is not optional — the regulatory license comes first, and the plates come after.
- 01
Stage one — the dealer regulatory license
establish your business location and signage, register your business and obtain a sales tax number if applicable, obtain your continuous surety bond, obtain blanket liability insurance, and submit the license application electronically through the Alabama Partner Registration portal.
- 02
Stage two — plates
once the regulatory license is issued, purchase the appropriate privilege license or licenses at your county licensing office, then request dealer plates through your MyDMV account. Plates are issued by ALDOR contingent on proof of the privilege licenses.
Step 1
Your business location and sign
Alabama requires dealers — including retailers, wholesalers, rebuilders, and reconditioners — to maintain a permanent business location with a verifiable phone listing. Retail dealers are required to have a permanent sign identifying the business.
Photographs of your location and signage are part of what the department will want. Confirm the current photo requirements and location standards with ALDOR before you build out or sign a lease, and check local zoning separately with your city or county — zoning is a local matter and entirely separate from state licensing.
Check zoning before you sign anything. Discovering that a property cannot be permitted for vehicle sales after you have committed to a lease is the most expensive mistake available in this process.
Step 2
Business registration and sales tax
Register your business entity as appropriate for your structure. Which structure is right for you — LLC, corporation, partnership, sole proprietorship — is a question for an attorney or CPA, not for a software vendor. It affects your taxes and your personal liability.
Retail dealers generally need an Alabama sales tax number, obtained from the Alabama Department of Revenue. Wholesale-only operations may be treated differently, so confirm what applies to your license type rather than assuming.
If your structure requires a federal EIN, obtain it free of charge directly from the IRS. Be cautious of third-party sites that charge for this.
Step 3
Surety bond
Alabama requires licensees to file a continuous surety bond with ALDOR, on the department's own bond form. The bond runs continuously rather than being purchased per term, and it also satisfies the separate designated agent bonding requirement — all dealers are required by law to become designated agents of the department.
Important: Alabama's dealer bond amount has been increased in the past, and older guides still circulating quote the superseded figure. Do not rely on any number you find in a document, including an older bond quote. Confirm the current required amount and the correct ALDOR bond form with the department or a licensed surety agent before you buy.
Choosing a provider
Wayne Reaves does not sell bonds or insurance, does not recommend a particular agent, and receives nothing if you use one provider over another. Your state association, an independent insurance broker, or a licensed surety agent can help you compare. Get more than one quote — pricing varies considerably based on credit and business history.
Step 4
Blanket liability insurance
Alabama requires each dealer to maintain blanket liability insurance covering all vehicles owned by or associated with the business, with minimum limits set by the department. Proof is submitted as an original certificate or a legible copy.
This one has teeth. Alabama attaches a substantial civil penalty to failure to maintain a blanket motor vehicle liability policy, and coverage lapses put the license itself at risk. This is not a document you produce once at application and forget — it must stay active for as long as you are licensed.
Confirm the current minimum limits with ALDOR, and tell your agent specifically that the policy is for an Alabama motor vehicle dealer license so the coverage form and limits are written correctly.
Step 5
Filing the application
Applications for the dealer regulatory license are submitted to ALDOR electronically through the Alabama Partner Registration portal. Applications are not accepted in person at a Motor Vehicle Division office for same-day issuance — everything goes through the portal.
After submission, ALDOR provides a transmittal sheet identifying the supporting documents the department needs from you. Respond to that promptly and completely; partial responses extend the timeline.
Note that outstanding liabilities to the department — for example, unresolved penalty assessments — can affect your application. If you have any history with ALDOR on a prior license or plates, resolve it before applying.
Step 6
Privilege licenses and dealer plates
This is the step people are most often surprised by. The dealer regulatory license from ALDOR is not the whole picture: after it is issued, you must visit your county licensing office to purchase the appropriate privilege license or licenses. Dealer plates are then issued by ALDOR, contingent on proof of those privilege licenses, and requested through your MyDMV account.
The number of dealer plates available differs between new and used dealers, with additional plates available to dealers who process a high volume of title transfers in the prior license year. Plate fees are generally not refundable or prorated.
Plate misuse carries real penalties. Alabama defines specifically who may operate a vehicle displaying a dealer plate and on what vehicles, with escalating civil penalties for violations, criminal exposure for willful misstatements, and a requirement to return plates within a set number of days if a license is revoked or forfeited. Rental and lease vehicles, tow trucks, and service vehicles are among the prohibited uses. Read the current rules in full before you put a plate on anything.
Step 7
Staying licensed
Ongoing obligations begin the day your license is issued. Your bond must remain continuous and your blanket liability coverage must remain active. Alabama also has specific reporting requirements — lost or stolen plates must be reported to law enforcement with a police report retained for audit, and vehicles withdrawn from inventory must be properly registered.
Confirm your renewal cycle and deadlines with ALDOR when your license is issued, and calendar them immediately.
How Wayne Reaves Fits In
We want to be straightforward about what we do and do not do.
What we do not do
We do not file applications, form business entities, sell bonds or insurance, provide legal or tax advice, or interpret state requirements on your behalf. Those belong with ALDOR, your attorney, your CPA, and licensed agents. We receive no compensation or referral fee from bond or insurance providers.
What we do
We build dealer management software and dealer websites for independent dealers — inventory, deal tracking, customer records, reporting, compliance tools, and a website that puts your inventory in front of buyers.
One practical note: Alabama has real recordkeeping and reporting obligations tied to inventory, title transfers, and plates. How you handle those is worth thinking about before your first sale rather than after.
Get set up before you open
The best time to choose your software is now — while you are still getting licensed. Notice how much of this process is really about how your dealership will keep records: titles, deal files, tax paperwork, books kept at your location. That is exactly what Wayne Reaves handles from day one. Dealers who get set up with us during licensing open their doors ready — inventory loaded, forms and deal paperwork in place, recordkeeping organized the way inspectors and auditors expect, and a website already live when the first customer searches for you.
Sign up while your application is in motion and we will have your system configured, your team trained, and your website built by the time the license is issued — so your first sale runs like your hundredth. We have been helping independent dealers open and grow since 1987, and getting started is simple: request a demo or call us, and we will walk you through it.
Where to Get Answers
| Question about… | Ask |
|---|---|
| License requirements, fees, application status | ALDOR Motor Vehicle Division · revenue.alabama.gov · mydmv.revenue.alabama.gov |
| The law itself | Code of Alabama 1975, §§ 40-12-390 to 40-12-400; § 40-12-264 (plates) |
| Privilege licenses | Your county licensing office |
| Dealer plates — eligibility, count, permitted use | ALDOR, via your MyDMV account |
| Business structure and entity formation | An attorney or CPA |
| Sales tax registration | Alabama Department of Revenue |
| Federal EIN | Directly with the IRS (free) |
| Surety bonds | A licensed surety agent |
| Blanket liability insurance | A licensed insurance agent |
| Zoning at a specific address | Your city or county zoning office |
| Federal advertising, Buyers Guide, and financing rules | An attorney or your state association |
| Dealer software and websites | Wayne Reaves Computer Systems Inc. |
Disclaimer
This guide is provided by Wayne Reaves Computer Systems Inc. as a general informational overview only. It is not legal, tax, financial, insurance, or licensing advice, and it does not create any professional or advisory relationship. Licensing requirements are established and administered solely by the State of Alabama and are subject to change without notice. Wayne Reaves Computer Systems Inc. makes no representation or warranty as to the accuracy, completeness, or currency of the information here, and accepts no liability for any action taken in reliance on it. Verify all requirements directly with the Alabama Department of Revenue, Motor Vehicle Division and consult qualified professionals before acting.
Reviewed July 2026. Reviewed quarterly.