How to Start a Business in Tennessee Checklist
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How to Start a Business in Tennessee:
Entrepreneurs looking to start a business in Tennessee will enjoy the state's general ease of doing business and several growing cities. To help you get started, we've created a step-by-step guide with a helpful checklist.
Form your business.
Review Tennessee formation options.
Tennessee offers four ways of forming your business. Review these closely and pick the one that fits your business best.
In Tennessee, you can create a sole proprietorship without filing any legal documents. However, you must get a business license, choose and file a business name, get the necessary permits, and apply for an Employer Identification Number (EIN).
Name your business.
Brainstorm name ideas and keywords that best describe your business. Make a list of names that you like and perform a name availability search with the state to identify any conflicts with other Tennessee business names.
If you are satisfied that your business name is available, we recommend trademarking the name with the U.S. Patent and Trademark Office. You can also check out our guide on how to register a name to assist you with naming your business.
If you need help finding a business name, be sure to check out NameSnack's free business name generator.
Get an employer identification number.
Nearly all businesses will need to register for federal taxes by applying for an employer identification number.
You can apply for an EIN online.
Register your business in Tennessee.
Once you've chosen a legal structure, you can register your business with the Tennessee Secretary of State. It's important to note that Sole Proprietorships are not expected to file formal documents but are still required to follow all tax requirements.
For LLCs and corporations, you'll need to complete and file Articles of Organization or Articles of Incorporation documents. With general partnerships, all parties must complete and file the Statement of Partnership Authority document.
You can register your business by mail or online. We recommend using the online solution to speed up the process.
The cost of registering a business in Tennessee ranges between $50.00 and $3,000.00, depending on the type of legal structure you choose.
It could take up to six weeks for your registration forms to be processed fully, but this time can be reduced to ten working days for an additional fee.
Obtain necessary permits and licenses.
Depending on the size, location, and nature of your business, you may need to obtain various permits. For instance, businesses in the waste industry must apply for hazardous waste and landfill permits, while those in the natural resources industry will require a state archaeological permit or an endangered plant dealer permit.
The type of permits you need will largely depend on the nature and location of your business. However, most Tennessee businesses are required to obtain a seller's permit. A seller's permit, also known as a sales tax permit, identifies that you are a collector of sales tax. For a full list of business permits and licenses, visit the Tennessee Government website.
Get a Tennessee business license.
The state of Tennessee requires businesses with taxable sales of $10,000 or more to have a statewide business license issued by the Tennessee Department of Revenue. Businesses with taxable sales of more than $3,000 but less than $10,000 require a minimal activity license.
Tennessee business licenses are issued by the county clerk in the area where your business is located. Therefore, the process for obtaining a license may vary by each county.
Visit your local government website. On your local government website, search for the form titled, "Application for Business Tax License or Minimal Activity License", and download or print the application.
Complete the application form. You must provide certain information related to your business and personal details. Once you've completed the application form, you can either send it electronically using the county website or physically hand it in.
Pay the application fee. The cost of applying for a business license will vary by each county. However, most counties charge between $15.00 and $50.00 to register a business license.
Renew your business license. You must electronically file your business tax return first. Only once this is complete, your business license will be renewed. You can file your business tax on the Tennessee Department of Revenue website.
If your online business makes less than $3,000.00 a year, it does not need a business license. You can get a minimal activity license if the total of your gross receipts is between $3,000.00 and $10,000.00. You must have a business license if your business makes more than $10,000.00 a year.
Register your business for taxes.
Check your business employer requirements.
Business employer requirements are specific to the type of business that you are starting and include various labor, safety, and tax obligations that need to be met.
Each business type will have different tax contributions. You can view your business classification and tax obligations on the Tennessee Department of Revenue's website.
Most LLCs in the state will have to register for sales and use tax, business tax, franchise tax, and excise tax.
Unlike many other states, Tennessee requires all LLCs to pay a franchise tax.
Register for sales and use tax.
Every individual or entity selling taxable tangible personal property in the state of Tennessee is required to pay sales and use tax. Services rendered are not taxable. You will need to register for a sales tax permit with the Tennessee Department of Revenue.
If your business is a corporation, limited partnership, LLC, or a business trust in Tennessee, you must register for and pay franchise and excise taxes.
Registration of sales tax is available on the Tennessee Taxpayer Access Point (TNTAP).
Register for Tennessee business tax.
If you manage a business within the state, you are required to register for and remit business tax. Business tax in Tennessee is made up of two separate taxes: the state business tax and the city business tax.
Business tax is applicable to all businesses that sell goods and services. While out of state businesses are also required to pay state business tax, they must meet certain requirements to qualify.
You can register for business tax on the Tennessee government website.
Register for gross receipts tax.
Gross receipts tax is only applicable to businesses that operate bottlers, mixing bars, utilities, and vendors industries. These include those who sell bottled drinks, produce and distribute gas, water, and electricity, and those who set up vending machines in cafes, restaurants, and cafeterias.
Depending on your business, you'll need to pay a certain percentage of your gross receipts. These can range between 1.5% - 15% of gross receipts.
You can register for Gross Receipts tax on the Tennessee Department of Revenue website
Register for unemployment insurance tax.
Tennessee law requires all business owners to complete and file a Report to Determine Status, Application for Employer Number (LB-0441) to help determine if their business is liable for unemployment insurance tax. If your business is required to contribute towards unemployment insurance, you will need to file quarterly reports as well. Your liability will depend on the type of business you own.
To find out if you qualify for unemployment insurance tax, visit the Department of Labor and Workforce Development website. If you are liable, you will be assigned an eight-digit employer account number.
Hire employees and report them to the state.
Learn about your employer hiring requirements.
The Tennessee Lawful Employment Act requires employers with six or more employees to verify the authorization of new hires. With reference to the pre-employment screening process in Tennessee, an employer is entitled to view a job applicant’s criminal history and obtain the relevant records from the criminal justice system.
Report employees to the state.
To start hiring you will need to register at the Tennessee Department of Human Services. Each employee will need to be registered within 20 days of starting work. This does not apply to independent contractors.
Visit the Department of Human Services website.
Scroll down to "Attention Employers" and click on the blue box that says "Register."
Complete the form and click "Submit Registration."
Obtain workers' compensation insurance.
Tennessee’s law requires all businesses to provide workers’ compensation coverage to their employees if they employ more than five people. Workers' compensation is used to pay employees' wages and medical expenses if they're injured on the job.
Requirements may differ according to the business you operate. You can obtain more information at the Tennessee Department of Labor & Workforce Development website.
Display mandatory posters in your place of business.
All Tennessee businesses are required to share information about employment laws and work-related information with their employees. This is done through mandatory posters that should be displayed in a noticeable area where employees have access.
Mandatory State Posters for Tennessee Employees:
Tennessee Business Types:
1. Sole Proprietorship.
A common business structure for small businesses thanks to its simplicity. With this structure, the business is managed and owned by one individual who is solely responsible for the enterprise. In addition to paying less in taxes than corporations, the net income from the business is filed as regular income on the owner’s personal income tax return.
In Tennessee, you can create a sole proprietorship without filing any legal documents. However, in order to be recognized as a sole proprietorship, you must obtain a business license, choose a business name, file a fictitious business name, obtain the necessary permits, and apply for an Employer Identification Number.
A suitable choice for businesses with two or more owners. Each owner will contribute towards funding, property, or labor, and in turn receive a share in the profits and losses of the business.
In Tennessee, all partnerships must complete the applicable paperwork and file it with the Secretary of State. There are three common partnerships recognized in Tennessee. These include General Partnerships (GP), Limited Partnerships (LP), and Limited Liability Partnerships (LLP).
Partnership Registration Paperwork:
General Partnership: Statement of Partnership Authority.
Limited Partnerships: Certificate of Limited Partnership.
Limited Liability Partnerships (LLP): Registration Statement.
3. Limited Liability Company (LLC).
The most popular type of legal structure due to minimal paperwork, flexibility, tax benefits, and a simple implementation process. LLC business owners are not obligated to file a corporate tax return. In Tennessee, you must file an Articles of Organization with the Tennessee Secretary of State. This can be done online, in-person, or by mail. There is a filing fee of $300.00.
Corporations are standalone entities with shareholders. This means that the corporation can own assets and conduct business in its own name. Compared to a sole proprietorship or partnership, corporations are more expensive and complex to form.
The process of registering a corporation in Tennessee is much more strenuous than other legal structures. You'll need to appoint a Registered Agent, establish corporate record books and bylaws, appoint initial corporate directors, issue stock, complete and file Articles of Incorporation Charter For Profit Corporation, and obtain the appropriate business licenses. There is a filing fee of $100.00.
Tennessee Registration and Business Fees:
Articles of Organization
$50.00 per member (minimum fee = $300, maximum fee = $3,000)
Articles of Incorporation Charter For Profit Corporation
Certificate of Limited Partnership
Certificate of Limited Liability Partnership
$50.00 per member (minimum fee = $250, maximum fee = $2,500)