How to start a business in Tennessee
From thriving cities to welcoming communities, Tennessee offers room for new ventures.
The steps
Just a few essential steps
The Volunteer State is renowned for low business fees, a business-friendly atmosphere, and straightforward procedures. We're here to guide you through launching your business in Tennessee.
If you plan to open your service business, there are a few steps for you to follow.
- Register with
- Secretary of State
- LLC filing fee
- From $300
$50 per member, up to $3,000
- Registered agent
- Required
An individual or a business entity with a Tennessee street address
- State tax ID
- Department of Revenue
Register for franchise and excise tax in TNTAP
- Licenses
- Local
Business license from your county and/or city clerk
- Federal tax ID (EIN)
- Free
From the IRS, online
Step 1 of 8
Choose a business name
Picking a great name for your business is the first fun step in your journey as an entrepreneur. It's like giving a name to a ship before it goes on an adventure. Your business name should match your vision and show what you're all about.
Remember, your chosen name has to follow the rules of your state. You can't use a name that's already taken. Also, make sure it has the right label, like "LLC" or "Inc.," based on how your business is set up. Avoid using words that are not allowed, and you'll have a unique name that's also legal.
Step 2 of 8
Register your Assumed Business Name
Once you have decided on a name for your company, it is important to take the necessary steps to register and secure it. LLCs, corporations and limited partnerships begin the registration process by applying to register assumed name. There is a fee of $20, and the registration is valid for 5 years and can be renewed.
It is also possible to reserve your chosen business name in the state of Tennessee. This ensures that no one else can use the same name while you are in the process of establishing legal structure for your business. To do this, you must file Application for name reservation with the Tennessee Secretary of State's office. There is a fee of $20 and the reservation will remain valid for a period of 120 days.
Step 3 of 8
Decide on a business structure
Choosing how to set up your company is a big decision that forms the base of your business. It affects things like what laws you follow, how you pay taxes, who's in charge, and how you grow. Let's look at three common choices:
Sole Proprietorship: This is the easiest way to run a business, especially if you're on your own. You're the boss, but you're also responsible for any money problems your business has.
Limited Liability Company (LLC): This is a good mix of simple and safe. It's kind of like being a sole proprietor, but your personal stuff is protected if the business has trouble. Lots of small businesses like this option.
Partnership: If you're in business with someone else, you're in a partnership. You can either share all the responsibility and problems (general), or only some of them (limited). Partnerships mean you make decisions together, but it can get tricky with lots of rules.
Each way has its good points and things to think about. You need to pick the one that matches what you want for your business.
Answer the questions to see which option fits.
Step 4 of 8
Register your business
Registering your business is fundamental in giving it legal recognition and ensuring adherence to state requirements. The procedure can vary based on your chosen business structure. Below is an overview of the registration process for Tennessee's sole proprietorships, LLCs, and partnerships. Choose the option that suits your business type to dive deeper into the registration specifics.
You can register a new business online through the Tennessee Secretary of State website.
Sole Proprietorship
How To Start A Sole Proprietorship:
Starting a sole proprietorship in Tennessee is a straightforward process. There are no complex formalities or fees involved, making it an ideal choice for entrepreneurs looking to launch their own ventures. To begin, simply start working.
However, while the process is simple, there are additional steps that can be beneficial. Although not strictly required, many sole proprietors find them advantageous.
First, consider acquiring a "Doing Business As" (DBA) name. A DBA allows you to use an assumed business name rather than your personal name, which can enhance professionalism and customer trust. It also enables you to open a business bank account under your DBA name.
Additionally, determine your tax obligations. Sole proprietors often use their Social Security Number for tax purposes, but obtaining an Employer Identification Number (EIN) is advisable for privacy. Be aware of sales tax obligations if you sell products and research other applicable state taxes.
Finally, be aware of licenses and permits. Tennessee has no general state business license; business licenses are issued by your county and, in some cases, city clerk. If your gross receipts are over $3,000 but under $100,000, you need a minimal activity license, which costs $15 per year. At $100,000 or more, you need a standard license and must register for business tax with the Department of Revenue. Specific industries may need licenses or permits. Always ensure compliance with local regulations as well.
Partnership
Three primary partnership models exist:
General Partnership: No complex formalities or fees are involved, but you don't have limited liability, which means you are responsible for all debts and losses.
Limited Partnership (LP): LPs feature limited and general partners. Limited partners hold no liability beyond their investment, while general partners maintain full liability.
Limited Liability Partnership (LLP): LLPs safeguard partners from uninvolved debts, particularly favored by high-liability professionals. LLPs adhere to general partnership taxation.
Commencing a Partnership:
Register the Business Name: Verify availability in the state's Business Database and register it with Tennessee's government.
Complete Necessary Paperwork: For GP, you don't need any documents, but you can consider filing a DBA; LPs should submit a Tennessee Certificate of Limited Partnership ($100 filing fee); LLPs must file an application for registration of a limited liability partnership (filing fee: $50 for each member, minimum $250, maximum $2,500)
Secure an EIN and Licenses: Secure an Employer Identification Number (EIN) from the IRS when hiring employees. Explore additional state licenses and tax obligations based on your business activities. If your gross receipts are over $3,000 but under $100,000, you need a $15 minimal activity license from your county or city clerk.
LLC
Establishing an LLC:
Articles of Organization: To establish your LLC officially, you must file Articles of Organization with the Tennessee Secretary of State. This document includes essential details about your LLC, such as its name, registered agent, and company address. The filing fee for this document is $50 for each member (minimum $300, maximum $3,000)
Registered Agent Appointment: Designating a registered agent is mandatory for all Tennessee LLCs. This agent accepts legal documents and official mail on behalf of your LLC. You can choose an individual or a business entity to serve as your registered agent.
Operating Agreement: While not filed with the state, drafting an Operating Agreement is recommended. This internal document outlines the rules and structure of your LLC, including member roles and responsibilities. Legal fees for creating this document can vary.
Annual Report: Tennessee requires LLCs to file an annual report ($50 per member, minimum $300), which includes updated information about your business.
To begin an LLC in Tennessee, you'll need to fill out some documents and pay fees. The exact cost depends on your situation. It's a good idea to talk to experts or use online services to make the process easier and make sure you follow the state's rules.
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Step 6 of 8
Obtain EIN
Getting an Employer Identification Number (EIN) is an important part of registering your business. Think of it as a special nine-digit number that's a lot like your business's own ID, just like individuals have Social Security numbers.
You need an EIN for a few key reasons:
Taxes: You use it to file your business taxes, take out taxes from employees, and report what money your business makes.
Hiring Workers: If your business hires employees, you must have an EIN for things like payroll and tax withholding.
Bank Accounts: Most banks want you to have an EIN to open a business bank account. This helps keep your personal and business money separate.
Legal Stuff: It's also important for legal documents, contracts, and some business licenses.
Getting an EIN is usually a simple process, and you can do it online through the IRS website. After you get your EIN, you'll use it for different money and legal things to keep your business running smoothly and follow tax rules.
Step 7 of 8
Obtain licenses and permits
This process includes figuring out the permits your business requires, following local zoning laws, and meeting state regulations. Making sure you have these licenses and certificates is important for your business to run legally and prevent potential problems in the future.
Tennessee has no general state business license; business licenses are issued by your county and, in some cases, city clerk. If your gross receipts are over $3,000 but under $100,000, you need a minimal activity license, which costs $15 per year. At $100,000 or more, you need a standard license and must register for business tax with the Department of Revenue. Additionally, Tennessee imposes specific state-level licenses and permits on various business types and industries. These may include professional licenses, retail permits, and contractor certifications. It's essential to identify which licenses and permits pertain to your business operations at the state level. Ensure you complete the necessary applications and meet all requirements to maintain compliance and avoid any legal complications.
When you're setting up your business in Tennessee, it's essential to remember the licenses and permits required in your local area. These are specific to your city or county and make sure your business follows the rules in your community. Some typical ones include zoning permits, health permits, and home occupation permits. Be sure to look into and get the local licenses and permits you need to run your business legally in your area.
Step 8 of 8
Build your online presence
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Are you from another state?
Learn how to set up a business in other states
Check out other guides if you need more detailed information about different states. You can click the state you are interested in on our map or choose it from the list below.
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