How to Get a Small Business License in Tennessee

If you want to start a small business in Tennessee, you must follow the appropriate startup procedure. After you choose a business name and structure and file the appropriate paperwork with the state to make your business official, you need to obtain the proper licenses and permits.

Which Business Licenses Do You Need for Your Small Business?

When starting a business in Tennessee, you must:

• register your business entity with the Tennessee Secretary of State (SOS)
• file taxes with the Tennessee Department of Revenue (DOR), and
• apply for business licenses and permits with your state, county, and town.

Which licenses and permits you must apply for depends on your business structure, industry, and location. The main types of business licenses, permits, and registrations are:

• general business licenses
• professional licenses
• seller's permits (sometimes called "sales tax certificate")
• zoning and building permits, and
• doing business as (DBA) registrations.

(For more general guidance, see our article on the legal requirements for starting a small business.)

General Business License in Tennessee

Tennessee requires businesses to have a general business license at the state level. There were major changes to Tennessee business tax law in 2023, so be sure you're up to date on the current law.

The type of license your business needs depends on your annual gross sales:

• No business license required: If you make less than $3,000 in gross sales, then you don't need a business license.
• Minimum activity license: If you make between $3,000 and $100,000 in gross sales, you'll need a minimum activity license from your county clerk's office.
• Standard business license: If you make more than $100,000 in gross sales, then you'll need to obtain a standard business license from your county clerk's office and open a business tax account with the DOR.

You can register for your tax account with the DOR using the Tennessee Taxpayer Access Point (TNTAP). However, you'll need to contact your county clerk to obtain your business license. As of 2023, the filing fee for each business license is $15.

Multiple business locations. If you have multiple business locations, then you must get a license with the county for each location.

Out-of-state businesses. In general, out-of-state businesses aren't required to get a state business license. Though businesses located outside of Tennessee that do business within the state must still register with the DOR to pay the business tax. Importantly, out-of-state contractors that gross more than $100,000 per year in a city or county must obtain a business license from that city or county.

In addition to getting a state business license, your business might need to obtain a business license from the city where you have a physical business location. Businesses that are located within a city that applies the municipal level business tax must apply for a business license with their city. However, if the business grosses less than $3,000 annually or is located in a city that doesn't apply the municipal-level business tax, the business doesn't need a business license from the city. (You can find a list of cities that apply the municipal-level tax on the DOR website.)

Business licenses are good for one year. The county clerk or city official will automatically renew your license when you file your business tax return.

The DOR provides a Tennessee Business Tax Manual that goes into detail about licensing and tax obligations for businesses.

Professional and Occupational Licenses for Businesses and Individuals in Tennessee

Many professions and occupations require special licensing or certification. If you're a member of one of these professions or occupations, you'll need to receive the appropriate license or certification before you begin business operations. Depending on your practice area, you could need a license for yourself and for your business.

The Department of Commerce and Insurance (TDCI) oversees many (but not all) of the regulatory boards and commissions for licensed professions and occupations. The regulatory boards section of the TCDI website lists the professions and occupations the TCDI handles. The list runs from Accountancy to Soil Scientists. By clicking on a specific board, you'll be taken to a webpage with detailed information and links to:

• license applications and renewals
• rules and laws
• education and exam requirements
• frequently asked questions, and
• other resources.

The TCDI doesn't handle all professions and occupations. For example, the Department of Health's Health Professional Boards is in charge of health-related professions, and the Board of Professional Responsibility is in charge of attorneys.

Check with the board, committee, or council that regulates your profession or occupation to figure out the steps you need to take to obtain the appropriate licensure or certification for you and your business.

Tennessee Sales Tax Certificate of Registration

If your business sells, leases, or rents tangible personal property or provides a taxable service, then you must register with the DOR to collect and pay sales tax in Tennessee. (Tenn. Code § 67-6-601 (2023).)

You can register for a sales and use tax account using TNTAP. After you register, you'll receive a certificate of registration. You must display this certificate at your business location.

For more information, see the sales and use tax guidance articles provided by the DOR.

Local Zoning and Building Permits

In some instances, you might need to apply for special zoning and building permits. For example, if you'll be building or remodeling an existing space, you'll likely need to undergo building inspections and apply for special permits before you can open your doors.

Some cities issue a certificate of occupancy or a similar document to show that your business is allowed as is under the city codes and ordinances. For example, Nashville issues a use and occupancy letter once you've successfully undergone the required inspections and received final approvals and permits for your building project.

In general, these letters, certificates, and similar documents simply demonstrate that your proposed business activities and use of the space comply with current city codes and ordinances.

Zoning laws. If your type of business isn't in line with the zoning code, you can find another space or potentially apply for a special use permit. A special permit can provide your business with an exception to the current use laws.

Building code. You can work with local departments and agencies to apply for building and construction permits. You'll likely need to have inspections related to your space's structural, electrical, mechanical, and plumbing features.

If you'll be leasing a commercial space, be sure to have a clause or paragraph in the commercial lease that ensures the building and your use of the space are in line with the zoning laws.

Registering Your Assumed Business Name in Tennessee

If you have a limited liability company (LLC) or corporation and are operating under a name that's different from the name registered with the SOS, then you'll need to file for an assumed name. For example, suppose you filed articles of organization with the SOS for your LLC under the name "Yellow Brick, LLC." But you open a record store under the name "Spinning Records." Because your store name is different from your registered name, you'd need to apply to register your assumed name.

An assumed name is also sometimes called a:

• "trade name"
• "DBA," and
• "fictitious name."

You can file online or mail a completed application to the SOS. You can find the appropriate application for your business type on the business forms and fees section of the SOS website.

Sole proprietors and general partnerships can list their DBA on their general business license with their county or city.

Other Licenses and Permits Your Business Might Need

Apart from the licenses and permits discussed above, you might be required to comply with other laws and regulations. Some of the more common issuing state agencies are:

• the Alcoholic Beverage Commission
• the Department of Agriculture's Consumer and Industry Services
• the Department of Environment & Conservation, and
• the Department of Health (DOH).

In addition to state and local licenses and permits, you could need to obtain special licensing from a federal agency. For example, if your business will have a significant environmental impact, you could need to pay special attention to laws and regulations issued by the U.S. Environmental Protection Agency.

Resources for Tennessee Businesses

The Tennessee Department of Economic & Community Development (TNECD) website has pages devoted to small businesses. You can search for information and resources related to business licensing and permits. The ECD has created a Tennessee Smart Start Small Business Guide that gives detailed guidance on the stages of starting a business.

The U.S. Small Business Administration (SBA) has a district office in Nashville. The office's website lists upcoming events, resources, and news for small businesses.

The Tennessee Small Business Development Centers (TSBDC) are another good resource. The TSBDC website has links for free advising and training services, as well as other useful information. The TSBDC is part of a national network of SBDCs.

You can find much more information in the many other articles in our small business section. You can also find expanded information in many Nolo books, such as Legal Guide for Starting & Running a Small Business, by Fred S. Steingold, and The Small Business Start-Up Kit, by Peri Pakroo.

Talking to a Tennessee Business Attorney

The road to obtaining your business licenses, permits, and registrations can be long. While there are many great free and inexpensive resources out there, you might need some personalized legal help along the way. If you need legal assistance for your specific situation, consider talking to a Tennessee business attorney. They can guide you through the licensing or permitting process.