Start Your Own Business in Tennessee: Seven Steps You Need to Take

From licenses and permits to taxes and insurance, learn what you need to do to start a business in Tennessee.



Here’s an overview of the key steps you’ll need to take to start your own business in Tennessee.

Step 1. Decide on a Legal Structure

The most common legal structures for a small business are:

  • sole proprietorship
  • partnership
  • limited liability company (LLC), and
  • corporation

There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Check  Choose Your Business Structure  on Nolo’s website for more information on how to choose the best ownership structure for your business.

Step 2. Choose a Name

For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Tennessee Secretary of State (SOS). You can check for available names by doing a  business information search  on the SOS website. You can reserve an available name for four months by filing an application for reservation of name form with the Tennessee SOS. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See  How to Form an LLC in Tennessee  and  How to Form a Corporation in Tennessee  for more information.

If your business is a sole proprietorship or partnership that uses a business name that is different from the name of the business owner (for a sole proprietorship) or individual partners (for a partnership), Tennessee does not require you to register a fictitious business name.

If you plan on doing business online, you may want to register your business name as a domain name. See  Choose and Register a Domain Name  for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See  How to Do a Trademark Search  for more information.

Step 3. Create Your Business Entity

  • Sole proprietorship:  To establish a sole proprietorship in Tennessee, you don’t need to file any organizational documents with the state. For more information, see  How to Establish a Sole Proprietorship in Tennessee.
  • Partnership:  To create a general partnership in Tennessee, you don’t need to file any organizational documents with the state. Although not legally required, all partnerships should have a written partnership agreement. The partnership agreement can be very helpful if there is ever a dispute among the partners. For more information, see  How to Form a Partnership in Tennessee.  To form a  limited liability partnership(often used by professionals), you must file an Application for Registration with the Tennessee SOS. For more information, see  How to Form a Limited Liability Partnership in Tennessee.
  • LLCs:  To create an LLC in Tennessee, you must file  Articles of Organization  with the Tennessee SOS. You will also need to appoint a  registered agent  in Tennessee for service of process. In addition, while not required by law, you also should prepare an  operating agreement  to establish the basic rules about how your LLC will operate. The operating agreement is not filed with the state. For more information, see  How to Form an LLC in Tennessee  and  How to Form a Professional LLC in Tennessee  (for professionals).
  • Corporations:  To create a corporation in Tennessee, you must file  Articles of Incorporation  with the Tennessee SOS. You will also need to appoint a  registered agent  in Tennessee for service of process. Although not legally required, you also should prepare  bylaws  to establish your corporation’s internal operating rules. Bylaws are not filed with the state.  S Corporations  must also file IRS Form 2553,  Election by a Small Business Corporation,  with the IRS. For more information, see  How to Form a Corporation in Tennessee.

Step 4. Licenses and Permits

Tax Registration.  If you will be selling goods in Tennessee, you must register with the Department of Revenue tocollect sales tax. There are also  other business-related  taxes for which you may need to register with the DOR.

EIN.  If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.

Regulatory licenses and permits.  These cover areas such as:

  • health and safety
  • the environment
  • building and construction; and
  • specific industries or services.

Different licenses and permits are issued by different agencies. Some of the most important issuing agencies are:

For information about local licenses and permits, check the websites for any cities or counties where you will do business.

Professional and occupational licenses.  These cover people who work in various fields. The  Department of Commerce & Insurance  (TDCI) oversees many (but not all) of the regulatory boards and commissions for licensed professions and occupations.

Step 5. Business Location and Zoning

You’ll need to pick a location for your business and check local zoning regulations. That includes if you work from home. You may be able to find zoning regulations for your town or city by checking  municode.com.

Step 6. Taxes and Reporting

Because Tennessee does not have a personal income tax, owners of some forms of business will not owe state tax on their business income. See  Tennessee State Business Income Tax  for more information on state business taxes in Tennessee.

Sole proprietorships.  Pay federal taxes on business income as part of their personal federal income tax returns.

Partnerships.  Partners in general partnerships pay federal taxes on partnership income. Partners in other kinds of Tennessee partnerships, such as Limited Liability Partnerships (LLPs) also must pay an excise tax and a franchise tax. LLPs also must file an  annual report.

LLCs.  Members pay federal taxes on their share of LLC income on federal tax returns. In addition, LLCs themselves must pay an excise tax and a franchise tax. Tennessee LLCs also must file an  annual report  with the Tennessee SOS. See  Tennessee LLC Annual Report and Tax Requirements  for more information.

Corporations.  A shareholder-employee with a salary must pay federal income tax on his or her personal federal tax return. The corporation itself is subject to Tennessee  corporation taxes. Corporations also must file an  annual report  with the Tennessee SOS.

Apart from Tennessee taxes, there are federal income and employer taxes. Check IRS Publications 334,  Tax Guide for Small Business, and 583,  Taxpayers Starting a Business, available at irs.gov.

Step 7. Insurance

Insurance is a good idea for most kinds of business. While insurance often is regulated at the state level, the types of business insurance available are usually similar across the fifty states. Check  Obtaining Business Insurance  for more information.

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