Starting Your Business in Tennessee | A Step-by-Step Guide

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Start a Business in Tennessee

If you want to start an LLC in Tennessee, there are numerous factors to consider. Starting your own business is one of the most exciting and profitable things you can do in Tennessee. But where do you start? Follow our comprehensive guide on How to Start a Business in Tennessee. We will assist you in removing doubt from the process and investigate your success chances. It will begin with defining your business idea and progress to establishing, launching, and expanding your business. Webinarcare Editorial Team will help you every step of the way!

How to Start a Business in Tennessee

What Business to Start in Tennessee?

If you’re looking to start a business in Tennessee, consider starting a limited liability company (LLC). LLCs offer personal liability protection for their owners while also providing the flexibility of a partnership or sole proprietorship. Beyond that, here is the list of businesses to consider in Tennessee.

  1. Real Estate Business
  2. Home Improvement Contractor
  3. Law Firm
  4. Restaurant
  5. Operations Consulting or Financial Consulting

Whatever business you choose to start, it’s important to conduct thorough market research and create a solid business plan before diving in. We reviewed some of the Best LLC Services and provided features as an add-on with their packages for you to check out.

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Starting a business can be a challenging but highly rewarding endeavor. By taking the time to research and plan, you can increase your chances of success. Whether you choose to form a corporation or start an LLC in Tennessee, it’s important to surround yourself with a strong team that will guide you. Don’t let fear hold you back, take that first step towards turning your business dreams into a reality.

– WEBINARCARE EDITORIAL TEAM

How to Start a Business in Tennessee?

To form a business in Tennessee, you must follow a few steps that include creating a business plan, choosing a business entity type, determining your business costs, naming your business, registering a business, and lastly, marketing your business.

Please continue reading to learn more about the overall procedure and what new small business owners should keep in mind as they complete each step.

Step 1: Creating a Business Plan

When developing a business plan, many factors should be considered during the decision-making process. Your business plan in Tennessee serves as a road map for your company’s success.

A business plan should take into account the specific goals of your company. You should know the product or service you will provide in Tennessee. A well-thought-out business plan is essential for determining how your company will make a profit. If the purpose of the business plan is ambiguous and unrelated to the service you provide, it will impact the business you are forming. Make sure your business goals are SMART (specific, measurable, achievable, realistic, and time-bound). Also, researching your competitors’ services will help you determine your strategy for your state business. Finally, you should consider your company’s funding.

With this article’s assistance, you can better comprehend your business’s essential components and success strategy. You can apply for Tennessee Small Business Loans from banks and investor funding to help support your company in Tennessee.

Once you have the entire plan in your hands, you can work on the legal framework of your company. Legally, you can form an LLC for your ideal business.

Step 2: Choose a Business Entity in Tennessee

Selecting a business entity for your Tennessee company. When starting your own business, you must choose a business structure. How well your personal assets are secured, how much tax you pay, and how much paperwork you have to deal with will all be significantly impacted by the type of corporate entity you choose. Consider setting up a corporation, LLC, LLP, or sole proprietorship as your business entity in Tennessee.

Sole Proprietorships

Consider a sole proprietorship if you want to start a business in Tennessee by yourself. A sole proprietorship is the simplest business structure in which a single individual owns and operates the entire business. The owner and the business are considered the same legal entity in a sole proprietorship. There is no legal distinction between the owner and the business, meaning that the owner has complete control over the business operations, profits, and losses.

Sole proprietorships are best suited for Tennessee small businesses with low risks and for individuals who want to maintain complete control over their business without the complexities of establishing a separate legal entity.

Limited Liability Company

A Limited Liability Company (LLC) is a business structure that combines features of both partnerships and corporations, offering limited liability protection to its owners (called members) while allowing flexibility in management and taxation. An LLC is a separate legal entity from its owners, meaning the members are not personally liable for the business’s debts, obligations, or liabilities.

It is a popular choice for small to medium-sized businesses that want the liability protection of a corporation while maintaining management flexibility and simpler tax treatment. It’s essential to consult with a legal or financial professional to determine if an LLC is the best choice for your specific business situation.

Limited Liability Partnership

A limited liability partnership (LLP) is comparable to an LLC. However, it is usually used by licensed business professionals like attorneys or accountants. A partnership agreement is necessary for this kind of business entity. You can form an LLP in Tennessee if you are planning to.

Corporation

Forming a Corporation in Tennessee reduces your personal liability for business debts as an LLC does. A corporation is a legal entity that is separate and distinct from its owners, known as shareholders. It is created under the laws of the state it is incorporated in and is considered a separate “person” under the law. The corporation can enter into contracts, own property, sue and be sued, and pay taxes separately from its owners.

A corporation can be taxed as an S-corporation (S-Corp) or a C-corporation (C-Corp). If a small corporation satisfies certain Internal Revenue Service (IRS) standards, then S-corporation status is available, providing pass-through taxation. However, most larger businesses and startups seeking venture financing are taxed as C-corps.

To choose the right business structure in Tennessee, consider personal liability protection, taxation, management flexibility, administrative requirements, and setup costs. Consult a legal or financial professional to help you make the best decision.

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Step 3: Determine your Tennessee Business Cost

In Tennessee, you should determine the cost of your business. You should consider paying the Articles of Organization fee, business licenses fee, office supplies and equipment, payroll, rent, utilities, transportation, and taxes.

Usually, filing an initial Tennessee Articles of Organization fee costs $300, while the LLC annual fee costs $50 per member in Tennessee. In terms of filing Tennessee Charter for Profit Corporation, the costs usually range up to $100 for online and by mail filing.

If forming an LLC is your ideal business, consider knowing the LLC Cost in Tennessee.

Step 4: Name your Business in Tennessee

Naming your business doesn’t take a lot of time. With the help of Tennessee Business Name Search, you can acquire a name for your business. If you form an LLC in Tennessee, you must follow the below rules while naming your business-

  • The name should not be confused with a government entity.
  • The name should be unique.
  • The name should be available to use.
  • Any other business does not use the name.
  • The new name must include “LLC” if it is a limited liability company.

In Tennessee, if you do not wish to file your business right away but want to hold the name that you have decided on, then you can reserve your business name. You must file a name reservation application in the Tennessee Secretary of State to keep the name.

If the business name is available, you may choose to reserve it for a specific period of 4 months. The online name reservation fee is $20 and the mail name reservation fee is $20. If your business plans to operate under a name other than its legal name, you may also need to register a fictitious or “doing business as” (DBA) name.

The DBA filing can be done in two methods, by mail and in person, which you can file in Tennessee Secretary of State. You can check out how to file a DBA in Tennessee for clearer understanding.

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Step 5: Register Tennessee Business

To register a business in Tennessee, you need to file it with the Tennessee Secretary of State. Before that, you must have a Tennessee Registered Agent for your business. The Registered Agent is a person who is responsible for receiving important legal documents on your behalf.

You can serve as your own Registered Agent, or you can appoint a friend or family member, or you can check the Best Registered Agent Services in Tennessee.

Apply For Articles of Organization

After you have a Registered Agent, you need to file the Tennessee Articles of Organization, if you want to have an LLC structure, or you need to file the Tennessee Charter for Profit Corporation if you want to have a Corporation.

Request For an EIN

In addition to the paperwork, your Registered Agent should apply for an Employer Identification Number (EIN) in Tennessee. An EIN will serve as the tax ID for your professional corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website. You can obtain the EIN for free from the IRS.

The application of an EIN in Tennessee can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone (for International Applicants)– International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN number, you can benefit in several ways. It will give your LLC the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

Recommended: Professional services have the EIN included in their LLC formation package. We recommend using –

LegalZoom – ($0 + State Fee for LLC formation)

Step 6: Apply for Business License and Permit

Business licenses and operating permits are necessary to run any business in Tennessee. Before launching your new business, request any required business license or permission. Most Tennessee businesses need licenses or permits to operate. Federal, state, and local governments may all require businesses to have licenses and permits. The business license fee depends on the type of license you are applying for. It can start from $25 till going up to $100+. However, in Tennessee, the business license fee ranges from $50 – $300.

Step 7: Obtain a Bank Account

Your business dealings in Tennessee might be simpler with a US business bank account because it boosts your company’s legitimacy and liquidity. Opening a separate bank account for your Tennessee business is essential for maintaining a clear separation between your personal and business finances.

You can check out the Best Banks in Tennessee, which offers the best fees, services, and convenience for your business needs.

Step 8: Market your Business in Tennessee

Now that your Tennessee business is registered, you can market it with an ideal marketing plan. An ideal marketing plan can help a start-up business to become known. Making a comprehensive social media network like META, Facebook, Instagram, Twitter, and YouTube falls within this category. While creating an SEO campaign for your company website, you may also look at specialized communities on Facebook and LinkedIn.

FAQs

How do I register my business in Tennessee?
Business owners can register their business with the Tennessee Secretary of State for a fee online or by mail.
What is the fee for registering my business in Tennessee?
The registration fee for a business in Tennessee varies according to the type of business that you establish.
What types of businesses need a Tennessee business license?
Any business that operates in the state of Tennessee is required to have a business license, including sole proprietorships, LLCs, corporations and partnerships.
What should I consider when choosing the name for my business in Tennessee?
Business owners in Tennessee should choose a name that will appeal to prospective customers as well as avoid names that are too similar to existing businesses in the state.
Can I choose any name I want for my business in Tennessee?
No, business owners will need to make sure that the name is not already in use by another business entity within Tennessee.
How can I check for trademark infringement when naming my business in Tennessee?
Business owners can check for trademark infringement in Tennessee by visiting the website of the U.S. Patent and Trademark Office.
How long will it take to process my business registration in Tennessee?
The Tennessee Secretary of State can usually process a new business registration within a few days or weeks, depending on the volume of applications.
What business taxes am I required to pay in Tennessee?
Business owners in Tennessee are required to pay various types of taxes, including payroll taxes, state sales tax, and franchise and excise taxes.
How do I determine the appropriate business structure for my business in Tennessee?
Business owners should consult with a tax attorney or accountant to determine the appropriate legal structure for their business in Tennessee.
What types of business structures are available in Tennessee?
Business owners in Tennessee can choose from several business structures, including sole proprietorship, LLC, corporation, and partnership.
Do I need to file annual reports for my business in Tennessee, and if so, when?
Yes, business owners in Tennessee are required to file annual reports on or before the anniversary of the date the company was initially registered.
Can I change the structure of my business in Tennessee after it is established?
Yes, business owners are allowed to change the structure of their TN business at any time by filing the appropriate paperwork with the state.
What is a Tennessee business resale certificate?
A Tennessee business resale certificate allows merchants to purchase goods and services tax-free if they are intended for resale.
How do I obtain a business resale certificate for my TN business?
Business owners in Tennessee can obtain a resale certificate by completing an AP-204 sales tax exemption form and mail or fax it to the Department of Revenue.
Does Tennessee have a state income tax for businesses?
Yes, Tennessee does have a state income tax on businesses, though it only applies to certain types of businesses.
How do I apply for a business loan in Tennessee?
Business owners in Tennessee can apply for business loans through banks, credit unions, business loan programs, and private funding.
What types of business insurance should I consider in Tennessee?
Business owners in Tennessee should consider insuring their company against damage, liability, workplace injuries, and business interruption.
What is the state minimum wage for Tennessee?
Tennessee uses the federal minimum wage of $7.25 per hour as its own minimum wage.
What local permits and licenses will my business need to operate in Tennessee?
Local permits and licenses will vary according to the location of the business.
Does Tennessee have any special taxes that businesses need to know about?
Tennessee has a few special taxes such as the Hall income tax or the amusement tax.
Are there any residency requirements to start a business in Tennessee?
No, business owners do not have to be residents of Tennessee to start a business there.
Does Tennessee have any business incentives for new businesses?
Yes, Tennessee offers a variety of incentives products to foster business growth, such as grants, tax incentives, and investment capital.
What is Tennessee’s Right to Work Law?
Tennessee’s Right to Work Law does not require any person to become a union member or to pay union dues as a condition of employment.
Can a person have an LLC and work for someone in Tennessee?
Yes, a business entity, such as an LLC, can work for and provide contracted services to another company in Tennessee.
Can I conduct business across state lines while registered in Tennessee?
Absolutely; the location of the business registration (i.e., Tennessee) does not restrict your business activities or operations elsewhere.
How do I find potential employees in Tennessee?
Business owners looking for potential employees can utilize a variety of resources, such as job placement services, job fairs, online job boards, and social media outlets.
How many employees must I have in order to comply with the Tennessee Conners Law?
Tennessee’s “Conners Law” to prevent abstinence legislation applies to businesses with 15 or more employees.
What assistance is available to TN small business owners?
Several organizations such as Tennessee Small Business Development Programs offer help for TN independent ventures so they can be more viable.
What is the process to register a business in Tennessee?
To register a business in Tennessee, you can file the Articles of Incorporation with the Tennessee Secretary of State.
How much does it cost to register a business in Tennessee?
It costs $100 to file the Articles of Incorporation with Tennessee Secretary of State.
How long does it take to register a business in Tennessee?
The processing time for registering a business in Tennessee is usually 5-7 business days.
What are the types of business structures that can be registered in Tennessee?
The types of business structures that can be registered in Tennessee include sole proprietorship, partnership, corporation, and limited liability company.
What is a sales tax and do I need to collect it in Tennessee?
Sales tax is a tax on retail sales of tangible personal property and services. If you are conducting business in Tennessee and selling taxable goods or services, you will need to register for a sales tax license and collect the applicable tax.
What is the minimum wage in Tennessee?
The minimum wage in Tennessee is $7.25 per hour, which is the same as the federal rate.
Do I need a business license in Tennessee?
Certain businesses in Tennessee may require a state-issued business license, as well as licenses on the local government level.
What taxes do I need to pay for my business in Tennessee?
Businesses in Tennessee are subject to State and local sales taxes, as well as any applicable income taxes.
Do I need to register my company’s name in Tennessee?
It is not necessary to register the name of your business with the state. However, it is important to make sure your business name is not already taken and does not infringe on any other trademark or intellectual property rights.
Where can I look for funding to start a business in Tennessee?
Tennessee Economic and Community Development offers many financial resources for businesses such as loans, grants, and bonds; while non-traditional funding comes from sources such as angel investors and venture capital.
Can I file for business license and Articles of Association online in Tennessee?
Yes, both business license and Articles of Incorporation can be filed online with the Tennessee government’s website.
What is a registered agent in Tennessee?
A registered agent is a designated individual or office that is appointed to receive official government correspondence and legal notices on behalf of the company.
What is personal liability, and how can it affect me as a business owner in Tennessee?
Personal liability means, as the owner of the business, you are personally responsible for any legal or financial obligations and debts of the company.
What licenses and permits are required for home-based businesses in Tennessee?
Home-based businesses in Tennessee may have to obtain zoning, safety, and professional licenses and permits.
Is registered service mark, trademark, or tradename necessary for Tennessee’s business registration process?
Registering trademarks is not necessary in Tennessee’s business registration process, however, you may want to consider it so you can protect your valuable intellectual property.
What is a limited liability company, or LLC, and how can it benefit me in Tennessee?
A limited liability company is a type of business structure that limits the owner’s personal liability and typically offers greater tax benefits.
Can any person be a registered agent in Tennessee?
Anyone including corporate entities can be designated as a registered agent in Tennessee.
How do I obtain a state contract in Tennessee?
If you want to apply for potential state business opportunities, you can register at the State of Tennessee Economic and Community Development’s online platform Third Party Contracting System.
Do I need to get a business permit to sell goods or services in Tennessee?
Some services and products require various permits and licenses and it depends on the category of business.
Is Tennessee a good state for small business owners?
Tennessee is known for its business-friendly environment and numerous business-support resources, making it a great destination for small business aspirations.
What does S Corporations stand for in Tennessee, and what are its benefits?
S Corporations are a form of corporation eligible to pay certain taxes by the company members instead of solely individual members. Benefits include limited personal tax ramifications on business-related assets and liabilities.
Can an LLC have foreign Individuals as owners?
Yes, an LLC can have foreign individuals, and ownership percentages depend on the individual business requirements.
How Do Tennessee business laws affect my business?
It’s essential to consider Tennessee business regulations in the planning phases of a business and maintains compliance throughout operation.
What business-based technology tools are available in Tennessee?
Multiple business-catering applications and technologies are available in Tennessee, such as Tennessee Small Business Contracts, TSBDC online workshop tools and Tennessee Smart Start resources.
What is Tennessee’s tax and business identification policy?
Business Identification is established in Tennessee by obtaining related state materials consisting of online applications and forms for certain equipment and systems.
What aspects are evaluated to gauge Tennessee’s business climate?
Tennessee’s critical aspects include access to Community development practitioners, industry-friendly economic Climate and healthy start-up acceptance number and capital range in the state.
What taxes regulation is exempt for business across Tennessee?
Taxes with no regulations placed upon businesses or entrepreneurs in Tennessee include authority payroll expenses and income tax availability for startup registration.
What is the minimum age requirement for starting a company in Tennessee?
In Tennessee, a person under 18 can apply to be incorporated, but apart from the associate name processor and the payment of fees, nothing additional to ordinary processes does not waiver legal concerns.
What legal forms of Freelance and work-from-home jobs address Federal and Tennessee business laws?
Federal and state laws of Tennessee obligate businesses, including freelancers, to conform to payroll and organization/trade name registration policies at a minimum.
Are there permits and licenses necessary for retail sales or vending across Tennessee?
Vending devices may require additional licensing, while retailing goods and commodities comply with restrictions regulated through department-funded licensers for online or storefront sales.

Also Read

Why You Should Start Business in Tennessee

One of the biggest draws of Tennessee is its central location within the United States. With major interstate highways intersecting in the state, access to markets both near and far is easily attainable. This means that regardless of the industry you are looking to enter, Tennessee provides excellent connectivity to consumers and suppliers alike.

Another aspect that makes Tennessee an attractive location for starting a business is its business-friendly environment. With no personal income tax and a relatively low corporate tax rate, Tennessee is a state that values entrepreneurship and welcomes businesses with open arms. In addition, the cost of living in Tennessee is relatively low compared to other states, making it an affordable option for business owners looking to start or expand their ventures.

Tennessee also boasts a diverse economy, with thriving industries in healthcare, agriculture, manufacturing, and tourism, among others. This diversity provides opportunities for entrepreneurs in a wide range of sectors to find success and grow their businesses. Additionally, Tennessee’s workforce is highly skilled and motivated, with several universities and technical colleges in the state offering training programs in various fields, ensuring a talented labor pool for businesses to draw from.

One of the most appealing aspects of Tennessee is its strong sense of community and support for small businesses. The state is home to numerous organizations and networks aimed at helping entrepreneurs succeed, offering resources, mentorship, and networking opportunities. Whether you are a seasoned entrepreneur or just starting out, Tennessee provides a supportive environment to help you navigate the challenges of starting a business.

Furthermore, Tennessee’s natural beauty and rich culture make it an attractive place to live and work. With vibrant cities like Nashville, Memphis, and Chattanooga, as well as scenic landscapes and outdoor recreation opportunities, Tennessee offers a high quality of life for residents and employees alike. This can be a significant draw for businesses looking to attract top talent and create a positive work environment.

In conclusion, Tennessee offers a compelling option for entrepreneurs looking to start a business. From its central location and business-friendly environment to its diverse economy and strong sense of community, Tennessee provides a fertile ground for businesses to grow and thrive. Whether you are looking to start a small Mom and Pop shop or a large-scale corporation, Tennessee has much to offer in terms of opportunity and support. Consider Tennessee as your next destination for starting a business, and embark on a journey to success in the Volunteer State.

Conclusion

Starting a business in Tennessee has unique advantages and challenges since it offers a large and diverse market, access to skilled talent, and numerous networking opportunities, making it an attractive location for entrepreneurs. However, business owners must also contend with a high cost of living, intense competition, and potentially complex regulations.

Ultimately, whether starting a business in Tennessee is the right decision depends on the entrepreneur’s specific needs, goals, and industry. It is crucial to conduct thorough research and consider factors such as taxes, regulations, workforce availability, and target market when choosing a location for a new business. By carefully weighing the pros and cons, entrepreneurs can make informed decisions and set themselves up for success in the competitive Tennessee business landscape.

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