Starting a business in Tennessee involves more than just having a great idea – it requires navigating specific steps to register the business legally.
Understanding which documents to file and which offices to approach can be challenging, especially for people starting their first business. To help make the process easier, our guide outlines the Tennessee business registration process in easy-to-follow steps. We explain each part of the procedure, helping you navigate from selecting your company’s legal structure to acquiring the required licenses so you can focus on building your business.
Related: Starting A Business In Tennessee Checklist
Step 1: Business Structure
The first step to registering a business in Tennessee is selecting a business structure. In simple terms, a business structure refers to how a company is legally organized to operate. Choosing the right type of business entity will impact on how your company operates, personal liability, taxes, and more, so choosing the right one is important.
There are four primary business structures to choose from: sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). A brief description of each is below.
Related: Comparison of Business Structures
A sole proprietorship is the easiest form of business structure because there is no legal difference between the person who owns the business and the person who manages it. The advantages include a low start-up cost and easy operation; however, the drawback is unlimited liability, meaning the owner’s personal assets are at risk if things go wrong.
Related: How to Start a Sole Proprietorship in Tennessee
General partnerships consist of two or more people conducting a business together. Like the sole proprietorship, the owners of a partnership have unlimited liability. Advantages include shared workload and management decisions, but disadvantages may arise from disagreements between partners, leading to stalled decision-making processes or conflicts of interest.
A corporation, unlike the earlier examples, is a business structure that is a separate legal entity from the individual. While corporations are more expensive and difficult to form than sole proprietorships and partnerships, the major advantage is that the corporation provides personal asset protection for the shareholders (owners) should the corporation be sued. The downsides are the compliance requirements and administrative burdens of having a board of directors, annual meetings for directors and shareholders, filing the annual report, appointing a Tennessee registered agent, and more.
Related: How to Form a Tennessee Corporation
The Limited Liability Company (LLC) is a popular business entity choice because it provides the liability protection of a corporation with the ease of operation of a sole proprietorship. The LLC does not have as many of the corporation’s burdens and has the greatest tax flexibility of the four structures since income can be taxed as a pass-through entity like the sole proprietor or partnership or as a corporation.
Related: How to Form a Tennessee LLC
Step 2: Business Name
After choosing a business structure, selecting a business name is often the next step for many Tennessee entrepreneurs. The need to register varies depending on the business structure, and the most common to register are sole proprietors and general partnerships.
Sole proprietorships and partnerships operating under a business name that is different from the full name of the owner(s) will need to register for a Tennessee Assumed Name (also known as a Doing Business As or DBA) with the Register of Deed’s Office in the county where the business is located.
For example, if John Smith decides to open a barbecue joint as a sole proprietor, he has two options:
- Operating under his own name: If John Smith chooses to run his business simply as “John Smith,” he doesn’t need to register an Assumed Name. He can start operating immediately under his legal name.
- Using a distinct business name: If John wants to call his restaurant “Smoky Mountain BBQ,” he’ll need to register this Assumed Name. Before registering the name, John will check name availability by visiting the Tennessee Secretary of State’s website.
Corporations and LLCs typically don’t need to register DBAs, as they already have a unique entity name from their formation process. However, they may choose to register an Assumed Name if they want to operate under an additional brand name.
Step 3: Federal Employer Identification Number
For many businesses, the next step after selecting the business structure and business name is obtaining a Federal Employer Identification Number (FEIN), also known as an Employer Identification Number (EIN). This unique nine-digit number, issued by the Internal Revenue Service (IRS), serves as a federal tax ID for your business.
You’ll need an EIN if:
- Your business has employees
- Your business is structured as a corporation, partnership, or multi-member LLC
While sole proprietorships and single-member LLCs without employees can use the owner’s Social Security number for tax purposes, many choose to obtain an EIN, so the owner’s Social Security number isn’t used on any business tax documents.
Obtaining an EIN is free and easy to get. The quickest method is to apply online through the IRS website, which typically takes only a few minutes. For those who prefer alternative methods, applications can be submitted by mail or fax.
Step 4: Professional & Industry Licensing
Several professions in Tennessee require specific licenses before practitioners can offer their services in the state. Some common professions that require licensing include:
- Accountants (Tennessee State Board of Accountancy)
- Architects (Tennessee Board of Architectural and Engineering Examiners)
- Attorneys (Tennessee Board of Law Examiners)
- Nurses (Tennessee Board of Nursing)
- Real Estate Agents (Tennessee Real Estate Commission)
- Contractors (Tennessee Board for Licensing Contractors)
- Cosmetologists (Tennessee Board of Cosmetology and Barber Examiners)
Before beginning operations, business owners should check with the relevant licensing board or the Tennessee Department of Commerce and Insurance to ensure they have all necessary professional licenses.
Step 5: Sales Tax Permit
In Tennessee, businesses that sell taxable goods or services are required to register for a Tennessee Sales Tax Permit. This permit allows you to collect and remit sales tax to the state. Whether you sell products online, in a storefront, or provide certain services, a sales tax permit is necessary to comply with state tax laws.
Who Needs a Sales Tax Permit?
- Retailers with a physical location in Tennessee.
- Online sellers that are shipping taxable goods to Tennessee customers.
- Service providers offering services that are subject to Tennessee sales tax (e.g., certain repair and installation services).
The Tennessee Department of Revenue’s Tennessee Taxpayer Access Point (TNTAP) website is the easiest way to register for a Tennessee Sales Tax Permit.
Step 6: Resale Certificate
A Tennessee Certificate of Resale, also known as a Resale Certificate, is a valuable document for businesses that purchase merchandise intending to resell it. This certificate allows these businesses to buy goods without paying sales tax at the time of purchase. These businesses will collect sales tax from the end customer when the product is sold rather than paying it upfront for inventory purchases.
Who needs a Resale Certificate:
- Retailers
- Wholesalers
- Manufacturers who resell finished products
- Online sellers with inventory in Tennessee
To get a Resale Certificate, businesses must first register for a Sales Tax Permit with the Tennessee Department of Revenue. Once registered, they can generate a Resale Certificate through their account on the Tennessee Taxpayer Access Point (TNTAP) website.
Step 7: Local Business Licenses
When starting a business in Tennessee, you may need to register for licenses at both the county and city levels, depending on your location and the nature of your business. These licenses are essential for operating legally within your specific area.
County Business License
Most businesses in Tennessee need to register for an annual business license from the County Clerk in the county where the business is located within 20 days of starting the business. The two common licenses are the Standard Business License and the Minimal Activity Business License.
- Standard Business License: The Standard Business License is for businesses that gross more than $10,000 annually. After filing for the Standard Business License with the county clerk, a tax return of the business’s gross receipts (gross sales) will be filed with the Tennessee Department of Revenue at the end of each year.
- Minimal Activity License: The Minimal Activity Business License is for businesses that gross over $3,000 and less than $10,000 annually. The Minimal Activity License is filed with the county clerk, but there is no annual report on gross receipts.
City Business License
If your business operates within a city in Tennessee that also requires licensing, you’ll need to obtain a city business license in addition to the county license. Requirements can vary depending on the municipality, so it’s important to check with your local city hall or clerk’s office.
Here’s an overview of common city-level licenses in Tennessee:
- General Business License: This is a basic license required by many Tennessee cities for any business operating within their jurisdiction. It grants permission to conduct business activities within the city limits.
- Retail License: Cities may require a separate retail license for businesses selling goods directly to consumers, distinct from the state-level sales tax permit.
- Professional Licenses: Certain occupations may need city-specific licenses in addition to state licensing. These can include licenses for contractors, real estate agents, or other regulated professions.
- Food Service License: Restaurants, cafes, and other food-related businesses often need a specific license from the city health department to operate.
- Alcoholic Beverage License: Businesses selling alcohol typically require a special license from the city, in addition to state alcohol permits.
Exact licensing requirements often differ between Tennessee cities, so it’s advisable to contact your local city government or business licensing office to determine the specific licenses required for your business type and location.
Step 8: Local Building & Zoning Permits
Before finalizing the purchase or lease of a property for your business, it’s important to understand and comply with local building and zoning regulations. These requirements ensure that your business operates in an appropriate location and that your building meets local safety standards.
Several types of permits and approvals may be necessary:
Zoning Compliance: Zoning laws dictate how property in specific areas can be used. Check with your local planning or zoning department to confirm that your intended business use is allowed at your chosen location. This applies to both commercial properties and home-based businesses in many areas.
Building Permits: If you plan to construct a new building or make significant modifications to an existing structure, you’ll likely need a building permit. This ensures that construction meets local building codes and safety standards. Building permits are typically obtained from the local building or codes department.
Certificate of Occupancy: Many Tennessee municipalities require a Certificate of Occupancy before a business can operate in a building. This document certifies that the building complies with all building codes and zoning laws and is safe for occupancy. The local building or codes department usually issues this certificate after final inspections.
Sign Permits: If you plan to install exterior signage for your business, you may need a separate sign permit. These permits ensure signs comply with local ordinances regarding size, placement, and lighting.
While specific requirements vary by location, most of these permits and approvals can be obtained through your local city or county government offices. It’s advisable to contact these offices early in your planning process to understand all requirements for your specific business type and location.
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