Registering a Business in Tennessee
1. Name Your Tennessee Business
For many, naming a new business is a daunting task. The name should be notable, letting the public know all that you have to offer. A powerful name, however, is much more than that. It is a branding tool, offering an inside look at your organization’s mission and vision for the future. The right name can help set you up for long-term success; the wrong name can help sink a ship before it even gets in the water.
Brainstorming Your Name
While many entrepreneurs are tempted to rush through the naming process, you should take as much time as you need to explore all naming possibilities. Take several brainstorming sessions and use the free online business tools available today to help come up with a number of possibilities, narrowing down your options as you go.
Our business name generator is an excellent, industry-specific brainstorming tool that will not only assist you in coming up with the perfect name, but it automatically checks domain name availability as well. If you’re still not sure where to start, our naming guide can help you define your brand and offers practical tips to utilize doing your brainstorming sessions.
Tennessee Name Search
Search with the business information search tool and the business name availability search tool set up through the Tennessee Secretary of State to make sure that your name is unique within the state. You’ll also want to check to make sure that your name isn’t too similar to that of any other business in your state. This will help avoid confusion and potential legal hassles down the road.
Once you have come up with a name that accurately represents your brand, it’s time to start legitimizing your business. These next steps will vary depending upon your business structure and your state’s legal requirements. We will go over the different business structures in the next section.
If you decide to use a “doing business as” (DBA) name, known as an assumed name in Tennessee, our DBA guide will help ensure you are properly registered on a state, county, and/or city level. There are several benefits to registering your assumed name with the state. It offers a layer of protection against other Tennessee businesses, proves your company’s legitimacy, and may be required by some vendors, banks, and lenders.
2. Choose a Business Structure for Your Tennessee Business
Now that you have chosen the appropriate name for your brand, it is time to start the process of legalizing your business. Before you begin the registration process, you will need to determine which business structure best fits your needs. Each comes with its own set of advantages, disadvantages, and tax benefits.
A sole proprietorship is the most unambiguous of all business structures. This informal entity was designed for entrepreneurs who do not plan to have any business partners. It does not offer any personal asset protection and does not require a state filing.
If you’re considering this entity, your business will operate under your surname. If you choose to register a DBA in Tennessee, you will need to file in every county that you do business in. This means that the costs and renewal procedures vary from county to county. Visit the Department of Revenue’s website for a full list of county clerk contact information.
Much like a sole proprietorship, a general partnership is an informal entity designed for entrepreneurs who are entering a partnership with at least one other person. The business can operate under you and your partners’ surnames, or you can acquire a DBA name. The profits and losses would be claimed under your (and your partners’) personal tax return, and there is no personal asset protection.
In Tennessee, all partnerships (including general partnerships, limited partnerships, and limited liability partnerships) must file official paperwork with the state along with a filing fee.
If you do not plan to go public in the next few years, a limited liability company (LLC) may be the best fit for you. It offers more flexibility and protects your personal assets in the event of a lawsuit.
The State of Tennessee requires that all LLCs appoint a registered agent who will accept legal documents on behalf of the organization. Your registered agent must be a qualified resident of Tennessee or a corporation that is authorized to conduct business in Tennessee. Many new LLCs elect to appoint a registered agent service, which costs between $39 and $300 annually.
Tennessee also requires you to follow certain naming requirements and file the Articles of Organization, which provides key details about your company.
A corporation is a business entity designed for those who have (or plan to have) shareholders. So, if your future plans include going public, this may be the best option for you.
Like LLCs, corporations must appoint a registered agent to accept paperwork in case of legal disputes, compliance documents, and government correspondence on the organization’s behalf. Also like an LLC, your registered agent can be a professional service, a business entity, or an individual.
In addition to getting a registered agent, you will also need to file Domestic For-Profit Charter (often referred to as the Articles of Incorporation for Certificate of Formation in other states).
Recommended: Read our full guide on choosing a business structure.
3. Determine if You Need to Register Your Business in Tennessee
Once you have determined your formal business structure and registered your new business name, you will want to check with your state to determine the business registration requirements. Each state has its own set of guidelines, and you must follow them precisely.
In most cases, sole proprietorships do not have to officially register with the State of Tennessee. Check with your local government to see if you must register your sole proprietorship at a county or city level.
Additionally, some businesses (e.g., sole proprietorships and single-member LLCs that don’t have employees) are not required to register and file for a Tax ID Number, also known as an Employer Identification Number (EIN), with the IRS. Even if this is not a requirement for your business, you will want to consider registering anyway as there are several legal and tax benefits.
Even if you aren’t required to register your business, note that registering an LLC comes with an abundance of legal and financial benefits. As a sole proprietorship or a partnership, your business debts are considered personal debts. This means that your personal assets can be seized in the event of a lawsuit. LLCs offer personal protection, legally protecting your personal assets and limiting your personal liability.
In addition to this personal protection, LLCs enjoy several other benefits, including:
- Flexibility in profit distribution, decision-making, and business management
- “Pass-through” taxation, which allows for the LLC’s income and expenses to pass through to the owners’ personal income tax returns with no restrictions regarding the number and type of owners
- Limited requirements regarding annual meetings, paperwork, and record-keeping
If you lack the time and/or knowledge needed to form your new LLC, there are a number of reputable LLC filing services that will help you launch your business. Because we understand how challenging it can be to sift through the dozens of available options, we have reviewed and ranked the five best LLC filing services. Our LLC service review offers a side-by-side comparison of each, ensuring you partner with a service that saves you both time and money.
4. Register for Taxes for Your Business in Tennessee
The IRS uses EINs as a way to distinguish businesses for tax reporting. All businesses with employees are required to have one. Our EIN guide will help you determine your business structure’s EIN requirements and walk you through each step in the process.
Once you have received your EIN, you’ll need to primarily register for unemployment insurance tax. All entities that conduct business in the state of Tennessee must pay an annual franchise & excise tax. Most businesses must also pay a business tax, while businesses that sell physical products must register for sales tax through the Department of Revenue.
Your business may need to apply for additional business taxes, such as motor fuel tax, gross receipts tax, or alcoholic beverage taxes. For more information regarding Tennessee business taxes and registration procedures, visit the Department of Revenue website.
5. Obtain Permits and Licenses for Your Tennessee Business
As mentioned above, most Tennessee businesses must apply for a business tax license. Additional licenses and permits required for a Tennessee business are determined by a number of factors, including your chosen industry and the county in which you operate. For example, a hair salon may need to obtain licensing from the state’s Cosmetology and Barber Examiners Board. For more information, visit the Licensing & Regulations page on the Department of Commerce & Insurance’s website.
Additionally, some companies are regulated under a federal agency and require federal licenses and/or permits. For instance, a liquor manufacturer would be subject to rules and guidelines created under the FDA. You can learn more about federal permit requirements and fees by visiting the Small Business Administration (SBA) website.
To assist you in determining your federal, state, and county license and permit requirements, we have developed a business license search. To use this free guide, simply choose your state from the dropdown menu, and you will be redirected to a list of everything you will need to consider when launching a business in the state of Tennessee.
Still feeling uneasy about the process? We’ve also compiled a list of our top five business license services that can help you get set up and ensure your business meets all compliance requirements.