Tennessee SmartStart

Tennessee Business Registration: A Beginner’s Guide

Registering a business involves several steps, and some businesses require additional state, local, or federal level permits or licenses. As you move through this guide, you can track your progress and access the agencies you need.

If you have questions or need personalized advice, consider consulting a trusted professional such as an attorney, CPA, or business counselor.

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Step 2: Choose a Legal Structure

Understand the different business structures and choose the one that fits your goals.

Choosing a legal structure is an important early decision. Your structure affects how you pay taxes, how much personal liability you take on, and how your business can grow. Take time to explore the different options and consider how each one aligns with your long-term plans.

Resources like SBA.gov, TSBDC.org, and SCORE.org offer beginner-friendly explanations of each structure.

For personalized guidance—especially if your situation is complex—consider consulting an attorney, CPA, or licensed business counselor.

Types of Org Structures

Sole Proprietorship

A sole proprietorship is the simplest and most common type of business to start. It’s owned and operated by one person (or a married couple) and usually runs under the owner’s name. There’s no legal separation between the owner and the business, which means the owner keeps all the profits and makes all the decisions. However, it also means they’re personally responsible for any debts or legal problems, so their personal money or property could be at risk if the business runs into trouble.

General Partnership

A general partnership is a straightforward business structure where two or more people share ownership and responsibility for running the business. Each partner typically contributes something valuable—like money, skills, or labor—and they share profits, losses, and management tasks equally unless otherwise agreed. It’s easy and low-cost to start, but a major downside is that each partner is personally liable for the business’s debts and legal issues, including those caused by the other partners.

Limited Partnership (LP)

A Limited Partnership (LP) is a business structure that includes at least one general partner, who runs the business and takes full responsibility, and one or more limited partners, who invest money but don’t manage daily operations. Limited partners share in the profits but are only at risk for losing what they invested, offering them some protection from liability. LPs are useful when managers need investors, but they’re often not ideal for new businesses because they’re more complicated to set up.

Limited Liability Company (LLC)

An LLC is a type of business that protects the owners (called members) from being personally responsible for the company’s debts or legal problems. It combines the flexibility of a partnership with some of the protections of a corporation. While it’s a popular choice for small businesses because of its tax benefits and liability protection, it can be more complicated and expensive to set up than other business types like sole proprietorships or general partnerships.

S Corporation (S-Corp)

An S Corporation (S-Corp) is a type of business that gets special tax treatment by filing paperwork with the IRS. It lets the business’s profits and losses pass through to the owners’ personal tax returns, which helps avoid being taxed twice. Like a regular corporation, it also protects the owners from being personally responsible for business debts. To become an S-Corp, you have to meet certain IRS rules and file Form 2553. It’s a good option for small to medium-sized businesses that qualify.

C Corporation (C-Corp)

A C Corporation is a business structure that is legally separate from its owners, meaning it can enter contracts, earn profits, and be held liable on its own. It provides strong protection for its owners and can raise money by selling stock to unlimited shareholders. However, it is subject to double taxation—once on the company’s profits and again when dividends are paid to shareholders—and it requires more paperwork and formal processes than other business types.

Public Benefit Corporation (PBC)

A Public Benefit Corporation (PBC) is a for-profit legal structure that blends traditional business goals with a commitment to positive social or environmental impact. Emerging from the social entrepreneurship movement, PBCs are required to consider both the financial interests of shareholders and the public benefit purpose(s) outlined in their charter. This model is ideal for businesses that want to generate profit while being mission-driven and accountable for their societal impact.

Foreign-Owned Corporation (Out-of-State)

A foreign-owned corporation is a business incorporated outside of Tennessee but doing business in Tennessee. This structure is suitable for businesses that want to expand into Tennessee without completely reorganizing their business entity. Foreign corporations must adhere to the laws and requirements of both their home state and Tennessee.

Nonprofit

A Nonprofit Corporation is a business set up to support a specific cause, such as charity, education, or religious work, rather than making profits for owners or shareholders. Any money the organization makes is reinvested into its mission, not paid out as income. Nonprofits can apply for tax-exempt status, allowing them to avoid paying income taxes, and they can receive donations, but setting up and maintaining a nonprofit involves more paperwork and oversight than a regular business.

Checklist

Research legal structure options using resources like SBA.gov, TSBDC.org, and SCORE.org.
Understand tax and liability implications for each structure type.

Step 4: Register Your Business Entity

Select your business type below and follow the steps that apply to you.

Every business structure in Tennessee has its own registration requirements.

Some entities—such as LLCs and corporations—must register with the Tennessee Secretary of State, while others, like sole proprietorships, register locally through the county clerk. This step guides you through the actions you need to take based on the business structure you’ve selected.

Each section below includes:

a brief explanation of the business type
a clear list of required steps
a checklist so you can keep track

If you are unsure which structure fits your needs, review Step 2 or consider consulting a business counselor, CPA, or attorney.

Sole Proprietorship

Sole Proprietorship

A sole proprietorship doesn’t require state registration, but if using a name other than the owner’s personal name, you must file a DBA (Doing Business As) with the county.

Determine whether your business requires a Standard or Minimal Activity Business license based on gross sales and any applicable exemptions:
- Minimal activity license if sales are between $3,000 and $100,000 (No business tax account or filing required). You must file with your county clerk.
- Standard business license if sales exceed $100,000 (Requires a business tax account and filing).
- Exemptions apply to services such as healthcare professionals, attorneys, accountants, insurance agents, loan companies, manufacturers, and farms.
- No license needed if the business grosses less than $3,000 annually.
Apply for and renew your license: Apply at the county clerk’s office where your business is located. Renew minimal activity licenses with the clerk and standard licenses through the Tennessee Department of Revenue.
Applying for an EIN is required if hiring employees, electing to be taxed as a corporation, OR if you do not wish to use your SSN to identify your business. The EIN can be used to open a business bank account(s). Note: An EIN gives your business a unique number that is not a SSN, and business information is public record.
File a DBA (if using a name other than the owner’s) with the county clerk.

Note: No need to file with the Secretary of State unless you’re using a name different from your own.

5. Set Up Financial Management: Open a business bank account to keep finances separate from personal funds.

Checklist

Determine whether your business requires a Standard or Minimal Activity Business license based on gross sales and any applicable exemptions.
Apply for and renew your license: Apply at the county clerk’s office where your business is located. Renew minimal activity licenses with the clerk and standard licenses through the Tennessee Department of Revenue.
File a DBA (if using a name other than the owner’s) with the county clerk. Set Up Financial Management: Open a business bank account to keep finances separate from personal funds.
If you are forming a General Partnership, you do not need to file with the Secretary of State unless you wish to have it registered as a limited partnership (LP). If forming an LLP (Limited Liability Partnership), you must register with the Tennessee Secretary of State.
File a Beneficial Ownership Information Report to ensure compliance with the Corporate Transparency Act. Exemptions apply to larger entities that have more than 20 employees, gross receipts over $5 million, or being a regulated entity like a bank.
Set Up Financial Management: Open a business bank account to keep finances separate from personal funds.

General Partnership

Partnerships must file a DBA name if using a name other than the partners’ legal names, and if forming an LLP, you must register with the Tennessee Secretary of State.

1. Determine if your business requires a Standard or Minimal Activity Business license based on gross sales:

a) No license needed if the business grosses less than $3,000 annually.

b) Minimal activity license if sales are between $3,000 and $100,000 (No business tax account or filing required). You must file with your county clerk.

c) Standard business license if sales exceed $100,000 (Requires a business tax account and filing).

d) Exemptions apply to services such as healthcare professionals, attorneys, accountants, insurance agents, loan companies, manufacturers, and farms.

2. Apply for and renew your license: Apply at the county clerk’s office where your business is located. Renew minimal activity licenses with the clerk and standard licenses through the Tennessee Department of Revenue.

3. File a DBA (if using a name other than partners’ names) with the county clerk.

4. If you are forming a General Partnership, you do not need to file with the Secretary of State unless you wish to have it registered as a limited partnership (LP). If forming an LLP (Limited Liability Partnership), you must register with the Tennessee Secretary of State.

5. File a Beneficial Ownership Information Report to ensure compliance with the Corporate Transparency Act. Exemptions apply to larger entities that have more than 20 employees, gross receipts over $5 million, or being a regulated entity like a bank.

6. Set Up Financial Management: Open a business bank account to keep finances separate from personal funds.

Checklist
Determine if your business requires a Standard or Minimal Activity Business license based on gross sales and any applicable exemptions.
Apply for and renew your license: Apply at the county clerk’s office where your business is located. Renew minimal activity licenses with the clerk and standard licenses through the Tennessee Department of Revenue.
File a DBA (if using a name other than partners’ names) with the county clerk.
File a Beneficial Ownership Information Report to ensure compliance with the Corporate Transparency Act.
Set Up Financial Management: Open a business bank account to keep finances separate from personal funds.

Limited Partnership

Limited Partnership

A Limited Partnership (LP) must register with the Tennessee Secretary of State by filing a Certificate of Limited Partnership. This structure includes one or more general partners who manage the business and assume full liability, and one or more limited partners who contribute capital but have limited liability and typically no role in daily operations. LPs are often formed by existing general partnerships seeking limited liability without forming an LLC.

File a Certificate of Limited Partnership with the Tennessee Secretary of State to officially register your LP.
File a DBA (if applicable) with the county clerk if operating under a name different from the partners’ names.
File a Beneficial Ownership Information Report to ensure compliance with the Corporate Transparency Act. Exemptions apply to larger entities that have more than 20 employees, gross receipts over $5 million, or being a regulated entity like a bank.
Determine if your business requires a Standard or Minimal Activity Business license based on gross sales and any applicable exemptions:

a) No license needed if the business grosses less than $3,000 annually.

b) Minimal activity license if sales are between $3,000 and $100,000 (No business tax account or filing required). You must file with your county clerk.

c) Standard business license if sales exceed $100,000 (Requires a business tax account and filing).

d) Exemptions apply to services such as healthcare professionals, attorneys, accountants, insurance agents, loan companies, manufacturers, and farms.

Apply for and renew your license: Apply at the county clerk’s office where your business is located. Renew minimal activity licenses with the clerk and standard licenses through the Tennessee Department of Revenue.
File the Tennessee Corporation Annual Report with the Secretary of State.
Set Up Financial Management: Open a business bank account to keep finances separate from personal funds.

Checklist

File a Certificate of Limited Partnership with the Tennessee Secretary of State to officially register your LP.
File a DBA (if applicable) with the county clerk if operating under a name different from the partners’ names.
File a Beneficial Ownership Information Report to ensure compliance with the Corporate Transparency Act.
Determine if your business requires a Standard or Minimal Activity Business license based on gross sales and any applicable exemptions.
Apply for the license at the county clerk’s office where your business is located. Renew minimal activity licenses with the clerk and standard licenses through the Department of Revenue.
File the Tennessee Corporation Annual Report with the Secretary of State.
Set Up Financial Management: Open a business bank account to keep finances separate from personal funds.

Limited Liability Company (LLC)

Limited Liability Company (LLC)

LLCs must file with the Tennessee Secretary of State, submitting Articles of Organization and ensuring the name is unique and contains “LLC.”

An LLC can choose to be taxed like a corporation by filing Form 8832. If it doesn’t, the IRS will automatically tax one-owner LLCs like sole proprietorships and multi-owner LLCs like partnerships.
File a Beneficial Ownership Information Report to ensure compliance with the Corporate Transparency Act. Exemptions apply to larger entities that have more than 20 employees, gross receipts over $5 million, or being a regulated entity like a bank.
File Articles of Organization with Secretary of State.
Determine if your business requires a Standard or Minimal Activity Business license based on gross sales and any applicable exemptions:

a) No license needed if the business grosses less than $3,000 annually.

b) Minimal activity license if sales are between $3,000 and $100,000 (No business tax account or filing required). You must file with your county clerk.

c) Standard business license if sales exceed $100,000 (Requires a business tax account and filing).

d) Exemptions apply to services such as healthcare professionals, attorneys, accountants, insurance agents, loan companies, manufacturers, and farms.

Apply for and renew your license: Apply at the county clerk’s office where your business is located. Renew minimal activity licenses with the clerk and standard licenses through the Tennessee Department of Revenue.
Designate a Registered Agent who will be responsible for receiving official notices and legal documents on behalf of the corporation.
Draft corporate bylaws: Bylaws are like a rulebook for how your business works on the inside. They explain who does what, how decisions are made, and help everyone stay on the same page to avoid confusion or arguments later.
File the Tennessee Corporation Annual Report with the Secretary of State.
Set Up Financial Management: Open a business bank account to keep finances separate from personal funds.

Checklist

An LLC can choose to be taxed like a corporation by filing Form 8832. If it doesn’t, the IRS will automatically tax one-owner LLCs like sole proprietorships and multi-owner LLCs like partnerships.
File a Beneficial Ownership Information Report to ensure compliance with the Corporate Transparency Act. Exemptions apply to larger entities that have more than 20 employees, gross receipts over $5 million, or being a regulated entity like a bank.
File Articles of Organization with Secretary of State.
Determine if your business requires a Standard or Minimal Activity Business license based on gross sales and any possible exemptions.
Apply for the license at the county clerk’s office where your business is located. Renew minimal activity licenses with the clerk and standard licenses through the Department of Revenue.
Designate a Registered Agent who will be responsible for receiving official notices and legal documents on behalf of the corporation.
Draft corporate bylaws: Bylaws are like a rulebook for how your business works on the inside.
File the Tennessee Corporation Annual Report with the Secretary of State.
Set Up Financial Management: Open a business bank account to keep finances separate from personal funds.

S Corporation (S-Corp)

S Corporation (S-Corp)

An S Corporation is a standard corporation that has elected a special tax status with the IRS to allow pass-through taxation. To register an S-Corp in Tennessee, you must first form a corporation by filing Articles of Incorporation with the Secretary of State, then elect S-Corp status by filing IRS Form 2553.

File Articles of Incorporation: Register your corporation with the Secretary of State.
Determine if your business requires a Standard or Minimal Activity Business license based on gross sales and any applicable exemptions:

a) No license needed if the business grosses less than $3,000 annually.

b) Minimal activity license if sales are between $3,000 and $100,000 (No business tax account or filing required). You must file with your county clerk.

c) Standard business license if sales exceed $100,000 (Requires a business tax account and filing).

d) Exemptions apply to services such as healthcare professionals, attorneys, accountants, insurance agents, loan companies, manufacturers, and farms.

Apply for and renew your license: Apply at the county clerk’s office where your business is located. Renew minimal activity licenses with the clerk and standard licenses through the Tennessee Department of Revenue.
Elect S-Corp Status: File IRS Form 2553 (Election by a Small Business Corporation) to elect S Corporation status. This must be signed by all stakeholders.
Designate a Registered Agent who will be responsible for receiving official notices and legal documents on behalf of the corporation.
Draft corporate bylaws: Bylaws are like a rulebook for how your business works on the inside. They explain who does what, how decisions are made, and help everyone stay on the same page to avoid confusion or arguments later.
File a Beneficial Ownership Information Report to ensure compliance with the Corporate Transparency Act. Exemptions apply to larger entities that have more than 20 employees, gross receipts over $5 million, or being a regulated entity like a bank.
File the Tennessee Corporation Annual Report with the Secretary of State.
Set Up Financial Management: Open a business bank account to keep finances separate from personal funds.

Checklist

File Articles of Incorporation: Register your corporation with the Secretary of State.
Determine if your business requires a Standard or Minimal Activity Business license based on gross sales and any possible exemptions.
Apply for the license at the county clerk’s office where your business is located. Renew minimal activity licenses with the clerk and standard licenses through the Department of Revenue.
File IRS Form 2553 (Election by a Small Business Corporation) to elect S Corporation status.
Designate a Registered Agent who will be responsible for receiving official notices and legal documents on behalf of the corporation.
Draft corporate bylaws: Bylaws are like a rulebook for how your business works on the inside.
File a Beneficial Ownership Information Report to ensure compliance with the Corporate Transparency Act.
File the Tennessee Corporation Annual Report with the Secretary of State.
Set Up Financial Management: Open a business bank account to keep finances separate from personal funds.

C Corporation (C-Corp)

C Corporation (C-Corp)

A C Corporation is a legal entity separate from its owners and must register with the Tennessee Secretary of State by filing Articles of Incorporation. C Corps offer strong liability protection and are taxed as separate entities. This is the default corporation type unless S-Corp status is elected.

File Articles of Incorporation: Register your corporation with the Secretary of State.

Determine if your business requires a Standard or Minimal Activity Business license based on gross sales and any applicable exemptions:

a) No license needed if the business grosses less than $3,000 annually.

b) Minimal activity license if sales are between $3,000 and $100,000 (No business tax account or filing required). You must file with your county clerk.

c) Standard business license if sales exceed $100,000 (Requires a business tax account and filing).

d) Exemptions apply to services such as healthcare professionals, attorneys, accountants, insurance agents, loan companies, manufacturers, and farms.

Apply for and renew your license: Apply at the county clerk’s office where your business is located. Renew minimal activity licenses with the clerk and standard licenses through the Tennessee Department of Revenue.

Designate a Registered Agent who will be responsible for receiving official notices and legal documents on behalf of the corporation.
Draft corporate bylaws: Bylaws are like a rulebook for how your business works on the inside. They explain who does what, how decisions are made, and help everyone stay on the same page to avoid confusion or arguments later.
File a Beneficial Ownership Information Report to ensure compliance with the Corporate Transparency Act. Exemptions apply to larger entities that have more than 20 employees, gross receipts over $5 million, or being a regulated entity like a bank.
File the Tennessee Corporation Annual Report with the Secretary of State.
Set Up Financial Management: Open a business bank account to keep finances separate from personal funds.

Checklist

File Articles of Incorporation: Register your corporation with the Secretary of State.
Determine if your business requires a Standard or Minimal Activity Business license based on gross sales and any applicable exemptions.
Apply for the license at the county clerk’s office where your business is located. Renew minimal activity licenses with the clerk and standard licenses through the Department of Revenue.
Designate a Registered Agent who will be responsible for receiving official notices and legal documents on behalf of the corporation.
Draft corporate bylaws: Bylaws are like a rulebook for how your business works on the inside.
File a Beneficial Ownership Information Report to ensure compliance with the Corporate Transparency Act.
File the Tennessee Corporation Annual Report with the Secretary of State.
Set Up Financial Management: Open a business bank account to keep finances separate from personal funds.

Public Benefit Corporation (PBC)

Public Benefit Corporation (PBC)

A Public Benefit Corporation (PBC) is a for-profit corporation that must state a public benefit purpose in its Articles of Incorporation. In Tennessee, PBCs register the same way as other corporations but must include specific benefit language when filing and must prepare annual benefit reports with the public.

File Articles of Incorporation: Register your corporation with the Secretary of State.

Note: This will include a Public Benefit Clause and Beneficial Purpose Statement. In Tennessee, “public benefit” means doing something good that helps people or the community — not just making money for the business owners. This could include things like helping the environment, supporting education, improving health, creating art, or helping others in some way.

Determine if your business requires a Standard or Minimal Activity Business license based on gross sales and any applicable exemptions:

a) No license needed if the business grosses less than $3,000 annually.

b) Minimal activity license if sales are between $3,000 and $100,000 (No business tax account or filing required). You must file with your county clerk.

c) Standard business license if sales exceed $100,000 (Requires a business tax account and filing).

d) Exemptions apply to services such as healthcare professionals, attorneys, accountants, insurance agents, loan companies, manufacturers, and farms.

Apply for and renew your license: Apply at the county clerk’s office where your business is located. Renew minimal activity licenses with the clerk and standard licenses through the Tennessee Department of Revenue.
Designate a Registered Agent who will be responsible for receiving official notices and legal documents on behalf of the corporation.
Draft corporate bylaws: Bylaws are like a rulebook for how your business works on the inside. They explain who does what, how decisions are made, and help everyone stay on the same page to avoid confusion or arguments later.
File a Beneficial Ownership Information Report to ensure compliance with the Corporate Transparency Act. Exemptions apply to larger entities that have more than 20 employees, gross receipts over $5 million, or being a regulated entity like a bank.
File the Tennessee Corporation Annual Report with the Secretary of State.
Set Up Financial Management: Open a business bank account to keep finances separate from personal funds.

Note: You may want to consider B-Corp Certification to enhance your organization’s credibility, demonstrate its commitment to social and environmental responsibility, and attract investors and customers who value sustainability and ethical practices.

Checklist

File Articles of Incorporation: Register your corporation with the Secretary of State.
Determine if your business requires a Standard or Minimal Activity Business license based on gross sales and any applicable exemptions.
Apply for the license at the county clerk’s office where your business is located. Renew minimal activity licenses with the clerk and standard licenses through the Department of Revenue.
Designate a Registered Agent who will be responsible for receiving official notices and legal documents on behalf of the corporation.
Draft corporate bylaws: Bylaws are like a rulebook for how your business works on the inside.
File a Beneficial Ownership Information Report to ensure compliance with the Corporate Transparency Act.
File the Tennessee Corporation Annual Report with the Secretary of State.
Set Up Financial Management: Open a business bank account to keep finances separate from personal funds.

Foreign-Owned Corporation (Out-of-State)

Foreign-Owned Corporation (Out-of-State)

Foreign corporations must apply for a Certificate of Authority with the Tennessee Secretary of State to legally operate in the state, after ensuring their business name is available.

Designate a Registered Agent who will be responsible for receiving official notices and legal documents on behalf of the corporation.
Get a Certificate of Existence (aka Certificate of Authorization or Letter of Good Standing) from the state where your business was first started. This paper shows that your company has followed the rules, filed the right forms, and paid any fees it owes in that state — basically, it proves your business is in good shape and allowed to operate.
File for Certificate of Authority with the Secretary of State to operate as a foreign corporation.
File a Beneficial Ownership Information Report to ensure compliance with the Corporate Transparency Act. Exemptions apply to larger entities that have more than 20 employees, gross receipts over $5 million, or being a regulated entity like a bank.
File the Tennessee Corporation Annual Report with the Secretary of State.
Set Up Financial Management: Open a business bank account to keep finances separate from personal funds.

Checklist

Designate a Registered Agent who will be responsible for receiving official notices and legal documents on behalf of the corporation.
Get a Certificate of Existence (aka Certificate of Authorization or Letter of Good Standing) from the state where your business was first started.
File for Certificate of Authority with the Secretary of State to operate as a foreign corporation.
File a Beneficial Ownership Information Report to ensure compliance with the Corporate Transparency Act.
File the Tennessee Corporation Annual Report with the Secretary of State.
Set Up Financial Management: Open a business bank account to keep finances separate from personal funds.

Nonprofit

Nonprofit

Registering a nonprofit in Tennessee is more complex than registering a standard for-profit corporation because of the additional requirements tied to financial transparency and tax-exempt status. Nonprofits must not only form a legal entity with the Secretary of State but also register as a charitable organization, providing detailed financial and organizational documentation. While the process allows for tax-exemption and eligibility for grants, it involves strict public reporting rules and regular filings. Consult this checklist for additional support.

Apply for federal tax-exempt status by submitting IRS Form 1023 or 1023-EZ to obtain a 501(c)(3) determination letter. You must additionally submit IRS Publication 557, Form 872-C, and Form 8718 from the IRS and await approval. This process may take up to 90 days.
File Articles of Incorporation with the Tennessee Secretary of State to create your nonprofit entity. Forms must include Purpose of Limitation clause and Dissolution clause.
Draft corporate bylaws: Bylaws are like a rulebook for how your business works on the inside. They explain who does what, how decisions are made, and help everyone stay on the same page to avoid confusion or arguments later.
Complete the Initial Charitable Organization Registration online through the Tennessee Secretary of State’s website.
Have two officers sign the registration form, including the Chief Fiscal Officer. This means you will need to appoint Directors in your corporation as early as registering your business.
Submit a Summary of Financial Activities if your organization has completed at least one accounting year.

Notes: (1) Attach the appropriate IRS Form 990 (public disclosure version) if applicable. (2) Submit an audited financial statement if your revenue exceeds $500,000 (excluding government or 501(c)(3) grants).

Upload your Articles of Incorporation AND Bylaws as part of the registration. The inclusion of governing documents in the filing is unique to nonprofits. Attach your IRS determination letter or proof of pending tax-exempt application.

Note: Pay the $10 registration fee online or by mail (unless exempt based on revenue).

File quarterly financial reports during your first year of operation, due within 30 days of each quarter’s end.

Checklist

File Articles of Incorporation with the Tennessee Secretary of State to create your nonprofit entity.
Draft corporate bylaws: Bylaws are like a rulebook for how your business works on the inside.
Apply for federal tax-exempt status by submitting IRS Form 1023 or 1023-EZ, IRS Publication 557, Form 872-C, and Form 8718 to obtain a 501(c)(3) determination letter.
Complete the Initial Charitable Organization Registration online through the Tennessee Secretary of State’s website.
Have two officers sign the registration form, including the Chief Fiscal Officer. This means you will need to appoint Directors in your corporation as early as registering your business.
Submit a Summary of Financial Activities if your organization has completed at least one accounting year.
Upload your Articles of Incorporation AND Bylaws as part of the registration. The inclusion of governing documents in the filing is unique to nonprofits. Attach your IRS determination letter or proof of pending tax-exempt application.
File quarterly financial reports during your first year of operation, due within 30 days of each quarter’s end.

Step 5: Taxes

Navigating Tax Requirements for your Newly Registered Business
It’s essential to understand your tax obligations. By now, you have registered for a Business Tax License – Standard or Minimal Activity (if applicable), which registers your entity in the state’s tax system. The IRS and Tennessee Department of Revenue offer support to help you navigate any additional requirements. Staying organized and filing taxes on time is key to ensuring your business remains compliant and takes full advantage of available incentives.

Sales and Use Tax Permit: If your business sells tangible goods or taxable services in Tennessee, you must register with the Tennessee Department of Revenue for a sales tax permit. Once registered, collect the state’s 7% sales tax, plus any applicable local taxes (1.5% to 2.75%), on sales made to Tennessee customers. You do not need to collect sales tax on sales made outside of Tennessee.
Franchise & Excise Taxes: These apply to most business entities except sole proprietorships and general partnerships. The franchise tax is based on the greater of a business’s net worth or the book value of property used in Tennessee, while the excise tax is based on net earnings in the state. Out-of-state corporations doing business in Tennessee are also subject to these taxes but may apportion their tax base.

Franchise and Excise Tax Credits: If your business makes a significant investment in the state or creates jobs, you may be eligible for tax credits based on your capital investment and job creation.

The IRS and Tennessee Department of Revenue provide assistance to new and existing businesses to understand and comply with their tax burdens, delivered through TSBDCs across the state. Make sure to keep organized, accurate financial records and file taxes on time.

Checklist

Register for a Sales and Use Tax Permit with the Tennessee Department of Revenue if you sell taxable goods or services in the state.
Determine if your business must pay Franchise & Excise Taxes, which apply to most entities except sole proprietorships and general partnerships.
Use IRS, Tennessee Department of Revenue, and TSBDC resources to understand your tax obligations, and keep accurate records to ensure timely filing.

Step 6: Employees

Before hiring, register as an employer, set up payroll, and ensure compliance with employment laws, tax withholding, and workplace regulations.
Hiring employees brings new responsibilities, including compliance with federal and state employment laws, tax withholding, and workplace regulations. Before bringing on staff, you must register as an employer, set up proper payroll systems, and understand your obligations around labor, safety, and reporting.

Register with the Tennessee Department of Labor and Workforce Development. Required for state unemployment insurance (UI) tax purposes.
Report New Hires to the Tennessee New Hire Reporting Program. Must report all newly hired and rehired employees within 20 days.
Set-up Payroll Withholding for Federal and State Taxes. Withhold and remit federal income tax, Social Security, and Medicare. Tennessee does not have a state income tax, but you must withhold federal taxes properly.
If applicable, display required federal and Tennessee labor law posters in a visible location.
Obtain Workers’ Compensation Insurance. Required if you employ 5 or more employees (or 1+ in construction or coal mining).
Follow Labor Laws and Employment Regulations: Comply with wage and hour laws, anti-discrimination laws, and OSHA workplace safety regulations.

Checklist

You will be able to complete these tasks when you are on this stage of the Pathway.
Change your stage through the user dashboard
Register with the Tennessee Department of Labor and Workforce Development.
Report New Hires to the Tennessee New Hire Reporting Program.
Set-up Payroll Withholding for Federal and State Taxes. Withhold and remit federal income tax, Social Security, and Medicare.
If applicable, display required federal and Tennessee labor law posters in a visible location.
Obtain Workers’ Compensation Insurance. Required if you employ 5 or more employees (or 1+ in construction or coal mining).
Follow Labor Laws and Employment Regulations: Comply with wage and hour laws, anti-discrimination laws, and OSHA workplace safety regulations.

Step 7: Obtain Necessary Licenses and Permits

Secure the required licenses and permits to comply with local, state, and federal regulations.

Alcoholic Beverage Commission – On and off-premises alcoholic consumption, wholesalers, winery, distillery, high gravity beer brewery.

Dept. of Agriculture, Consumer and Industry Services – Feed, seed fertilizer, pesticides, weights and measures, retail and food service establishments, dairy, plant and animal.

Dept. of Commerce and Insurance – Accountancy, architecture and engineering examiners, auctioneers, barbers, contractors/home improvement license, cosmetology, funeral directors, insurance companies, plumbers, private protective services, surveyors, and appraisers.

Dept. of Education – Educator licenses, educator preparation programs.

Dept. of Environment & Conservation – Businesses that affect air (dry cleaners, gas stations), land resources (drilling, grading), natural resources, water use, work in or near water (manufacturers).

Dept. of Financial Institutions – Banks, check cashers, credit unions, development corporations, mortgage companies, ATM services.

Dept. of Health – Acupuncture, athletic trainers, body piercing, counselors, EMS, food service establishments, hotels, massage therapists, professional and facility licensing, swimming pools, tattoo artists, vet techs (and many others, especially medical-related).

Dept. of Human Services – Family support and childcare, protective services for vulnerable adults, general disability support programs not related to long-term care.

Dept. of Disability and Aging – Long-term care, including residential facilities and in-home personal support services specifically for individuals with significant disabilities and aging populations.

Dept. of Labor and Workforce Development – Employers/employees, licensing and permitting for construction, manufacturing, mining, and related safety oversight.

Dept. of Mental Health and Substance Abuse Services – Alcohol and drug abuse, mental health facilities/services, and crisi

Food Service Businesses

Food Service Businesses
A food service business involves the preparation, serving, and sale of food and beverages to customers. This includes restaurants, cafes, catering services, and bars that serve food or drinks to customers. Food service businesses are regulated due to health, safety, and alcohol considerations, and must comply with local food handling and sanitation laws.

1. Obtain a Tennessee Food Facility Health Permit from your local health department.

2. Apply for a Sales and Use Tax Permit (available at Tennessee Department of Revenue).

3. Apply for Alcoholic Beverage License through the Tennessee Alcoholic Beverage Commission (TABC).

a) Beer and Wine License allows the sale of beer and wine, but excludes spirits.

b) Full Liquor License allows the sale of beer, wine, and spirits.

c) On-Sale License allows the consumption of alcohol on establishment’s premises.

4. Ensure all food-handling employees have a valid Food Handler’s Permit, costing up $15 per employee.

5. Obtain Workers’ Compensation Insurance. Required if you employ 5 or more employees.

6. Consider additional insurance options, including Liquor Liability, Food Contamination Insurance, Unemployment Insurance, Product Liability, Business Property Insurance, and Business Interruption Insurance depending on your business needs.

7. For Mobile Food Establishments: Along with the Farm-Based or Mobile Food Questionnaire, submit applicable documents such as product labels, business license or state registration, notarized lease agreement, well or spring water approval, mobile unit floor plan, and USDA certification or service agreement if applicable.

8. Review any local zoning laws or health department regulations specific to food service operations.

Checklist

Obtain a Tennessee Food Facility Health Permit from your local health department.
Apply for a Sales and Use Tax Permit (available at Tennessee Department of Revenue).
Apply for Alcoholic Beverage License through the Tennessee Alcoholic Beverage Commission (TABC).
Ensure all food-handling employees have a valid Food Handler’s Permit, costing up $15 per employee.
Obtain Workers’ Compensation Insurance. Required if you employ 5 or more employees.
Consider additional insurance options depending on your business needs.
For Mobile Food Establishments: Along with the Farm-Based or Mobile Food Questionnaire, submit applicable documents.
Review any local zoning laws or health department regulations specific to food service operations.

Consulting

Consulting

Consulting services involve providing expert advice to individuals, businesses, or organizations in areas like marketing, management, finance, technology, or strategy. Most consulting businesses do not require a professional license, but you are still required to comply with state and local regulations. This includes registering for a business license, sales tax (if applicable), and verifying zoning requirements if operating from a home or office location.

1. Home Occupation Permit (if operating from home): If your business operates from a home office, check with your local zoning office to see if a Home Occupation Permit is required, especially if you plan to see clients at your home or run a high-traffic operation. Contact your local zoning office.

2. Verify (or Obtain) Professional Licenses (if applicable): Depending on the type of consulting you offer, you may need specific professional licenses (e.g., financial advising, legal consulting). Check the Tennessee licensing portal for any requirements specific to your consulting field.

3. Obtain Workers’ Compensation Insurance. Required if you employ 5 or more employees.

Checklist

Home Occupation Permit: If your business operates from a home office, check with your local zoning office to see if a permit is needed.
Verify (or obtain) professional licenses if applicable.
Obtain Workers’ Compensation Insurance. Required if you employ 5 or more employees.

Construction

Construction

Construction businesses handle building and renovation projects. This includes general contractors, specialty contractors (electricians, plumbers), homebuilders, and civil engineering firms working on residential, commercial, or infrastructure projects.

1. Obtain a Contractor’s License from the Tennessee Department of Commerce & Insurance, required whenever the total cost of the project is $25,000 or greater.

2. For Bradley, Davidson, Haywood, Hamilton, Knox, Marion, Robertson, Rutherford, and Shelby counties: Secure a Home Improvement License from the Tennessee Department of Commerce & Insurance for remodeling projects valued between $3,000 and $24,999. Since consumers prefer to hire licensed professionals for home remodeling, obtaining this license—along with proper insurance and bonding—helps build trust, and be sure to prominently display your license number in all advertisements.

3. Ensure compliance with Tennessee’s State Contractor Registration and provide necessary bonding or insurance

4. In Tennessee, all employees of construction companies must have workers’ compensation coverage. This can be obtained through licensed insurance companies or by getting approval to be a self-insured employer. If a company can’t get insurance, they can apply for coverage through a special national plan, called the Workers’ Compensation Insurance Plan.

Note: Participating in the Tennessee Drug-Free Workplace Program by submitting the application to the Tennessee Bureau of Workers’ Compensation can earn employers a 5% discount on workers’ compensation insurance premiums and may also help qualify them for state contract opportunities.

5. Apply for professional licenses as needed for your type of construction business, which you can check here.

6. Check for local construction or zoning permits dependent on municipality or county.

Checklist

Obtain a Contractor’s License from the Tennessee Department of Commerce & Insurance, required whenever the total cost of the project is $25,000 or greater.
In Select Counties, Secure a Home Improvement License from the Tennessee Department of Commerce & Insurance for remodeling projects valued between $3,000 and $24,999.
Ensure compliance with Tennessee’s State Contractor Registration and provide necessary bonding or insurance.
Obtain Worker’s Compensation Insurance, required for all construction companies.
Apply for professional licenses as needed for your type of construction business.
Check for local construction or zoning permits dependent on municipality or county.

Homebased Businesses

Homebased Businesses

1. Required in some counties: Apply for a Home Occupation Permit from your local zoning office.

2. Apply for a Sales Tax Permit if you plan to sell taxable goods or services (available at Tennessee Department of Revenue).

3. Check here if your home-based business requires any professional licenses (e.g., daycare provider, cosmetologist, etc.).

4. Obtain Workers’ Compensation Insurance. Required if you employ 5 or more employees.

5. Consider Home-Based Business Insurance: Provides coverage for property, crime, theft, professional liability, loss of business data, and disability for home-based businesses.

6. Ensure compliance with any local zoning laws or homeowner association (HOA) regulations that may restrict home-based businesses.

Checklist

Required in some counties: Apply for a Home Occupation Permit from your local zoning office.
Apply for a Sales Tax Permit if you plan to sell taxable goods or services (available at Tennessee Department of Revenue).
Check if your home-based business requires any professional licenses.
Check here if your home-based business requires any professional licenses (e.g., daycare provider, cosmetologist, etc.)
Consider Home-Based Business Insurance: Provides coverage for property, crime, theft, professional liability, loss of business data, and disability for home-based businesses.
Ensure compliance with any local zoning laws or homeowner association (HOA) regulations that may restrict home-based businesses.

Childcare Providers

Childcare Providers

Childcare providers are responsible for the care, education, and safety of children. To legally operate a childcare service, providers must adhere to strict state regulations, including background checks for staff and specific licensing requirements.

1. Obtain a Child Care License: All childcare providers must be licensed by the Tennessee Department of Human Services (DHS) if you care for 5 or more unrelated children for 3 or more hours per day. Ensure your facility meets space, staffing, and facility rules and regulations, including maintaining the prescribed staff-to-child ratio.

2. Determine the right license type and apply through DHS:

a) Family Child Care Home: 5-7 unrelated children

b) Group Child Care Home: 8-12 children

c) Child Care Center: 13+ children

d) Drop-In Center: 15+ children, part-time care (14 hours max/week per child)

3. Consult the Procedure for Becoming a Licensed Child Care Agency, a 10-step guide outlining the process to licensure.

4. Complete Required Training: Childcare staff must complete initial and ongoing training in child development, safety, and child abuse prevention.

5. Submit Background Checks: All staff must undergo a criminal background check through the Tennessee Bureau of Investigation (TBI), including out-of-state checks.

6. Ensure Emergency Preparedness Compliance, if applicable: Your childcare facility must have emergency plans for evacuations and safety protocols in place.

7. Obtain Workers’ Compensation Insurance. Required if you employ 5 or more employees.

8. Consult a TSBDC for support through the licensing process.

Checklist

Obtain a Child Care License, required for all childcare providers.
Determine the right license type and apply through DHS.
Consult the Procedure for Becoming a Licensed Child Care Agency.
Complete Required Training: Childcare staff must complete initial and ongoing training in child development, safety, and child abuse prevention.
Submit Background Checks: All staff must complete criminal background checks through the TBI, including out-of-state checks.
Ensure Emergency Preparedness Compliance, if applicable: Your childcare facility must have emergency plans for evacuations and safety protocols in place.
Obtain Workers’ Compensation Insurance. Required if you employ 5 or more employees.
Consult a TSBDC for support through the licensing process.

Step 8: Open for Business

Planning, Protection, and Recordkeeping

Opening your business takes more than completing registration steps. This section covers business planning, insurance, and bookkeeping to help you build a strong foundation for long-term success.

1. Traditional Business Plan vs. Business Model Canvas

2. Develop a Business Plan

3. Insurance

4. Bookkeeping

Traditional Business Plan vs. Business Model Canvas

Choosing between a traditional business plan and a business model canvas depends on your needs. Traditional plans are detailed, formal, and often required for leases, loans, or investors—ideal for stable industries. A business model canvas is a flexible, visual tool great for early-stage ideas or fast-moving fields. Both help guide your business and should be updated regularly as your business grows.

1. Identify Your Goal: Are you planning for internal use, pitching to a landlord, or applying for a loan?

2. What is the best option for you right now?

a) Use a traditional business plan if you’re in a stable industry, need financing, or are securing a lease.

b) Use a business model canvas if you’re testing a new idea or working in a creative or fast-changing space. See the image below for reference.

3. Explore Tools: For help building a business model canvas, visit tnsmartstart.com.

4. Keep It Updated:

Revisit your plan periodically more than once a year, and or more often if your business is evolving quickly.

Checklist

Define your goal (internal use, lease, or loan).
Choose your format (traditional plan or model canvas).
Use available tools (e.g., tnsmartstart.com).
Review and update regularly.

Develop a Business Plan
A business plan is a roadmap for your business that outlines how it will operate and grow. It’s essential for setting goals, attracting investors, securing loans, and guiding day-to-day decisions. Whether you’re just starting out or expanding, a solid business plan helps you stay focused and on track. You can find detailed instructions at sba.gov and tnsmartstart.com. See below for guidance on how to create a traditional business plan.

Introduction:

Start with the basics: describe your business structure, location, ownership, industry, products/services, and long-term goals.

Marketing Plan:

Research your market, identify your ideal customer, analyze competitors, outline your pricing and marketing strategies, and highlight how you’ll stand out.

Management Team:

Define who’s running the business. List key team members, their roles, experience, and any advisors or professionals you’ll rely on (e.g., attorney, accountant).

Financial Projections:

Estimate your startup costs, ongoing expenses, and revenue. Create cash flow statements, income statements, a balance sheet, and a break-even analysis.

Personal Financials:

If you’re seeking a loan, include each owner’s personal financial statement (assets, debts, credit score).

Executive Summary:

Write this last. Summarize the entire plan, highlight what you’re asking for (if funding), and explain how it will be used and repaid.

Checklist

Plan your business: Choose the approach that works best for you! You can use the provided resources to complete a Business Model Canvas or follow the steps above to create a traditional business plan

Protect Your Business (Insurance)

Insurance can help protect your business from accidents, property damage, lawsuits, and other unexpected events. Some types of coverage may be required, while others depend on your business activities, risk level, and whether you have employees.

Required coverage

These types of coverage may be required depending on your business and whether you have employees.

Unemployment insurance: Employers in Tennessee may need to register and pay unemployment insurance tax.
Workers’ compensation insurance: Some Tennessee businesses must carry workers’ compensation coverage, especially businesses in construction and businesses with a certain number of employees.

Core coverage for many businesses

These types of insurance are commonly recommended for many small businesses.

General liability insurance: Helps protect your business if someone claims bodily injury, property damage, or other harm caused by your business operations.
Business property insurance: Helps cover your building, equipment, inventory, and other business property if they are damaged or lost.
Business interruption insurance: Helps cover lost income and certain expenses if your business must temporarily close because of a covered event.

Coverage based on your industry or risk level

These types of coverage may be helpful depending on the work your business does.

Product liability insurance: Important for businesses that make, sell, or distribute products.
Professional liability insurance: Important for businesses that provide professional services or advice. In some fields, this is called malpractice insurance.
Cyber insurance: Helps protect your business from losses related to hacking, data breaches, and other online risks.
Crime insurance: Helps protect your business from theft, fraud, vandalism, and employee dishonesty.
Key person insurance: Helps protect the business if an owner or other key employee dies or becomes disabled.
Bonding: May be required for some contractors and service-based businesses. A bond helps protect customers if contract terms are not met.
Health insurance: Some businesses choose to offer health insurance to employees.

Checklist

Review which types of insurance are required or recommended for your business

Track Your Money (Bookkeeping)

Build a Strong Financial Foundation

Bookkeeping is the process of recording and organizing your business’s financial activity. Good bookkeeping helps you track income and expenses, stay compliant with tax requirements, and get a clear picture of your business’s financial health.

1. Choose a Bookkeeping Method:

Decide between cash basis (record income/expenses when money changes hands) or accrual basis (record income/expenses when earned/incurred). If you’re a small business with relatively simple transactions, the cash basis is often easier to manage. For larger businesses or those with inventory, accrual accounting offers a more accurate picture of financial health.

2. Set Up a Business Bank Account

Separate personal and business finances to make tracking and reporting easier.

3. Pick a Bookkeeping System:

Choose accounting software (like QuickBooks, Wave, or Xero) or hire a bookkeeper. You can also use spreadsheets for very small operations.

4. Track All Income and Expenses:

Record all transactions — sales, purchases, receipts, and payments — consistently. Save receipts and invoices.

5. Organize Your Chart of Accounts:

Categorize all your transactions (e.g., revenue, rent, utilities, supplies) to keep records clean and understandable.

6. Reconcile Bank Statements Monthly:

Compare your books with your bank statement to catch errors, missing entries, or fraud.

7. Review and Update Financial Statements:

Regularly generate reports like your income statement, balance sheet, and cash flow statement to understand your business performance.

8. Prepare for Taxes:

Maintain organized records throughout the year to make filing easier. Work with an accountant if needed.

Checklist

Choose a bookkeeping method: Decide how you will record money coming in and going out
Set Up a business bank account: Keep your business money separate from your personal money
Pick a bookkeeping system: Use accounting software, a spreadsheet, or a bookkeeper.
Track income and expenses: Write down all money your business earns and spends
Organize your accounts: Group transactions into simple categories, like sales, rent, and supplies
Check your bank statements every month: Compare your records with your bank statement to make sure everything matches
Review your financial reports: Look at your reports regularly to see how your business is doing
Get ready for taxes: Keep your records organized during the year so tax filing is easier

The Final Countdown … Closing Your Business

Closing a business is a big decision, but sometimes it is the right one.

Before you close, it’s a good idea to contact an Entrepreneur Support Organization (ESO) like TSBDC, SCORE or a Regional Entrepreneur Center for advice—you might be able to sell your business or get help to turn things around. If closing is still the best choice, follow the proper steps to ensure everything is handled correctly so you avoid future issues. This includes filing tax returns, paying owed taxes, and keeping your records in order.

Here are the steps you need to take to close your business:

1. Get help early. Contact an ESO. They can help you consider your options.

2. Take care of your employees. Provide final paychecks and any benefits owed.

File your final tax form(s). Send you last tax return to the IRS, and if applicable, file your Tennessee Corporation Annual Report.

4. Pay any taxes due. If you cannot pay the full amount, ask about making a payment plan.

5. Report contractor payments. If you hired contract workers, make sure to send any required 1099 forms.

6. Close out tax accounts. Cancel your EIN and close all federal, state, and local tax accounts.

7. Save your records. Keep your business records in case you need them later.

Final Note:
After you finish the main steps, close your business bank accounts and let your vendors and customers know you’re closing. This helps tie up any loose ends.

Checklist

Contact an ESO for advice before closing.
Give employees their final paychecks and any remaining benefits.
File your final tax form(s): send you last tax return to the IRS, and if applicable, file your Tennessee Corporation Annual Report.
Pay any taxes you owe or set up a payment plan.
If needed, send 1099 forms to contract workers.
Cancel your EIN and close tax accounts at federal, state, and local levels.
Keep your business records in case you need them later.
Tie up any loose ends.

Tennessee Business Registration: A Beginner’s Guide

Step 1: Choose a Name for Your Business

Checklist

Step 2: Choose a Legal Structure

Sole Proprietorship

General Partnership

Limited Partnership (LP)

Limited Liability Company (LLC)

S Corporation (S-Corp)

C Corporation (C-Corp)

Public Benefit Corporation (PBC)

Foreign-Owned Corporation (Out-of-State)

Nonprofit

Checklist

Step 3: Obtain State and Federal Tax IDs

How to apply:

How to apply:

Checklist

Step 4: Register Your Business Entity

Sole Proprietorship

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Limited Partnership

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Limited Liability Company (LLC)

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S Corporation (S-Corp)

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C Corporation (C-Corp)

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Public Benefit Corporation (PBC)

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Foreign-Owned Corporation (Out-of-State)

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Nonprofit

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Step 5: Taxes

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Step 6: Employees

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Step 7: Obtain Necessary Licenses and Permits

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Consulting

Checklist

Construction

Checklist

Homebased Businesses

Checklist

Childcare Providers

Checklist

Step 8: Open for Business

Traditional Business Plan vs. Business Model Canvas

Checklist

Checklist

Protect Your Business (Insurance)

Checklist

Track Your Money (Bookkeeping)

Checklist

The Final Countdown … Closing Your Business

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