How to Start a Business in Tennessee
Tennessee is home to more than 650,000 small businesses, making up over 99% of all employers in the state.
In This Article
The Complete Guide
How to Start a Business in Tennessee — 12 Steps
This is a full walkthrough: entity selection, state registration, federal tax IDs, licenses, banking, insurance, and ongoing compliance. Every step includes the official Tennessee links, fees, and timelines.
Cost depends on your structure. A sole proprietorship may cost nothing to start. An LLC costs $300 to file online. A corporation costs $100. Step 3 walks through every option.
Tennessee: Key Business Facts
Updated: Feb 2026- LLC Filing Fee (Online)
- $300
- Sole Proprietorship / DBA
- $20
- Corporation Filing
- $100
- Processing Time
- 3-5 business days
- Expedited Option
- Not available
- State Income Tax
- None (no individual income tax)
- Sales Tax Rate
- 7%
- Gross Receipts Tax
- No
- Franchise / Annual Tax
- $0.25 per $100 of net worth or…*
- Filed With
- Tennessee Secretary of State
- State Business License
- Required
- Last Verified
- February 24, 2026
* Franchise / Annual Tax: $0.25 per $100 of net worth or Tennessee property, $100 minimum
Local licenses: Most Tennessee cities and counties require a local business license. Check with your county clerk's office for specific requirements and fees.
What It Takes to Start a Business in Tennessee
Forming a business in Tennessee requires filing with the Tennessee Secretary of State and registering for a state business license through the Tennessee Department of Revenue. The LLC filing fee starts at $300 (plus $50 per member), and you should budget for a $100 minimum annual franchise tax and a $300 annual report fee.
Tennessee does not charge individual state income tax on wages or salaries, which is a significant advantage for sole proprietors and pass-through entity owners. Plan for 3-5 business days of standard processing when you file your formation documents online.
Validate Your Business Idea in Tennessee
Research whether your idea fits Tennessee's strongest economic sectors before investing time and money. The state's top industries include:
- Healthcare and health services (Nashville is a national hub)
- Music, entertainment, and tourism
- Advanced manufacturing and automotive
- Logistics and distribution
Contact the Tennessee Small Business Development Center (TSBDC) for free one-on-one consulting and market research assistance. Their advisors help you test demand, analyze competitors, and refine your concept at no cost.
Pro Tip
Write a Business Plan
Draft a business plan that covers your target market, revenue model, startup costs, and 12-month financial projections. Banks and SBA lenders require a written plan before approving any financing.
Follow our step-by-step business plan guide to build a document that works for both lenders and your own strategic planning. Keep it under 20 pages and focus on realistic numbers.
Pro Tip
Choose Your Business Structure in Tennessee
Most founders in Tennessee choose an LLC because it combines personal liability protection with pass-through taxation and avoids the formalities of a corporation. Filing an LLC costs $300 (plus $50 per member) at the Tennessee Secretary of State.
The four main structures are sole proprietorship, LLC, S-Corp, and C-Corp. Each has different liability, tax, and compliance implications. See the full comparison below, or read our Tennessee LLC formation guide for a detailed walkthrough.
Pro Tip
Important
Business Structure Comparison — Tennessee
Full comparison guide| Structure | Tennessee Filing Cost | Personal Liability | How You're Taxed | Best For |
|---|---|---|---|---|
| Sole Proprietorship | $20 (DBA) | ❌ None | Personal income tax. No separate return. | Freelancers, consultants, side hustles testing an idea with no employees. |
| LLC Most Common | $300 online | ✅ Personal assets protected | Pass-through by default. Elect S-Corp when profitable. | Most small businesses. Best balance of liability protection, flexibility, and tax options. |
| S-Corporation | ~$300 + IRS election | ✅ Personal assets protected | Pass-through. Owners pay themselves a salary — can reduce self-employment tax. | Profitable businesses (typically $50K+ net) where payroll tax savings justify the complexity. |
| C-Corporation | $100 | ✅ Personal assets protected | Corporate tax rate (21% federal). Double taxation on dividends. | Startups planning to raise VC funding, issue stock options, or eventually go public. |
| General Partnership | Free / No State Filing | ❌ None — all partners personally liable | Pass-through. Each partner reports share on personal return. | Two or more owners who trust each other and don't need liability protection. |
Which should you choose? Most first-time founders in Tennessee pick an LLC — it protects your personal assets without the complexity of a corporation. If you're not sure, consult a CPA or business attorney before filing. Read the full Tennessee LLC guide →
Choose and Register Your Business Name
Search the Tennessee business name database to confirm your desired name is available. Your LLC name must include "LLC," "L.L.C.," or "Limited Liability Company" as a designator.
If you want to operate under a different name, file a DBA (assumed name) with your county clerk for about $15-$20 and register it with the Secretary of State for $20. DBA registrations are valid for 5 years.
Pro Tip
Check Tennessee Business Name Availability
Search the official Tennessee Secretary of State database before you file.
Register Your Business with the State
File your Articles of Organization with the Tennessee Secretary of State online for $300 (plus $50 per member, capped at $3,000). Standard processing takes 3-5 business days.
You must designate a registered agent with a physical Tennessee address. The agent receives legal documents and state correspondence on your behalf. See our Tennessee registered agent guide for affordable options starting at $50 per year.
After approval, you will receive a Certificate of Formation confirming your LLC is officially active in Tennessee.
Pro Tip
File Online with Tennessee Secretary of State
Official Tennessee business registration portal. Standard processing: 3-5 business days.
Get Your Federal EIN from the IRS
Apply for a free Employer Identification Number (EIN) directly from the IRS online portal. The process takes about 10 minutes and you receive your EIN immediately upon completion.
An EIN is required to open a business bank account, hire employees, and file federal taxes. Think of it as your business's Social Security number.
Pro Tip
Important
Get Your Tennessee Licenses and Permits
Requirements vary by industry, but most Tennessee businesses need:
- State Business License — required for businesses with gross sales over $3,000; register through TNTAP for a $15 registration fee
- Sales Tax Permit — required if selling taxable goods or services; register free through TNTAP
- Professional License — required for contractors, healthcare providers, real estate agents, and other regulated fields; check the Tennessee regulatory boards
- Employer Registration — register with the Tennessee Department of Labor and Workforce Development before hiring your first employee
- Local Business License — most cities and counties require a separate license from the county clerk's office
Pro Tip
Important
Open a Business Bank Account
Bring your EIN confirmation letter, Certificate of Formation, government-issued ID, and your LLC operating agreement to the bank. Separating personal and business finances is essential for maintaining your LLC's liability protection.
Compare fee structures and features using our best business bank accounts guide. Many online banks offer free checking with no minimum balance, which is ideal for startups watching cash flow.
Pro Tip
Set Up Accounting and Understand Tennessee Taxes
Tennessee charges no individual income tax on wages or salaries, but LLCs and corporations owe a 6.5% excise tax on net earnings and a franchise tax of $0.25 per $100 of net worth (minimum $100). These taxes are reported on the FAE170 return, due the 15th day of the 4th month after your tax year ends.
The state sales tax rate is 7%, and local rates add 1.5% to 2.75% on top of that. Register for sales tax collection through TNTAP if you sell taxable goods or services.
Set up accounting software from day one to track income, expenses, and tax obligations. Our accounting software comparison covers the best options for small businesses.
Pro Tip
Important
Get Business Insurance in Tennessee
Tennessee requires workers' compensation insurance for businesses with 5 or more employees. Even if you are below that threshold, general liability insurance is recommended as a baseline for any business.
Compare policy options and costs using our business insurance guide. Common policies include general liability, professional liability (E&O), and commercial property insurance.
Pro Tip
Build Your Online Presence
Claim your free Google Business Profile to appear in local search results immediately. This is especially important for service businesses targeting customers in Nashville, Memphis, Knoxville, or Chattanooga.
Build a simple website using one of the platforms in our website builder comparison. A one-page site with your services, contact info, and location is enough to start.
Pro Tip
Stay Compliant After Forming Your Tennessee Business
After forming, keep your Tennessee business in good standing by meeting these deadlines:
- Annual Report — due April 1 each year, fee: $300; file online at TNBEAR
- Franchise and Excise Tax (FAE170) — due the 15th day of the 4th month after your tax year ends; file through TNTAP
- Registered Agent — maintain a registered agent with a physical Tennessee address at all times
- Business License Renewal — renew your state and local business licenses annually
- Sales Tax Returns — file monthly, quarterly, or annually depending on your sales volume
Missing the annual report deadline triggers a $50/month late fee, capped at $1,500. Track all deadlines with StartupOwl's compliance calendar.
Pro Tip
Important
Tennessee Business Background & Context
State-specific data to help you plan — taxes, economy, funding, and what to expect after you form.
Frequently Asked Questions
What to Do Next
Once you've registered your Tennessee business, take these steps to set up for success.
Form Your Tennessee LLC
File your Articles of Organization for $300 and get your business legally established in 3-5 business days.
Start Your LLC →
Get a Tennessee Registered Agent
Every Tennessee LLC needs a registered agent with a physical in-state address. Compare affordable options.
Compare Agents →
Open a Business Bank Account
Separate your personal and business finances with a dedicated business checking account.
Compare Accounts →
Connect with the Tennessee SBDC
Get free advising, market research, and help with SBA loan applications from your local TSBDC office.
Find an Advisor →
Write Your Business Plan
Build a plan that works for lenders and your own strategic decision-making.
Start Planning →
Disclaimer: This guide is for informational purposes only and does not constitute legal or tax advice. Requirements change — always verify current fees and requirements directly with Tennessee Secretary of State and the IRS before filing.
Ready to Form?
Get your Tennessee business registered with ZenBusiness — choose your structure, file the paperwork, and stay compliant from day one.
About the Author
Director of Entrepreneurial Strategy
Jennifer is a former founder who built and sold a boutique B2B logistics company in her thirties. She understands the emotional and strategic toll of building a business from the ground up without a massive safety net. She is deeply connected to the Atlanta startup ecosystem and is passionate about equitable funding.
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