How to Register a Business in Tennessee

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TLDR

Crowdspring recently named Nashville one of the best cities in the U.S. for startups, with Nashville’s central location playing a massive role in its entrepreneurial environment.
When you register a business in Tennessee, you’ll need to satisfy several requirements to register your startup successfully. Before registering, though, it’s a good idea to identify some vital foundational aspects of your company, such as creating a business plan.
In drafting your business plan, you’ll want to consider your target buyer, go-to-market strategy, marketing, sales approaches, location, and ownership, to name a few topics. In addition, you can check in with the U.S. Small Business Administration, guiding you on how to create a business plan in addition to providing market research and competitive analysis for your startup.
You must first determine your organization’s legal entity structure. Your chosen business entity determines the next steps in registering your startup, in addition to which taxes you’ll pay and how much personal liability you might have.
For example, the most common and straightforward type of business entity is a sole proprietorship. When you have a sole proprietorship, it means that your business is unincorporated, with no legal distinction between you as the founder and the startup itself.
When picking a name for your startup, you’ll need to distinguish it from other business names already registered with the state. Additionally, you’ll need to follow Tennessee’s naming conventions, such as using proper designations such as “LLC” or “Limited Liability Company,” as applicable, in your startup’s name.
Next, you need to identify and obtain a registered agent unless your startup is a general partnership. A registered agent is “a person or company who agrees to accept legal mail on behalf of your entity.” A registered agent must have a street address in Tennessee and be physically present at that address to receive service. A P.O. Box may not be used.
Finally, after completing the above steps, it’s time to submit your formation forms to Tennessee’s Secretary of State’s office. For new entities, Tennessee provides sample forms for your use or review.
Depending upon your chosen entity for your startup, you need to understand the annual filing requirements in addition to any owed state tax. For example, for registering a for-profit corporation or a limited partnership, you must pay a $100 filing fee.
If you are a minority-owned business in Tennessee, you have access to several certificate programs and resources through the Governor’s Office of Diversity Business Enterprise (Go-DBE).

Tennessee is known for many things, including bar-b-que, the Grand Ole Opry, the blues, and the Great Smoky Mountains. But Tennessee is also known for business—both large and small. Tennessee is home to over 635,000 small businesses, employing 1.1 million people.

But big businesses don’t get all the attention in the state. Tennessee is also a hotbed for new companies, startups, and entrepreneurs. Crowdspring recently named Nashville one of the best cities in the U.S. for startups, with Nashville’s central location playing a massive role in its entrepreneurial environment.

As you determine where to locate your new business, this article will explore the ins and outs of registering your startup in Tennessee.

When Do You Need to Register a Business in Tennessee?

When you register a business in Tennessee, you’ll need to satisfy several requirements to register your startup successfully. Before registering, though, it’s a good idea to identify some vital foundational aspects of your company, such as creating a business plan.

In drafting your business plan, you’ll want to consider your target buyer, go-to-market strategy, marketing, sales approaches, location, and ownership, to name a few topics. In addition, you can check in with the U.S. Small Business Administration, guiding you on how to create a business plan in addition to providing market research and competitive analysis for your startup.

Once you’ve identified some of the basics about your startup’s operation, it is then time to register your startup. Below, we’ve broken these requirements into an easy step-by-step process.

Determine Your Startup’s Entity Structure

Before registering your startup in Tennessee, you must first determine your organization’s legal entity structure. Your chosen business entity determines the next steps in registering your startup, in addition to which taxes you’ll pay and how much personal liability you might have.

In Tennessee, you may choose to register as a:

Corporation
Limited Liability Company (LLC)
Partnership
General Partnership (G.P.)
Limited Partnership (L.P.)
Limited Liability Partnership (LLP)
Sole Proprietorship

For example, the most common and straightforward type of business entity is a sole proprietorship. When you have a sole proprietorship, it means that your business is unincorporated, with no legal distinction between you as the founder and the startup itself. The liabilities and profits are accounted for on the founder’s personal tax returns. Additionally, and here’s the downside, the founder has unlimited personal liability, with no protections built-in. Tennessee requires no formal filing to operate a business in the state.

If, on the other hand, you choose a corporation, limited liability company, or partnership structure for your startup, you must follow specific steps to register your business in Tennessee. For example, if you structure your startup as a limited liability company, you’ll need to file an Articles of Organization application with Tennessee’s Secretary of State. If you decide to form a corporation for your startup, you’ll need to file a Charter application.

You may want to visit your accountant before choosing a business structure so you are familiar with the tax advantages and disadvantages of each.

Choose Your Startup’s Name

In addition to choosing your entity’s structure, you’ll also have to choose your business’s name. When picking a name for your startup, you’ll need to distinguish it from any other business names already registered with the state.

Additionally, you’ll need to follow Tennessee’s naming conventions, such as using proper designations such as “LLC” or “Limited Liability Company,” as applicable, in your startup’s name. Additionally, certain words are prohibited unless approval is received. For example, if a startup’s name contains the words “trust,” “bank,” “credit union,” or “mortgage,” the founder must first get permission from the Tennessee Department of Financial Institutions before filing organizational or name reservation documents with Tennessee’s Secretary of State’s office.

If a business name contains the word “mortgage,” “bank,” “banks,” “credit union,” or “trust,” written approval must be first obtained from the Tennessee Department of Financial Institutions before documents can be accepted for filing with the Division of Business Services (except a name reservation).

You can check for available names by visiting Tennessee’s business name availability search.

Suppose you’re not ready to register your Tennessee startup, but you want to preserve your company’s name. In that case, you may reserve your business name while you’re completing your registration process. Along with your name reservation application form, you’ll pay a filing fee of $20.

Identify Your Registered Agent

Next, you need to identify and obtain a registered agent unless your startup is a general partnership. A registered agent is “a person or company who agrees to accept legal mail on behalf of your entity.”

A registered agent must have a street address in Tennessee and be physically present at that address to receive service. A P.O. Box may not be used.

Submit Your Formation Forms

Finally, after completing the above steps, it’s time to submit your formation forms to Tennessee’s Secretary of State’s office. For new entities, Tennessee provides sample forms for your use or review.

Let’s look at a specific example. If you choose to register as a limited partnership in Tennessee, you will file a Certificate of Limited Partnership to create your startup. And, as stated above, if you structure your startup as a limited liability company, you’ll need to file an Articles of Organization application with Tennessee’s Secretary of State. Finally, if you decide to form a corporation for your startup, you’ll need to file a Charter application.

In addition to your formation forms, you’ll also want to check if any additional records are required at the city, county, or state level, such as one for a business license.

How Much Does It Cost to Register a Business in Tennessee?

Depending upon your chosen entity for your startup, you need to understand the annual filing requirements in addition to any owed state tax. For example, for registering a for-profit corporation or a limited partnership, you must pay a $100 filing fee. For Articles of Organization, your fee is $50 per member in existence on the filing date, with a minimum fee of $300 and a maximum fee of $3,000,000.

Additionally, if you register a business in Tennessee, you need to understand your tax obligations. For example, depending on your startup entity, you’ll need to pay certain taxes through Tennessee’s Department of Revenue, such as sales and use tax, withholding tax, other employment taxes, and corporate income and net worth tax.

To understand if and when you are subject to Tennessee’s business and employment taxes, you should consult with an experienced accountant.

How Do You Register as a Minority-Owned Business in Tennessee?

If you are a minority-owned business in Tennessee, you have access to several certificate programs and resources through the Governor’s Office of Diversity Business Enterprise (Go-DBE). In addition to minority-owned businesses, the Go-DBE office focuses on women-owned businesses as well as “person with disabilities and service-disabled veteran-owned businesses.”

In addition to the state certification, you can also explore national certifications, such as those offered by the Small Business Administration (SBA). For example, minority-owned startups can seek certifications such as the 8(a) business development program, the HUBZone program, and the SBA Mentor-Protégé Program. To learn more about these certifications, visit the SBA’s website.

The Benefits of Registering Your Startup in Tennessee

Founders can look forward to the many benefits of locating their startup in Tennessee. Here are some key points to consider:

A favorable regulatory climate
No personal income taxes
Low cost of living
Low property taxes
Central location in the U.S.
A steady pipeline of talent coming from Tennessee’s 80 colleges and universities
A supportive startup and small business environment
The music and the bar-b-que (wet or dry)

The Limitations Associated with Registering Your Startup in Tennessee

There are very few drawbacks to starting a business in Tennessee. However, one limitation is key to startup founders: access to capital. Like other states, many startups aren’t sound candidates for traditional financing through banks or credit unions.

Many founders may find luck with angel investor networks or bridge loans. But getting that funding is often a challenge.

Tennessee also has scorching summers with frequent thunderstorms. Most large cities aren’t walkable, although specific neighborhoods are. But you’ll need a car in Tennessee; public transportation is lacking.

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