How to Start a Business in Tennessee
Have you been thinking about starting a business in Tennessee but aren’t sure how to begin? If so, we’ve got you covered!
Keep reading to see what goes into a good business plan, insurance options, and tax and legal requirements so you can be prepared for a successful business launch.
Start with a Plan
If you want to have a successful business in Tennessee, you’ll need to start with a comprehensive business plan. This includes determining:
- What you want to sell (service, product, or both)
- If you’ll be a brick-and-mortar store or only have an online presence
- Your target market
- The funds required to launch your business
- How you’ll market your business
- How to grow your business
Working through each of these areas will not only help you know what your next steps need to be and how to get there, but will also give your investors or potential partners a compelling vision for where you want to be and how you intend to get there.
In Tennessee, you can get additional business resources and tips from the Small Business Administration’s Tennessee Branch.
Your next step is choosing the business structure that’s right for you.
Choose the Right Business Structure
This is a crucial step, because you can’t move forward in the registration process without knowing what your business structure’s going to be.
You have several options here, including:
- Sole proprietorships
- Partnerships (LP, LLP, general)
- Limited Liability Companies (LLC)
- Corporations (B, C, S types, Nonprofits)
If you’re not sure which business structure makes the most sense for your business, it may be wise to consult a licensed Tennessee business attorney.
Once you’ve determined the structure of your business, it’s time to select a business name that’s not in use by another company.
Select a Unique Name
Before you get too far in the business registration process, you’ll need to choose a business name to ensure that it hasn’t already been taken by another business in Tennessee.
You can do this by going to the Tennessee Secretary of State’s website and searching for the name you want to use. If you get any hits, you’ll need to choose a different name.
Once your search comes back without finding any other businesses with your preferred business name, you’re ready for the next step of the process—which is getting your business registered with the state of Tennessee.
Get Registered in Tennessee
Your business type determines where you register your business.
Sole proprietorships and general partnerships must register with the municipal and/or county clerk.
Corporations, LLPs, LPs, and LLCs must register with the Tennessee Secretary of State in addition to the municipal or county clerk. Filing fees for these businesses vary from $20 to $120 depending on the business structure.
LLCs are also required to file articles of organization, which will cost an additional $50 per member, not to exceed $3,000.
Sole proprietorship and general partnership fees are determined by the county or municipality in which the business is located.
Next, you’ll need to register for a tax ID number so you can legally operate your business.
Obtain a Federal Tax ID Number
Nearly every type of Tennessee business needs to have a Federal Tax ID number, also known as a Federal Employer Identification Number (or EIN) for short.
This is easily done through the IRS website, which can also help you determine if you’re a business entity that doesn’t need an EIN after all.
Next, you’ll want to obtain the tax accounts and licenses specifically required in the state of Tennessee.
Obtain Tennessee Tax Account(s) and Permits/Licenses
Which Tennessee tax account you’ll need to apply for depends on your business. Most businesses will need to pay business and sales tax.
All businesses except sole proprietorships and general partnerships will also be required to pay excise and franchise taxes.
The Tennessee Department of Commerce and Insurance issues business licenses, but you may be required to obtain additional licenses or permits from other agencies for specialized businesses or materials used.
For example, the Tennessee Department of Environment and Conservation issues several different types of business licenses and permits including:
- General radioactive licenses
- X-ray use registrations
- Endangered plant dealer licenses
- Oil and gas well permits
- Ginseng dealer permits
Of course, this isn’t a complete listing of all additional licenses or permits your business may be required to have, and you may need to consult with a Tennessee-based business attorney to determine which licenses or permits you’ll need to be in compliance with Tennessee law.
At this stage of the process, and before you open to customers, it’s a good idea to look into business insurance, to protect yourself and your personal assets.
Insuring Your Tennessee Business
No business owner wants to think about it, but if someone gets hurt on your business property, or is harmed by a product or service you’ve provided, you’ll need to have insurance. Liability protection can cover you from loss, and help protect your customers, too.
The type of liability insurance you’ll need depends on the type of business you have. If you sell a service (such as tax preparation), you’ll need a different type of insurance than if you sell a product (such as medical supplies).
Three of the most common types of business insurance are:
- General liability (in case your physical location/website/advertising, etc., harms someone)
- Product liability (in case a product you make harms someone)
- Professional liability (in case a service you provide—or fail to provide—harms someone)
It’s possible your business could cross over into multiple categories, and that you’ll need more than one type of liability insurance. You’ll also need to find out if the state of Tennessee requires your particular business to carry a specific type of business insurance.
Business Essentials
With all your planning, don’t forget about a few business essentials to be successful. You’ll want to have a customer-friendly website, and an engaging, easy-to-use web-based store if you plan to sell items online.
Not only do you want a good website, but you’ll also need a great marketing campaign—and don’t forget to use the power of social media to your advantage when planning out your marketing strategies.
You’ll also need a great location if you’ve got a brick-and-mortar storefront. You may have the best products and the best prices in town, but if no one can find you, customers won’t be pounding down your door.
However, it’s easy to overlook your point of sale system. While it may seem like a small detail, customers will remember their payment experiences with your business. How easy is it to use? Does your system crash constantly, or is it reliable and secure?
Epos Now offers multiple products for businesses, including mobile point-of-sale options for both Android and Apple phones and tablets. Not only that, but Epos Now integrates with payment processors so you can accept popular credit cards, while also allowing customers to use Apple Pay and Google Pay.
You can have peace of mind knowing that epos now was independently rated by US News and World Report as one of the best POS providers in the country.
Now that you’ve finally gotten all of your legal requirements taken care of, your business plan is in place, you’ve found the perfect location (or perfect online location), and you’ve got a robust and responsive point of sale system, you’re ready to welcome customers.