Starting your own business in Tennessee is one of the most exciting and profitable things you can experience. But where do you begin? There are numerous strategies to establish a business, each with important factors to consider. If you wish to start a business in Tennessee, there are many things that you should consider. Doing business in Tennessee, popularly known as The Volunteer State, will give you many opportunities because of the current estimated population, which consists of 7,080,262. Considering the large numbers, you will cater to a lot of customers.
Follow our in-depth guide on how to start a business in Tennessee. We will help you remove the doubt from the process and explore your chances of success. It will start from defining your business idea to establishing, launching, and expanding your business. And we will guide you every step of the way.
How to Start a Business in Tennessee?
To form a business in Tennessee, you must follow a few steps that include creating a business plan, choosing a business entity type, determining your Tennessee business costs, naming your business, registering a business, and lastly, marketing your Tennessee business. Starting a business is not something you can do overnight. The processing, planning, and preparation take a lot of time. If you want to start a business in Tennessee, you must have everything ready beforehand.
Continue reading to learn more about the procedure as a whole and what new small business owners should keep in mind as they carry out each phase.
Step 1: Create a Business Plan
The first thing you need to start your business is a solid plan. In creating a business plan, you should consider many things when you are in the decision-making phase. Your business plan in Tennessee is a road map for your successful business.
A business plan should consider the detailed purpose of your business. You should know what product or service you will serve in Tennessee. A purposeful business plan is important because that plays a key role in knowing how your business will make a profit. If the purpose of the business plan is vague and not aligned with what service you are giving, it will affect the business you are forming. Make sure to be SMART (specific, measurable, achievable, realistic, and in a certain timeframe) with your business goals. Also, researching your competitor’s service is a great deal to knowing what strategy you will form for your Tennessee business. And lastly, you should include the funding of your business.
A business plan should be created before you start a business. Without it, you have nothing but a blank slate. This document will help you understand the key parts of your business and the plan for success. Regarding the potential funding for your business in Tennessee, you can avail of business loans in bank and investor funding.
You can continue working on the legal structure of your business once you have the whole plan in your possession. You may create an LLC for your business legally. You can check other business guides shared by the LLCBuddy Editorial Team.
Step 2: Choose a Business Entity in Tennessee
A business entity refers to a legal structure formed to conduct business activities. It is a separate and distinct organization recognized by the law, which possesses rights, responsibilities, and liabilities distinct from its owners or members. Choosing a business entity for your Tennessee business is significant.
You must decide on a business entity structure while beginning your own business. The form of company entity you choose will significantly impact how well your personal assets are protected, how much tax you pay, and how much paperwork you have to deal with. You should consider forming a business entity in Tennessee through having Sole Proprietorship, LLC, LLP, and Corporation.
Sole Proprietorships
A sole proprietorship is a simple and common type of business structure where an individual owns, operates, and manages the entire business. It is the easiest and least expensive form of business organization to establish and maintain. One of the most appealing aspects of a sole proprietorship is the owner’s direct control over all aspects of the business.
A key characteristic of a sole proprietorship is that the owner and the business are considered a single legal entity. This means that all profits, losses, assets, and liabilities are the owner’s personal responsibility. Although this can lead to increased risk exposure, it allows the owner to control their business operations completely.
Consider a sole proprietorship if you want to start a business in Tennessee by yourself. For legal and tax reasons, the owner and the business are regarded as one and the same. The business owner takes on liability for the business. Therefore, the owner is liable for all business debts in the event that the company fails.
Limited Liability Company
A Limited Liability Company, also known as an LLC, is a business structure ideal for entrepreneurs and start-ups. It is perfect for start-ups and aspiring entrepreneurs since it has limited liability issues for a company. The Tennessee LLC is mainly used for the legal structure of a business between two or more companies that share management and profits. It also protects its owners from liabilities, debts, and responsibilities that may cause them in the future.
LLCs offer pass-through taxation, meaning that the profits and losses flow through to the members’ personal tax returns, avoiding double taxation that corporations may experience. Additionally, LLCs have fewer formal requirements and administrative burdens compared to corporations. Read Tennessee classification of LLC tax to get more information about tax.
Another advantage of an LLC is the flexibility in the management structure. Members can choose to manage the company themselves or appoint managers to oversee the business operations. This allows for customization based on the unique needs and preferences of the owners.
Limited Liability Partnership
Limited Liability Partnerships (LLPs) are a unique business structure combining partnerships and corporations’ elements. An LLP offers limited liability protection to its partners, meaning that each partner is only responsible for their actions and debts rather than jointly and severally liable for the entire partnership’s obligations.
This structure is particularly popular among professional service providers such as lawyers, accountants, and architects, as it allows them to maintain the collaborative nature of a partnership while enjoying the liability protection typically associated with corporations.
In an LLP, each partner’s income is subject to self-employment taxes, and the profits and losses are passed through to the partners’ personal income tax returns, similar to a general partnership. This pass-through taxation avoids the double taxation issue faced by some corporations.
Corporation
Forming a Tennessee corporation reduces your personal liability for business debts as an LLC does. A corporation can be taxed as an S-corporation (S-Corp) or a C-corporation (C-Corp). If a small corporation satisfies certain Internal Revenue Service (IRS) standards, then S-corporation status is available, providing pass-through taxation. However, most larger businesses and startups seeking venture financing are taxed as C-corps.
Step 3: Determine your Tennessee Business Costs
In Tennessee, you should determine the business costs that you will form. You should consider paying the Articles of Organization fee for LLCs, Charter for Profit Corporation fees for corporations, business licenses fee, office supplies and equipment, payroll, office rent, utilities, transportation, and taxes.
Usually, filing an initial Tennessee Articles of Organization fee costs $300, while the annual fee costs $50 per member in Tennessee. Read about the overall cost of LLC registration in Tennessee cost to know more about Tennessee LLC cost. If you wish to know more about how much it costs to form an LLC, you should look up and be guided by the LLC formation costs. For a corporation, you must pay the $100 for online and by mail filing. Besides, you need to pay taxes as a corporation.
Step 4: Name Your Business in Tennessee
Naming your business doesn’t take a lot of time. With the help of Tennessee LLC name search, you can acquire a name for your business. If you form an LLC in Tennessee, you must follow the below rules while naming your business-
- The name should not be confused with a government entity.
- The name should be unique.
- The name should be available to use.
- Any other business does not use the name.
- The new name must include “LLC” if it is a limited liability company.
In Tennessee, if you do not wish to file your business right away but want to hold the name that you have decided on, then you can reserve your business name for 4 months. You must file a name reservation application in the Tennessee Secretary of State to keep the name. There is a complete guide on LLC name guidelines for you to have a proper LLC business name.
Step 5: Register Your Business in Tennessee
In order to register a business in Tennessee, you need to file it with the Tennessee Secretary of State. Before that, you must have a Tennessee Registered Agent for your business. The Registered Agent is a person who is responsible for receiving important legal documents on your behalf.
Get the Tennessee Registered Agent
You must get your Tennessee Registered Agent before you file your business. The person should be eligible to conduct business in Tennessee. Also, they must be aged above 18 years. You can be your own registered agent. However, that will not be a wise decision. Appointing a professional will be much more beneficial for your business than doing it on your own.
Apply For Tennessee Formation Document
After you have a Registered Agent, you need to file the Tennessee formation document. If you are filing an LLC in Tennessee, you must file the Articles of Organization and if you want to have a corporation structure, you need to file the Tennessee Charter for Profit Corporation.
Request For an EIN
In addition to the paperwork, you should apply for an Employer Identification Number (EIN). An EIN will serve as the tax ID for your professional corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website. You can obtain the EIN for free from IRS.
The application of an EIN in Tennessee can be through the following:
- Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
- Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
- Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is 4 weeks.
- Apply by Telephone (for International Applicants)– International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.
After you have your EIN number, you can benefit in a number of ways. It will give your LLC the final advantage necessary to operate at full capacity without encountering legal or judicial issues.
Step 6: Apply for Business License and Permit
Obtaining a business license and operating permit is necessary to run any business in Tennessee. Before launching your new business, you should request any required business license or permission. Most Tennessee businesses need licenses or permits to operate. Federal, state, and local governments may all require businesses to have licenses and permits. The business license fee depends on the type of license you are applying for. You must contact Tennessee Secretary of State for more details.
Step 7: Get a Bank Account
Your business dealings in Tennessee might be simpler with a US business bank account because it boosts your company’s legitimacy and liquidity. Most banks demand an EIN to create a business bank account for firms other than sole proprietorships. Also, keeping separate finances helps you avoid combining personal and professional finances.
Step 8: Market your Business in Tennessee
Now that your Tennessee business is already registered, you can market it with an ideal marketing plan. An ideal marketing plan can help a start-up business to become known. Making a comprehensive social media network like META, Facebook, Instagram, Twitter, and YouTube falls within this category. While creating an SEO campaign for your company website, you may also look at specialized communities on Facebook and LinkedIn.
Important Information
Do you need to have Business Insurance?
Your company needs insurance even if it’s a home-based business or you don’t have employees. Depending on your business planning and the risks you face, you may require different types of insurance. As your business expands, you might require more than one type of insurance. If you have employees, you are typically legally required to carry workers’ compensation insurance. You must contact Tennessee Department of Commerce and Insurance, Insurance Division to ensure what type of insurance is required for your business.
What is the most profitable type of business?
The most profitable type of business will vary depending on a number of factors, including your industry, location, target market, and business strategy. However, some companies, such as those that provide expensive products and other services, tend to be more profitable than others. If you’re unsure about the kind of business to launch, think about your abilities and interests and the demands of your target market to guide your decision on an effective business.
FAQs
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Why Start Business Tennessee is So Important
One of the key reasons why starting a business in Tennessee is so important is the state’s robust economy. Tennessee has seen significant economic growth in recent years, attracting businesses of all sizes and industries. The state’s low taxes and business-friendly environment have made it a magnet for companies looking to establish or expand their operations.
Furthermore, Tennessee is home to a diverse and skilled workforce, making it easier for businesses to find the talent they need to succeed. With top-notch educational institutions and training programs, entrepreneurs can rest assured that they will have access to a talented and well-educated workforce to help their business thrive.
In addition to its strong economy and talented workforce, Tennessee also offers numerous resources and support for startups and small businesses. Whether it’s through business incubators, accelerators, or networking events, the state provides ample opportunities for entrepreneurs to connect with mentors, investors, and potential partners.
Moreover, Tennessee’s strategic location in the heart of the Southeast makes it an ideal base for businesses looking to reach a wider market. The state’s excellent transportation infrastructure, including major highways, railways, and airports, makes it easy for businesses to connect with customers and suppliers across the country.
Another reason why starting a business in Tennessee is so important is the state’s pro-business policies and regulations. With initiatives to streamline permitting processes, reduce regulatory burdens, and provide tax incentives for businesses, Tennessee has created a business-friendly environment that fosters innovation and growth.
Furthermore, the state’s commitment to fostering entrepreneurship and supporting small businesses has led to the creation of various programs and initiatives designed to help startups succeed. From government grants and loans to mentorship programs and networking opportunities, Tennessee offers a range of resources to help entrepreneurs get their businesses off the ground.
Overall, starting a business in Tennessee is important not only for individual entrepreneurs but also for the state’s economy as a whole. By supporting startups and small businesses, Tennessee can create jobs, stimulate economic growth, and drive innovation across various industries.
In conclusion, Tennessee’s vibrant economy, talented workforce, business-friendly environment, strategic location, and supportive resources make it an ideal destination for entrepreneurs looking to start a business. With the state’s commitment to fostering entrepreneurship and supporting small businesses, there has never been a better time to launch a business in Tennessee.
Why Open a Bakery in Tennessee
One of the main reasons why starting a business in Tennessee is so important is the state’s business-friendly environment. From low corporate tax rates to business-friendly regulations, Tennessee has created a favorable business environment that fosters growth and innovation. Unlike other states, Tennessee values entrepreneurship and understands the importance of supporting small businesses. By starting a business in Tennessee, entrepreneurs can take advantage of the state’s pro-business policies and initiatives that are designed to help businesses succeed.
Another reason why starting a business in Tennessee is crucial is the state’s affordable cost of living. Tennessee offers entrepreneurs a high quality of life without breaking the bank. From affordable housing to a low cost of doing business, Tennessee offers entrepreneurs the opportunity to build their businesses without worrying about high living expenses. This allows entrepreneurs to focus on growing their businesses and achieving their goals without the burden of financial stress.
Furthermore, starting a business in Tennessee provides entrepreneurs with access to a supportive community that is dedicated to helping businesses thrive. Tennessee is home to a strong network of mentors, investors, and business organizations that are committed to helping entrepreneurs succeed. Whether it’s through networking events, workshops, or mentorship programs, Tennessee offers entrepreneurs a wealth of resources to help them navigate the challenges of starting a business. This supportive community is essential for entrepreneurs who are looking to grow their businesses and make a positive impact on the state’s economy.
In addition to the business-friendly environment, affordable cost of living, and supportive community, starting a business in Tennessee is also important because it offers entrepreneurs the opportunity to be a part of a thriving business ecosystem. Tennessee is home to a diverse range of industries, including healthcare, technology, manufacturing, and agriculture. This diversity creates a dynamic business environment that allows entrepreneurs to tap into new markets and explore new opportunities for growth. By starting a business in Tennessee, entrepreneurs can position themselves to take advantage of the state’s growing economy and diverse business landscape.
In conclusion, starting a business in Tennessee is crucial for entrepreneurs who are looking to make their mark in the business world. With its business-friendly environment, affordable cost of living, supportive community, and thriving business ecosystem, Tennessee offers entrepreneurs the resources and opportunities they need to succeed. Whether you’re a seasoned entrepreneur or just starting out, Tennessee provides a fertile ground for businesses to grow and thrive. So, if you’re thinking about starting a business, why not consider Tennessee? It may just be the perfect place to turn your entrepreneurial dreams into reality.
Why Tennessee Property Management Business is So Important
One of the main reasons why starting a business in Tennessee is so important is the supportive business environment that exists in the state. Tennessee has a business-friendly climate with low taxes, minimal regulations, and a skilled workforce that is eager to contribute to the success of new businesses. These factors make it easier for entrepreneurs to establish and grow their companies, leading to increased economic prosperity for the state as a whole.
Moreover, Tennessee offers a strategic location with easy access to major markets both domestically and internationally. Its central location in the United States makes it an ideal hub for businesses looking to establish a presence in multiple regions. This can lead to increased opportunities for collaboration and growth, ultimately benefiting both the business and the local economy.
In addition, Tennessee has a strong infrastructure that supports business growth and innovation. From top-notch universities and research institutions to modern transportation networks and communication systems, the state provides entrepreneurs with the resources they need to succeed in today’s competitive business landscape. This creates a fertile ground for creativity, collaboration, and innovation, all of which are essential for building a successful business.
Another important aspect of starting a business in Tennessee is the diverse range of industries that thrive in the state. From advanced manufacturing and healthcare to technology and agriculture, Tennessee offers a broad spectrum of opportunities for entrepreneurs with different backgrounds and skills. This diversity not only fosters economic growth but also promotes a sense of community and collaboration among businesses, leading to a more vibrant and dynamic business ecosystem.
Furthermore, starting a business in Tennessee allows entrepreneurs to tap into a talented and motivated workforce that is eager to contribute to the success of their companies. The state boasts a skilled and educated labor force that is equipped with the knowledge and expertise needed to drive businesses forward. By harnessing this talent pool, entrepreneurs can build strong and sustainable businesses that can compete on a global scale.
Overall, starting a business in Tennessee is not only important for individual entrepreneurs but also for the state as a whole. By creating new businesses, entrepreneurs contribute to job creation, economic growth, and innovation, ultimately benefiting the community and society at large. Tennessee’s supportive business environment, strategic location, strong infrastructure, diverse industries, and talented workforce all make it an attractive destination for entrepreneurs looking to turn their business dreams into reality.
Conclusion
In conclusion, embarking on the entrepreneurial journey of starting a business in Tennessee, also known as The Volunteer State, requires thorough research, planning, and dedication. Understanding the local business landscape, choosing the right structure, and complying with all regulatory requirements are essential steps to ensuring your venture’s success. This article has provided valuable insights and guidance for aspiring entrepreneurs looking to seize the opportunities present in Tennessee’s dynamic economy. By leveraging available resources and approaching the process with diligence and determination, you can lay the foundation for a thriving and prosperous business in Tennessee.