How to Start a Tennessee Corporation


Steve Goldstein
Steve Goldstein
Business Formation Expert
Steve Goldstein runs LLCBuddy, helping entrepreneurs set up their LLCs easily. He offers clear guides, articles, and FAQs to simplify the process. His team keeps everything accurate and current, focusing on state rules, registered agents, and compliance. Steve’s passion for helping businesses grow makes LLCBuddy a go-to resource for starting and managing an LLC.

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Start a Tennessee Corporation

When you plan to start a business in Tennessee, you must decide on the appropriate structure. Starting a corporation may be more complicated than creating an LLC in Tennessee or a sole proprietorship. However, it is not that difficult as well. There are a few guidelines that you should be aware of when it comes to creating Tennessee corporation. Starting a corporation involves a legal process, that is, the process of incorporation.

In this article, I will share a step-by-step guide to start a corporation in Tennessee. I will also enlighten you on the advantages and disadvantages of having a corporation. Some people consider starting a corporation in Tennessee more than other business structures since it has many advantages over other forms.

What is a Corporation in Tennessee

In definition, a corporation is a formal organization established by stockholders, shareholders, or other people to make a profit. Like individuals, corporations can undertake contracts, own assets, sue and be sued, pay taxes, limit state and federal taxes, and loan funds from banking institutions.

Common Types of Corporations

Before you start with the process of forming a corporation, you should know what type of corporation you will form. There are several different forms of corporations you can take into consideration, depending on your corporation’s objectives and ownership structure.

  • C-Corporation: C-Corporation is the most known type of incorporation. They have almost all corporate distinguishing characteristics. Profits are distributed to corporate owners who are taxed at an individual level. The corporation is taxed similarly to a business unit.
  • S-Corporation: An S-Corporation is set up similarly to a C-corporation but has different tax implications and owner limits. S-corps have no more than 100 stockholders and are not taxed separately. These business units must also file paperwork with the Internal Revenue Service (IRS) to obtain their status.
  • Non-profit Corporation: Nonprofit businesses are frequently used by religious, educational, and charity institutions to run their operations without making a profit. Thus, a nonprofit corporation is exempt from paying taxes. The nonprofit organization’s gifts, contributions, or cash are reinvested in the company to fund its growth, future endeavors, or operations. Read how to start a nonprofit corp in Tennessee to learn about nonprofit corporations.

If you have a small business, it is recommended that you form an LLC instead of a corporation in Tennessee. LLCs have more tax benefits than other structures. Besides, LLCs protect your personal assets. However, it is wise to consult a legal expert before you start setting up your business in Tennessee.

LLCBuddy Editorial Team

How to Start a Corporation in Tennessee

To start a corporation in Tennessee, you must follow the below steps that, include forming a corporation name, appointing a board of directors, filing for Charter for Profit Corporation, drafting corporate bylaws, meeting with the board of directors, issuing stocks, creating a shareholders agreement, requesting for an EIN, and getting a license and permit. All these steps are basic ones. It can be changed depending on the type of corporation you form and the nature of your business.

Step 1: Choose a Corporation Name in Tennessee

Naming your business is one of the most crucial activities during the startup phase. Your corporation name serves as the foundation for your brand. Legal procedures should be taken into account when choosing your corporation name. Choose a corporation name that will enable you to develop a strong brand identity without being hampered by irrelevant factors.

If you are forming an LLC, there is a complete guide on Tennessee LLC name guidelines for a proper LLC name. Here are some guidelines you must follow while naming your corporation in Tennessee-

  • Your business name must contain entity identifiers, such as “Incorporated,” “Limited,” “Corporation,” or “Company,” or an abbreviation, such as “Inc.,” “Co.,” or “Ltd.”
  • Exclude any words in your business name, such as “Trust,” “Bank,” “Credit Union,” or “Trustee,” or words related to a government agency, such as “FBI,” “State Department,” or “Treasury.”

Step 2: Board of Directors Initial Appointment

To form a corporation in Tennessee, you must appoint an initial board of directors before making them permanent once the corporation is formed. In Tennessee, you may appoint at least Three board of directors. The initial board of directors is in charge of guiding the overall strategy of your business. The structure, responsibilities, and powers given to a board of directors are determined by the bylaws of a company or organization. So, appointing your corporation’s initial board of directors in Tennessee is a big step in forming a corporation.

Step 3: Filing the Charter for Profit Corporation in Tennessee

After you appoint the initial board of directors in your Tennessee corporation, the next step is to write and file a Charter for Profit Corporation. In writing, the Tennessee Charter for Profit Corporation, the corporation name, principal place of business, the purpose of business, Tennessee Registered Agent contact information, and the names and addresses of incorporators and/or initial board members, should be written.

Filing a Charter for Profit Corporation in Tennessee may be done with four methods that are e-filing, by email, by mail and in-person. The Charter for Profit Corporation fee may vary from different states. However, in Tennessee, it costs $100 for online and by mail filing.

  • Online Filing: Create an account/Log in to the SOS site, get the e-form, fill it, and submit online. Or get the online PDF, fill it up and upload it back on the site.
  • Offline filing: Send the form by mail to or drop it off in person at Corporate Filings, 312 Rosa L. Parks Avenue, 6th Floor, William R. Snodgrass Tower, Nashville, Tennessee 37243

Step 4: Draft Corporate Bylaws

Now you are done filing a Charter for Profit Corporation in Tennessee, the next step is to draft corporate bylaws. Corporate bylaws are the basic rules that control a corporation. It includes the organization’s structure, processes, laws, and rules. As a result, all personnel, managers, and corporation members must obey the firm’s rules.

In creating corporate bylaws, you should include the following on how the decisions will be made-

  • The responsibilities are given to each officer.
  • How will judgments in business be made?
  • Where and when are the annual shareholder meetings?
  • The minimum number of shareholders required for decision-making.
  • Location and timing of dividend payments.

Step 5: Hold the First Board of Directors’ Meeting

After drafting the corporate bylaws, gather all the board of directors for the first meeting. This meeting will be finalized by appointing directors to manage the company’s daily operations, approve the bylaws, choose the corporation’s accounting year, and approve the stock issue. All board meetings should have minutes taken and stored with the company’s records.

Step 6: Issuing Stock in a Corporation

After starting your Tennessee corporation, one of the first official corporate actions is issuing stock to the shareholders. Keep track of the number of shares issued to each shareholder and the purchase price. A corporation in Tennessee is managed by its shareholders, who contribute to the business in exchange for ownership shares.

Step 7: Draft and Finalize a Shareholders Agreement

Even though drafting and finalizing a shareholders agreement is unnecessary, I suggest you still comply since it will benefit your corporation and its shareholders. A small business’s shareholders enter into a shareholder agreement contract. It establishes how ownership will be handled in unexpected situations, like a shareholder passes away, retires, becomes disabled, or quits the corporation. Early on in the life of your Tennessee corporation, signing a shareholders’ agreement can help maintain corporate continuity and prevent future disputes.

Step 8: Request an EIN in Tennessee

After everything is in place, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your Tennessee 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.

The application of an EIN in Tennessee can be through the following:

  • Apply Online- The EIN online 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-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 corporation the final advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 9: Get Licenses and Permits for your Corporation in Tennessee

Before your corporation operates in Tennessee, you must have a business license. A business license is a document issued by a government agency that permits you to operate your business in the geographic region that that agency governs. To legally operate your corporation, you’ll need a business license. Numerous corporate licenses need to be filed and renewed regularly. Check out how to get business licenses and permits in Tennessee to know more.

You must also register a DBA name if you intend to conduct business using a name other than your corporation’s legal name. The DBA name is sometimes known as “doing business as” or a “fictitious business name.” Depending on your location, you may need to register the DBA with your state, city, and county. You can skip this step if your business solely uses your legal company name.

Important Information

Paying your Taxes in Tennessee

Even if you have established your corporation in Tennessee, pay your taxes and keep everything up to date so you won’t pay any penalty. Unlike an LLC, there is a corporate tax that every corporation in Tennessee has to pay. On the other hand, they must pay income taxes based on their business income. Some other types of taxes in Tennessee are sales tax, franchise tax (not applicable to all the states), and other state taxes.

Cost of Forming a Corporation in Tennessee

A filing and annual fee must be paid to form a corporation in Tennessee. Without it, your corporation won’t operate. The initial filing fee for a corporation may vary depending on the state. However, in Tennessee, it costs $100 for online and by mail filing. The corporation in Tennessee also has to file an annual report (though it might not be mandatory, it is recommended to file one). Ensure you comply with all the necessary fees and costs so your corporation will run successfully and smoothly. If, in the future, you make any changes to your corporation, you must file the Tennessee Amendment. It costs $20 to file an amendment in Tennessee.

Advantages of Starting a Corporation in Tennessee

  1. Limited Liability: The biggest advantage of setting up a Tennessee corporation is that the shareholders are not personally responsible for the debts of the company. As a result, when you incorporate as a corporation, personal assets like homes, vehicles, and other possessions are prohibited. One of the main benefits of setting up a corporation over a general partnership or sole proprietorship business structure is that neither the business nor the owners are held legally responsible for the obligations of the business, even if it means giving up their personal assets.
  1. Limitless Corporation: The fact that a corporation’s existence is independent of its owners is another significant benefit of incorporation. In other words, a corporation has an endless life and will continue operating normally even if the owner dies or decides to sell their ownership.
  1. Advantages in Tax: The deduction of health insurance premium payments made on behalf of an owner-employee is one of the many financial benefits to which corporations are entitled. Corporations also save on self-employment taxes since their revenue is not subject to workers’ compensation, Social Security, or medical taxes. Tax rates on corporate profits are lower than those on individual income.

FAQs

What are the steps to start a corporation in Tennessee?
To form a corporation in Tennessee, you must file articles of incorporation with the Tennessee Secretary of State. The articles must include the corporate name, the name, address, and signature of an incorporator, the purpose of the corporation, the type of stock to be issued, and the duration of the corporation. Additionally, you must pay the required filing fee.
What are the requirements to form a Corporation in Tennessee?
To form a Corporation in Tennessee, the articles of incorporation must include the corporate name, the name, address, and signature of an incorporator, the purpose of the corporation, the type of stock to be issued, and the duration of the corporation. There is also a filing fee that must be paid.
What is the corporate income tax rate in Tennessee?
The corporate income tax rate in Tennessee is 6.5%.
Is there a minimum amount of capital required to form a corporation in Tennessee?
No, there is no minimum amount of capital required to form a corporation in Tennessee.
What type of businesses can be formed as a Corporation in Tennessee?
Any type of business can be formed as a Corporation in Tennessee, including corporations, LLCs, and other business entities.
Does Tennessee have a personal property tax?
Yes, Tennessee does have a personal property tax.
What type of documents are needed to register a Corporation in Tennessee?
To register a Corporation in Tennessee, you must file articles of incorporation with the Tennessee Secretary of State. The articles must include the corporate name, the name, address, and signature of an incorporator, the purpose of the corporation, the type of stock to be issued, and the duration of the corporation. Additionally, you must pay the required filing fee.
Does Tennessee have an annual franchise tax for Corporations?
Yes, Tennessee does have an annual franchise tax for Corporations.
How much does it cost to form a Corporation in Tennessee?
The cost to form a Corporation in Tennessee depends on the type of Corporation being formed and the filing fees associated with it. Generally, the filing fee is between $100 and $400.
What is the sales tax rate in Tennessee?
The sales tax rate in Tennessee is 7%.
Does Tennessee require Corporations to hold an annual meeting?
Yes, Tennessee does require Corporations to hold an annual meeting.
Does Tennessee require Corporations to have a registered agent?
Yes, Tennessee does require Corporations to have a registered agent.
Does Tennessee require Corporations to file annual reports?
Yes, Tennessee does require Corporations to file annual reports.
Does Tennessee have any special rules for Corporations that do business out of state?
Yes, Corporations that do business out of state must register with the Tennessee Secretary of State and pay the applicable fees.
Does Tennessee have any special tax incentives for Corporations?
Yes, Tennessee does have special tax incentives for Corporations, such as the Industrial Machinery Tax Credit, the Research and Development Tax Credit, and the Tennessee Jobs Tax Credit.
Are there any additional filing requirements for foreign Corporations in Tennessee?
Yes, foreign Corporations must register with the Tennessee Secretary of State and pay a registration fee.
Does Tennessee have any special rules for Nonprofit Corporations?
Yes, Nonprofit Corporations must register with the Tennessee Secretary of State, file a Statement of Financial Interests, and have a minimum of three members.
What types of taxes do Corporations in Tennessee have to pay?
Corporations in Tennessee must pay corporate income tax, personal property tax, sales tax, and franchise tax.
How often does a Corporation in Tennessee have to file taxes?
Corporations in Tennessee must file taxes on an annual basis.
Is there any way to reduce the taxes owed by a Corporation in Tennessee?
Yes, Corporations in Tennessee may be eligible for special tax incentives, such as the Industrial Machinery Tax Credit, the Research and Development Tax Credit, and the Tennessee Jobs Tax Credit.
Does Tennessee require Corporations to keep records?
Yes, Tennessee does require Corporations to keep records, such as financial statements, minutes of meetings, and other records related to the Corporation.
What is the process for dissolving a Corporation in Tennessee?
To dissolve a Corporation in Tennessee, you must file articles of dissolution with the Tennessee Secretary of State, pay the applicable fees, and notify all creditors.
Does Tennessee require Corporations to file annual tax returns?
Yes, Tennessee does require Corporations to file annual tax returns.
Does Tennessee have any special rules for S Corporations?
Yes, S Corporations must register with the Tennessee Secretary of State and file an annual report.
Does Tennessee have any special requirements for Corporations that offer stock?
Yes, Corporations that offer stock must register with the Tennessee Department of Financial Institutions and file an application for a Certificate of Authority.
Does Tennessee have any special rules for LLCs?
Yes, LLCs must register with the Tennessee Secretary of State and file an annual report.
Can Corporations in Tennessee be dissolved voluntarily?
Yes, Corporations in Tennessee can be dissolved voluntarily by filing articles of dissolution with the Tennessee Secretary of State, paying the applicable fees, and notifying all creditors.
Does Tennessee have any special rules for Professional Corporations?
Yes, Professional Corporations must register with the Tennessee Secretary of State and file an annual report.
What is required to form a corporation in Tennessee?
To form a corporation in Tennessee, you must file articles of incorporation with the Tennessee Secretary of State, pay the filing fee, and prepare corporate bylaws.
What is the filing fee to form a corporation in Tennessee?
The filing fee to form a corporation in Tennessee is $100.
Is there a minimum number of incorporators required to form a corporation in Tennessee?
Yes, a corporation in Tennessee must have at least three incorporators.
Are there any other fees associated with forming a corporation in Tennessee?
Yes, there may be additional fees such as a fee to publish a notice of intent to form a corporation in a newspaper.
How long does it take to form a corporation in Tennessee?
It typically takes about one to two weeks to form a corporation in Tennessee.

Also Read

Why Tennessee Corporation is So Important

Tennessee Corporation is a key driver of innovation and entrepreneurship within the state. By fostering an environment that supports business growth and expansion, Tennessee Corporation contributes to the overall prosperity and well-being of its citizens. Through their investments in research and development, technology, and other critical sectors, these corporations are able to create new products, services, and jobs that benefit the entire community.

Moreover, Tennessee Corporation plays a crucial role in driving competitiveness and productivity in the state. By investing in cutting-edge technologies, infrastructure, and workforce development, these corporations are able to enhance their capabilities and remain competitive in both domestic and global markets. This, in turn, helps to attract more investment, talent, and resources to Tennessee, further fueling the state’s economic growth and success.

Tennessee Corporation also plays an essential role in supporting local communities and charitable causes. Many corporations in the state are actively involved in philanthropic activities, whether through direct donations, sponsorships, or other forms of support. By giving back to the community, these businesses are able to make a difference in the lives of their employees, customers, and the broader public, helping to create a more equitable and sustainable society for all.

Furthermore, Tennessee Corporation serves as a key partner to state and local governments in addressing critical issues such as infrastructure, education, healthcare, and environmental sustainability. Through public-private partnerships and collaborative initiatives, corporations in Tennessee are able to work together with government agencies, non-profit organizations, and other stakeholders to achieve common goals and objectives. This cooperation helps to address complex challenges that no single entity can tackle alone, leading to more effective and efficient solutions for the benefit of all.

In conclusion, Tennessee Corporation is a vital component of the state’s economy and society, playing a crucial role in driving growth, innovation, and sustainability. By supporting business development, job creation, and community engagement, these corporations contribute to the overall prosperity and well-being of Tennesseans. It is essential for stakeholders across the state to recognize and appreciate the value and importance of Tennessee Corporation, and to continue supporting its growth and success for the benefit of all.

Conclusion

When determining which corporate form is best for you, be selective. You must know which business structure is bet-fitted for your product/service in Tennessee. Consult a legal professional before you take the first step while setting up your business. Finding the ideal ratio of corporate advantages and legal protection that meets your unique needs is very important. In forming a corporation in Tennessee, you need to ensure that every detail is well-formed so that your corporation will be successful. And if you have any questions, share them in the comment section below.

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