How to Start an S-Corp in Tennessee


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 an S-corporation in Tennessee

Tennessee, popularly known as The Volunteer State, offers a bunch of benefits for business owners, especially the state capital Nashville has a lot to offer to the rising entrepreneurs in the state. If you want to start a business in Tennessee, you must choose an appropriate corporate structure. You can have a corporation or a sole proprietorship or set up an LLC in Tennessee. There are a few guidelines that you should be aware of when it comes to starting an S-Corporation. In Tennessee, S-Corporation is businesses’ most common corporate structure, especially start-ups. It was developed in order to give companies limited liability protection while preserving the advantages of being a distinct legal organization.

In this article, you will learn about how to start an s-corporation in Tennessee. You will also learn whether an s-corporate business structure suits your business. Please read all the points carefully before starting your business in Tennessee.

What is an S-Corp in Tennessee?

An S corporation (S-corp) is not a type of corporate entity, unlike a limited liability company (LLC) or other business structures. It’s a tax classification that might result in significant financial savings for both corporations and LLCs but in different ways. S-corp is similar to LLC, except that the IRS treats it as a corporation for tax purposes.

If you want an S corp status for your business, you can always form an LLC to protect your personal assets from business debts. It takes some basic steps to have a successful s-corporation in Tennessee. S-Corps do pay corporate income taxes, but they are still treated as disregarded companies for federal tax purposes.

S-corps pay corporate taxes that LLCs do not have to pay. If you want to have an S-corp status, then we would recommend you have an LLC instead. This will protect your personal assets from your business liabilities and you don’t have to pay any corporate taxes.

LLCBuddy Editorial Team

Limitation and Requirements of S-Corp in Tennessee

As you have decided to have an S-Corp structure for your business, you must know the limitations and requirements to qualify for S-Corp status. We have listed some important points to consider following for your reference-

  • Be a domestic corporation.
  • Not be an ineligible corporation, such as specific financial institutions, insurance providers, or domestic corporations engaged in overseas sales.
  • Have just one type of stock.
  • Have a maximum of 100 shareholders or members.
  • Have only permitted individuals, certain trusts, and estates as stockholders or members.

If you are qualified for the limitations and requirements, you can apply for an S-Corp in Tennessee.

How to Start an S-Corporation in Tennessee?

To create S-Corp in Tennessee, you must follow the below guidelines that include forming a business name, hiring a Registered Agent, filing your Articles of Organization, creating an operating agreement in Tennessee, requesting an EIN, filing a form 2553.

Step 1: Register a Business Name in Tennessee

After you have decided on the idea to start an S-Corp in Tennessee, deciding the name for your corporation is significant. Legal procedures should be taken into account when choosing your partnership name. Choose a business name that will enable you to develop a strong brand identity.

If you want to set up 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 S-corp.

  • Avoid profanities
  • The name should be available, and no other entity should have the same name in Tennessee.
  • Limit of restricted words that need a license in Tennessee, for example, doctors, attorneys, etc.
  • Do not use a business name that sounds like a government agency or entity (like “police,” “county,” and “state”)

Step 2: Hiring the Tennessee Registered Agent

The next step in starting an S-corp in Tennessee is hiring a Tennessee Registered Agent, a person that accepts legal paperwork on behalf of your business. This person or business will receive important tax forms, legal documents (such as subpoenas), all notices of lawsuits, and other official government correspondence in Tennessee. Forming an LLC and an S-corp will be easier if you have Registered Agent in Tennessee.

Step 3: File Your Tennessee Articles of Organization

The Articles of Organization is an important document to start your limited liability company (LLC). Tennessee Articles of Organization is a simple document that contains the business name and address as well as the name and address of the person who received lawsuits on behalf of the organization. In order for the “Articles of Organization” to be filed, you need to pay a filing fee to the state. In Tennessee, the filing fee is $300.

In California, along with the Articles of Organization, you must send the Statement of Information to file your company. The statement of information is a mandatory document in California, but other states do not have this document.

Step 4: Creating an Operating Agreement in Tennessee

After you have filed your Articles of Organization in Tennessee, the next step is to create an LLC operating agreement in Tennessee. The Tennessee LLC operating agreement is essential and necessary since it will cover your corporation’s important documentation and rules. The operating agreements usually include the following-

  • Article I: Organization
  • Article II: Management and Voting
  • Article III: Capital Contributions
  • Article IV: Distributions
  • Article V: Membership Changes
  • Article VI: Dissolution

After creating the LLC operating agreement, you can benefit in several ways since it will discuss how decisions for the business will be made, including management and member voting structure. For more details about how an operating agreement works, please check Operating Agreement.

Step 5: Request for EIN in Tennessee

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your general partnership. 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- You can apply for EIN online, the most desirable and fastest method for users.
  • Apply by Fax- Another method of obtaining EIN is to fax Form SS-4 (PDF) after entering all the correct information to (855) 641-6935.
  • 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.

If you would like to be assisted in getting an EIN in the Internal Revenue Service, we can get your EIN for you. Our EIN service is quick and hassle-free. For more details about EIN for your business, check why you need EIN.

Step 6: File Form 2553 for Your S-Corp Business in Tennessee

Once you have obtained your EIN and Articles of Organization to form an S-Corp, you must file Form 2553, Election by a Small Business Corporation, to apply for S-corp status. Filing a form 2553 should be done 75 days after the formation of your S-Corp, or not more than 75 days after the beginning of the tax year in which the election is to take effect.

If your LLS-Corp has passed the deadline of 75 days, you must also file Form 8832, Entity Classification Election, in order to opt to be taxed as a corporation. Then you would send Form 2553 and Form 8832 jointly by certified mail from the USPS. In Tennessee, you can send your form 2553 to the Department of the Treasury Internal Revenue Service Center – Kansas City, MO 64999 Fax: 855-887-7734.

Advantages of Starting an S-Corporation in Tennessee

Filing an S-Corp in Tennessee has numerous benefits and advantages.

  • Writing Off Losses: With S-corp, owners can deduct business losses from their individual income statements. If the company loses money in the first few years, it may balance its other sources of revenue. Even so, understand the shareholder loss limitations set by the IRS.
  • Pass-Through Taxation: Starting an S-Corp is the widely known advantage in forming this kind of business structure since an s-corp uses a pass-through taxation structure. The company does not pay twice the tax in this kind of taxation. Because of this structure, most start-ups and entrepreneurs in Tennessee apply for an S-Corp LLC.
  • Qualified Business Income Deduction: A qualified business income, or QBI, is the total of all qualified items of income, gain, deduction, and loss from any qualified trade or business, including S-Corp. With this, S corp owners may deduct up to 20% of their eligible earnings under the Tax Cuts and Jobs Act.

FAQs

What is an S-Corp in Tennessee?
An S-Corp in Tennessee is a business entity that is recognized by the Internal Revenue Service (IRS) as a separate taxpaying entity. It provides the same limited liability protection to its owners as a corporation, but it is taxed like a partnership.
How do I start an S-Corp in Tennessee?
To start an S-Corp in Tennessee, you need to file an application with the Tennessee Secretary of State. You will also need to file a federal Form 2553 with the IRS and an S-corp tax election.
What are the benefits of forming an S-Corp in Tennessee?
An S-Corp in Tennessee provides limited liability protection for its owners, and it is taxed like a partnership, meaning that the profits and losses pass through to the owners, who report the income or losses on their individual tax returns. Additionally, an S-Corp can offer certain tax advantages, such as the ability to deduct certain expenses.
What paperwork do I need to form an S-Corp in Tennessee?
To form an S-Corp in Tennessee, you will need to file the Articles of Incorporation with the Tennessee Secretary of State. You will also need to file a federal Form 2553 with the IRS and an S-corp tax election.
How much does it cost to form an S-Corp in Tennessee?
The filing fees for an S-Corp in Tennessee is $100. Additionally, you may need to pay professional fees if you use an attorney or accountant to help you with the formation process.
Are there any additional fees associated with forming an S-Corp in Tennessee?
Yes, you may be subject to additional fees if you are filing the Articles of Incorporation with the Tennessee Secretary of State. Additionally, you may need to pay professional fees if you use an attorney or accountant to help you with the formation process.
How long does it take to form an S-Corp in Tennessee?
It typically takes 2-4 weeks for the Tennessee Secretary of State to process the Articles of Incorporation. Additionally, it may take several weeks for the IRS to process the federal Form 2553 and the S-Corp tax election.
What is an S-Corp?
An S-Corp is a business entity that’s recognized by the Internal Revenue Service (IRS). It offers the advantages of a corporation while avoiding the double taxation of regular corporations.
Is an S-Corp the same as an LLC in Tennessee?
No, an S-Corp is not the same as an LLC in Tennessee. An LLC is a limited liability company, while an S-Corp is a tax designation.
What documents do I need to file to form an S-Corp in Tennessee?
To form an S-Corp in Tennessee, you’ll need to file a Certificate of Formation with the Tennessee Secretary of State, obtain an Employer Identification Number (EIN) from the IRS, and file Form 2553 with the IRS.
Do I need to register my S-Corp in Tennessee?
Yes, you’ll need to register your S-Corp with the Tennessee Secretary of State.
What is the difference between an S-Corp and a C-Corp in Tennessee?
An S-Corp is a pass-through entity that avoids double taxation, while a C-Corp is a corporation subject to double taxation.
Do I need an operating agreement for my S-Corp in Tennessee?
Yes, it’s recommended that you create an operating agreement for your S-Corp in Tennessee.
What are the requirements for an S-Corp in Tennessee?
The requirements for an S-Corp in Tennessee include filing a Certificate of Formation with the Tennessee Secretary of State, obtaining an Employer Identification Number (EIN) from the IRS, and filing Form 2553 with the IRS.
What are the tax requirements for an S-Corp in Tennessee?
An S-Corp in Tennessee must file a state and federal tax return each year. The state tax return should be filed with the Tennessee Department of Revenue, and the federal tax return should be filed with the IRS.
Do I need to file an annual report for my S-Corp in Tennessee?
Yes, you’ll need to file an annual report with the Tennessee Secretary of State each year.
How do I pay taxes for my S-Corp in Tennessee?
You’ll need to file a state and federal tax return each year for your S-Corp in Tennessee. The state tax return should be filed with the Tennessee Department of Revenue, and the federal tax return should be filed with the IRS.
Do I need a business license for my S-Corp in Tennessee?
It depends. You may need to obtain a business license or permit from the Tennessee Department of Revenue or your local government.
What are the advantages of forming an S-Corp in Tennessee?
Forming an S-Corp in Tennessee can provide several advantages, including personal liability protection, flexible ownership and management structures, and potential tax savings.
Are there any restrictions on forming an S-Corp in Tennessee?
Yes, there are certain restrictions on forming an S-Corp in Tennessee. For example, S-Corps are limited to 100 shareholders and the shareholders must be individuals or certain trusts, estates, and charitable organizations.
How do I dissolve an S-Corp in Tennessee?
To dissolve an S-Corp in Tennessee, you’ll need to file a Certificate of Dissolution with the Tennessee Secretary of State.
What are the filing requirements for an S-Corp in Tennessee?
The filing requirements for an S-Corp in Tennessee include filing a Certificate of Formation with the Tennessee Secretary of State, obtaining an Employer Identification Number (EIN) from the IRS, and filing Form 2553 with the IRS.
What are the reporting requirements for an S-Corp in Tennessee?
An S-Corp in Tennessee must file a state and federal tax return each year. The state tax return should be filed with the Tennessee Department of Revenue, and the federal tax return should be filed with the IRS. Additionally, an annual report must be filed with the Tennessee Secretary of State each year.
What is the difference between an S-Corp and an LLC in Tennessee?
An LLC is a limited liability company, while an S-Corp is a tax designation. An S-Corp is recognized by the IRS and offers the advantages of a corporation while avoiding the double taxation of regular corporations.
Do I need to file a state tax return for my S-Corp in Tennessee?
Yes, you’ll need to file a state tax return with the Tennessee Department of Revenue each year for your S-Corp in Tennessee.
Do I need to file a federal tax return for my S-Corp in Tennessee?
Yes, you’ll need to file a federal tax return with the IRS each year for your S-Corp in Tennessee.
What is the process for forming an S-Corp in Tennessee?
The process for forming an S-Corp in Tennessee includes filing a Certificate of Formation with the Tennessee Secretary of State, obtaining an Employer Identification Number (EIN) from the IRS, and filing Form 2553 with the IRS.
What forms do I need to file to form an S-Corp in Tennessee?
To form an S-Corp in Tennessee, you’ll need to file a Certificate of Formation with the Tennessee Secretary of State, obtain an Employer Identification Number (EIN) from the IRS, and file Form 2553 with the IRS.
What are the tax advantages of forming an S-Corp in Tennessee?
Forming an S-Corp in Tennessee can provide several tax advantages, including personal liability protection, flexible ownership and management structures, and potential tax savings.
What is the process for starting an S-Corp in Tennessee?
To start an S-Corp in Tennessee, you will need to complete the business entity registration process with the Tennessee Secretary of State. You will also need to file articles of incorporation and obtain an Employer Identification Number (EIN) from the IRS.
What are the costs associated with starting an S-Corp in Tennessee?
The costs associated with starting an S-Corp in Tennessee include the filing fees for articles of incorporation, a $50 name reservation fee, and a business privilege tax based on the amount of capital invested in the business.
What are the state taxes for an S-Corp in Tennessee?
An S-Corp in Tennessee is subject to the Tennessee state income tax, as well as local taxes. Additionally, the state’s franchise and excise tax must be paid annually.
Are there any special requirements for an S-Corp in Tennessee?
Yes, an S-Corp in Tennessee must hold annual meetings of directors and shareholders, adopt bylaws, and keep accurate records of all transactions.
Is there any additional information I need to know about starting an S-Corp in Tennessee?
You should consult with a qualified professional to ensure that all the necessary steps are taken when forming an S-Corp in Tennessee. Additionally, you should become familiar with the Tennessee laws and regulations that govern S-Corps.

Also Read

Why Tennessee S Corporation is So Important

One of the key reasons why Tennessee S Corporation is so important is because of the tax benefits it offers to business owners. Unlike a traditional C Corporation, where the business is taxed separately from its owners, an S Corporation allows profits and losses to flow through to the owners’ personal tax returns. This means that business owners can avoid the double taxation that often occurs with C Corporations, where the business is taxed on its profits and then the owners are taxed again when they receive dividends.

In addition to the tax benefits, a Tennessee S Corporation also provides business owners with limited liability protection. This means that the owners’ personal assets are shielded from the debts and liabilities of the business. If the business were to face a lawsuit or go bankrupt, the owners would not be personally responsible for the debts of the corporation. This is a crucial benefit for business owners who want to protect their personal finances and assets.

Furthermore, choosing an S Corporation can also help business owners attract investors and raise capital. Many investors prefer to invest in S Corporations because of the pass-through taxation structure, as well as the limited liability protection. By choosing this type of corporation, business owners can demonstrate that they are serious about their business and are committed to its long-term success, making it more attractive to potential investors.

Another important advantage of a Tennessee S Corporation is the flexibility it offers in terms of ownership structure. Unlike a traditional C Corporation, which has restrictions on the number and types of shareholders, an S Corporation can have up to 100 shareholders, who can be individuals, trusts, or certain types of charitable organizations. This flexibility allows business owners to bring in partners and key employees as shareholders, which can help the business grow and expand.

Additionally, forming an S Corporation in Tennessee can also help business owners protect their personal assets in the event of a business sale or transfer. By structuring the sale or transfer of the business as a stock sale, rather than an asset sale, the owners can potentially lower their tax liability and protect their personal assets from any liabilities that may arise from the sale.

Overall, the benefits of a Tennessee S Corporation are numerous and can help business owners navigate the complexities of running a successful business. From the tax advantages to the limited liability protection to the flexibility in ownership structure, choosing an S Corporation can provide business owners with the tools they need to build a strong and thriving business in Tennessee.

Conclusion

In conclusion, starting an S-corp in Tennessee is a strategic choice for entrepreneurs seeking the benefits of limited liability and favorable tax treatment. One can successfully establish an S-corp by following the outlined steps, including selecting a unique name, filing the Charter for Profit Corporation, obtaining necessary licenses, and adhering to state-specific regulations. Ultimately, this corporate structure offers a strong foundation for business growth and protection, making it a worthwhile consideration for those looking to launch a venture in Tennessee.

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