Starting a Business in Tennessee
Starting a business can be an exciting, yet scary, undertaking. Many entrepreneurs have a great product or service to offer, but they don’t know exactly how to get their business off the ground. Choosing the right CPA firm to help you get started may be one of the most important decisions you’ll make.
Things to do before you are ready to do business
Keeping track of the required filings, deadlines, licenses, and registrations when starting a business in Tennessee can be overwhelming. We are here to help. Below is a guide of the things you should consider when starting a new business.
Employer ID Numbers
An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number, and is used to identify a business entity. Generally, businesses need an EIN. Apply for a Employer Identification Number (EIN) with the IRS.
Corporate Status (S Corp)
S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Learn if your business qualifies for S corporation status and how to submit Form 2553 (Election by a Small Business Corporation) to the IRS.
Worker’s Compensation Coverage
If you plan to have five or more full-time or part-time employees, you must obtain worker’s compensation coverage for all covered employees. You may contact an insurance agency for more details.
Tennessee Tax and License Registrations
You can register for many tax IDs and licenses at the Tennessee Department of Revenue’s New Taxpayer Registration website. These include alcohol licenses, business tax registrations, franchise and excise tax registrations, sales and use tax registrations and more.
The Tennessee Alcoholic Beverage Commission (TABC) issues several alcoholic beverages related licenses to qualified applicants. Learn more about Tennessee alcohol licenses.
Business Tax License
Generally, if you conduct business within any county and/or incorporated municipality in Tennessee, then you should register for and remit business tax. Business tax consists of two separate taxes: the state business tax and the city business tax. Learn more about Tennessee business tax.
Franchise and Excise Tax
If you are a corporation, limited partnership, limited liability company, or business trust chartered/organized in Tennessee or doing business in this state, then you must register for and pay franchise and excise taxes. The franchise tax is based on the greater of net worth or the book value of real or tangible personal property owned or used in Tennessee. The excise tax is based on net earnings or income for the tax year. Learn more about Tennessee franchise and excise tax.
Sales and Use Tax
Generally, the sales tax applies to the retail sale of tangible personal property and certain services such as lodging services, telecommunications services and installation and repair of tangible personal property. The sales tax is comprised of two parts, a state portion and a local portion. Learn more about Tennessee sales and use tax.
Please contact us if you need assistance in applying for new business tax registrations and licenses. Also, as you set-up your new business, we can assist you with accounting processes, QuickBooks set-up, tax compliance and planning, technology, and employee benefit plans.