Tennessee LLC, Corporation, and DBA Startup Guide

Tennessee Business Facts and Environment

Tennessee Business Facts

Tennessee is an export leader that sends over $32 billion worth of products throughout the globe in 2013. The state is home to a number of foreign-owned companies. The economy of Tennessee is made up of industry clusters in aerospace, automotive manufacturing, chemical production, health care, biotechnology, energy technology, agriculture, food production, and entertainment.

Major Companies Headquartered in Tennessee

Tennessee is the headquarters of many major companies including FedEx, HCA Healthcare, Community Health Systems, AutoZone, and Brookdale Senior Living.

Startup Environment

Tennessee is a desirable home base to many major companies, because of several attractive factors. The Volunteer State has managed to maintain sound fiscal management and budgetary discipline, which allows Tennessee to make meaningful investments in public education, workforce development and international business reach.

Tennessee is an ideal startup environment for reasons such as no personal income tax on wages and salaries, being a right-to-work state and having the lowest state debt per capita in the country, per The Tax Foundation.
Tennessee also boasts the second lowest state and local taxes paid per capita in the U.S., per The Tax Foundation.

Tennessee LLCs, Corporations, and DBAs

Step 1: Decide on a Business Structure

There are 3 basic options: a DBA, a Corporation or an LLC. Click here to learn more about business entities.

• A DBA or “Doing Business As” (also known as a “Fictitious Business Name” or FBN) is not really a separate structure, but just a different name that an individual or partners use as their business name.
• A Corporation is a separate entity (provides liability protection to the owners) that has a structure that includes shareholders, directors and officers. More complex than a DBA but the entity of choice for large companies and startups that intend to raise funding. Some professions are required to choose what is known as a “Professional Corporation” or PC (doctors, lawyers, architects, etc.).
• An LLC or “Limited Liability Company” is a newer type of business that is both a separate entity but provides very easy management (doesn’t require directors or officers) and taxation. Has largely replaced the DBA and Corporation in popularity recently as it provides liability protection but with much less complexity (and taxation) than a Corporation.

Step 2: Pick a Business Name

Choosing a business name is easier said than done – many legal and business problems can arise from picking the wrong name (you can always change it later but the less times you have to do that the better). In Step 3 we’ll show you how to search for the name in Tennessee, but we highly recommend you do the following before searching Tennessee state databases:

• Make sure you’ve covered the basics: unique, easy to understand/pronounce (practice saying it out loud: “Thanks for calling XYZ”) and can survive over time (“DVD World” is not timely). Here are some of our tips on business identity including logo and trademarks.
• Search the web for your proposed name. Search Google, Bing and DuckDuckGo as a “first sweep” for any potential conflicts, especially in your state or local jurisdiction. NOTE: If you intend to operate nationally or even internationally it will be even more important that your name be unique. This should cover many cases where a company name is being used but not officially trademarked (see next tip).
• Do a trademark search with the US Patent and Trademark Office (USPTO). This will be a very good indicator if your name will have any conflicts. There’s an art to trademark searches (trademark specialists will charge you handsomely to do a thorough search) but in our experience if you can use Google at a fairly advanced level you can reasonably clear a name yourself. Tip: search misspellings, plurals, variations of spelling, sound-alikes and other versions of your chosen name to be sure it’s not already registered.
• Make sure your company name choice is available by searching the Tennessee Business Entity Database and doing a name search on the State of Tennessee website. NOTE: Make sure to search variations of spelling, plurals and misspellings as the state may reject a name that is too similar (then you have to start all over again, wasting valuable time).

NOTE: Familiarize yourself with the Tennessee naming guidelines. LLC entity names need to contain the words Limited Liability Company or the abbreviation LLC, and certain words are restricted or prohibited.

Restrictions on Tennessee Business Name & Business Purpose

• Business names that imply affiliations with government or charities are strictly prohibited.
• Tennessee lists words that require permission from the Tennessee Department of Financial Institutions: mortgage, bank, credit union, and trust.

Step 3: Register the Business

Each state has its own requirements for registering a business. Now that you’ve chosen a business structure and selected your business name, here are the requirements to register your business in Tennessee.

How to form an LLC in Tennessee

• File the “Articles of Organization” with the Tennessee Secretary of State.
• Once the articles are filed and approved you will then need to properly organize the LLC (this also applies to “1-person LLC’s”) by holding an “Organizational Meeting” which takes contributions from the members, issues Member Certificates, adopts the company Operating Agreement and more.
• Hire a professional Registered Agent.
• Hold an Organizational Meeting to take contributions from the members, issues Member Certificates, adopts the company Operating Agreement and more (yes, even for 1 person LLCs).
• Optional: Elect S-Corporation status with the IRS by filing IRS Form 2553. Yes, even an LLC can choose to be taxed as an S-Corporation (or even a C-Corporation). 

TIP: Speak to your tax advisor about this important issue because it adds complexity to your LLC most people would rather avoid.

• Optional: Create an operating agreement. This is a legal document that outlines ownership and operating procedures of your LLC.

How to Incorporate in Tennessee

• File the “Articles of Incorporation” with the Tennessee Secretary of State.
• Hold an Organizational Meeting to properly organize the corporation, take contributions from the shareholders, elect directors and officers, issues stock, adopts the Corporate Bylaws and more.
• Hire a professional Registered Agent.
• Optional: Corporations can elect S-Corporation status with the IRS by filing IRS Form 2553. Click here to learn more about S-Corporations.

Considerations when incorporating or forming an LLC in Tennessee

• The Tennessee Secretary of State could take anywhere from 4 to 5 weeks for mail filings to process the paperwork. This may increase during peak periods.
  
  Tip: Check our order form to see how long Tennessee is currently taking to process regular and expedited orders.
  
• A Registered Agent is required for every Tennessee Corporations and LLC. The chosen registered agent must have a physical street address in Tennessee. A professional Registered Agent who will provide their address and forward any important documents to you. This is convenient if you have to move, since you won’t have to file forms or pay fees, (just update your address with your agent).

How to File a DBA in Tennessee

• Check the state database of business names.
• Complete the DBA registration form.
• Pay $20 for the filing fee.

Ready to Start Now? Let Us Do The Work

Sure, you could do all the steps above or you could spend 5-10 minutes on our order form and let us take care of it while you work on more important things.

• Learn more about our Corporation and LLC services
• Read our verified reviews and 100% Satisfaction Guarantee
• Contact our friendly support team if you have any questions

Step 4: Obtain Your Federal Employer Identification Number

Your EIN is like your Social Security Number for your company. It’s required for Corporations and LLC’s and optional for DBA’s (if you don’t have any employees, then it’s required). However, if you are a DBA and don’t obtain an EIN you will be forced to use your Social Security Number on many documents so it’s typically recommended you obtain the EIN to prevent identity theft.

To obtain an EIN you can apply online with the IRS or via IRS Form SS-4.

TIP: We will obtain your EIN for you if you we form your company.

Step 5: Open Company Bank and Credit Accounts

To keep business and personal expenses separate, you should open a separate account for your business. In addition, getting business credit cards is how you begin to build a company credit profile (corporation or LLC required) and can later qualify for larger loans and lines of credit. To open the account simply call your chosen bank and inquire on the steps to open a business bank account. Typically you’ll need a) your filed paperwork, b) your EIN and c) a company resolution authorizing your company to open the account (signed by the owners, members, officers or directors, etc.).

Top 5 Major Banks in Tennessee

• CapStar Bank
• Wells Fargo Bank
• Wilson Bank and Trust
• Fifth Third Bank
• U.S. Bank

Click here to view a list of our recommended banks in our Vendor Network.

TIP: Our business formation service includes a free banking resolution for your use.

Step 6: Set-up An Accounting System

Setup your Accounting and Record-keeping system and learn about the taxes your new company is responsible for paying.

Company documents generally are required to be kept for 3 years, including: a list of all owners and addresses, copies of all formation documents, financial statements, annual reports, amendments or changes to the company. All Tax and Corporate Filings should be kept for at least 3 years. View our “Accounting & Financial Management” section for help with setting up an accounting system and purchasing accounting software.

Review our list of Accountants, Accounting Software and Bookkeepers in our Vendor Network.

Step 7: Obtain Licenses and Permits

Now that you’ve registered your business name you need to obtain a business license for your company – this authorizes your company to do business in your city or county. Typically this also involves registering for state taxes and permits (the city may require them as part of the business licensing process).

TIP: We work with a company that can obtain and prepare business licenses and permits for you. Click here to learn more.

Step 8: Hire Employees (if applicable)

If you intend to hire yourself or others as a full or part-time employee of your company, then you may have to register with the appropriate State Agencies or obtain Workers Compensation Insurance or Unemployment Insurance (or both). View our “Employees & Payroll” section for help with hiring employees and processing payroll.

Review our list of recommended Payroll Providers in our Vendor Network.

Step 9: Obtain Business Insurance

There are many types of insurance for businesses but they are usually packaged as “General Business Insurance” or a “Business Owner’s Policy”. This can cover everything from product liability to company vehicles. A decent policy can run as little as $300/year and offers a great extra level of protection.

Click here to view our list of insurance providers in our Vendor Network.

Step 10: Systemize and Organize

Prepare the business as if someone needed to take it over and run it for you. This means have a method to process orders, pay bills, pay employees, pay taxes, maintain your permits, etc. Basically, try to make the operational aspect of the business as automated and efficient as possible so you can concentrate on growing your business. View our “Manage Your Company” section for help with systemizing and automating your business.

Step 11: Branding and Marketing

Now that you’ve set-up the company for success, you need to get the word out. Create a marketing plan for your products and services that targets your ideal customer. View our “Marketing & Sales” section for help for more information.

Step 12: Annual and Ongoing Requirements

DBA: Your Fictitious Business Name should be valid for 5 years (unless you change company name or other information listed on the FBN) at which point you’ll need to renew it with the county.

LLC: Tennessee corporations are required to file a Periodic Report with the Tennessee Secretary of State each year, due on or before the first day of the fourth month following the end of the taxable year, in addition to general taxation. The filing fee is $50 per member, with $300 being the minimum and $3,000 being the maximum. Information on your business’ taxes can be found here.

Corporation: Business in Tennessee should file a report annually with the Secretary of State of Tennessee each year, due on or before the first day of the fourth month following the end of the taxable year. The filing fee is $20 + a 2.29% surcharge if filing online.

Click here to view our MyCompanyWorks Premium™ service which can automate most or your ongoing compliance tasks.

Important Tennessee Contacts

Tennessee Secretary of State

Division of Business Services (for Corporation and LLC filings)
312 Rosa L. Parks Avenue, Snodgrass Tower, 6th Floor
Nashville, TN 37243
Phone: 615-741-2286

Tennessee Taxation Departments

• Tennessee Department of Revenue

Tennessee Labor and Employment Departments

• Department of Labor and Workforce Development

Tennessee Startup Resources

1. Small Business Administration (SBA) Tennessee District Offices

• Tennessee District Office

2. SCORE Tennessee

• The Nashville SCORE chapter provides business mentoring services and educational workshops to entrepreneurs and business owners located in the 30 counties comprising middle Tennessee.

3. Tennessee Legal Statutes

• 2013 Revisions to the Tennessee Business Corporation Act – a general understanding of corporate law generally and the workings and implications of the current Tennessee Business Corporation Act specifically.
• Tennessee Revised Limited Liability Company Act – the specific act that applies to Tennessee LLC’s.
• 2010 Tennessee Code Title 62 – Professions, Businesses and Trades – this includes regulations on Tennessee’s professions and businesses.

4. Tennessee Chambers of Commerce

• Tennessee Chamber of Commerce
• Nashville Area Chamber of Commerce
• Dickson County Chamber of Commerce, TN
• Bristol Chamber of Commerce, TN
• Rutherford County Chamber of Commerce

5. Tennessee SmartStart

• Tennessee SmartStart provides resources through an interactive, step-by-step guide designed to assist early stage business owners establish a business in Tennessee and navigate rules and regulations.

6. Tennessee Angel Investors

• List of Angel Investors in Tennessee

7. Tennessee Business News

• The Tennessean
• Nashville Business Journal

8. TNECD

• The Tennessee Department of Economic and Community Development’s mission is to develop strategies which help make Tennessee the No. 1 location in the Southeast for high quality jobs.

9. Tennessee Small Business Development Center

• For over 30 years, the Tennessee Small Business Development Center (TSBDC) network has been empowering small business owners, entrepreneurs, and individuals with a business idea to innovate new products and services that compete in the global marketplace.

10. Sustainable Tennessee

• Tennessee Environmental Council helped launch the Sustainable Tennessee coalition in 2007, with the goal of developing a statewide Sustainability Agenda.