Starting a Business in Tennessee: The Legal and Tax Checklist Most Entrepreneurs Skip

Tennessee remains one of the most business-friendly states in the country. With no personal income tax, a relatively low cost of living, and a steadily growing economy, it offers an attractive environment for entrepreneurs. Modern technology has also removed many traditional barriers, making it easier than ever to launch a new venture.

That said, forming a business is not simply a matter of filing paperwork. Unfortunately, state and federal regulations impose numerous legal, tax, and reporting obligations, many of which are not obvious without proper guidance. Missed filings or compliance failures can lead to penalties, unnecessary fees, or even administrative dissolution of your entity.

To provide a starting point, we’ve prepared a brief overview of the general requirements for launching a business in Tennessee. This summary highlights general requirements, but every business is different. Requirements will vary based on entity structure, industry, ownership, and location which is why working with an attorney and CPA from the outset is one of the most valuable investments you can make.

What You Need To Do At Formation

• Choose your entity structure (LLC, S-Corp, C-Corp, sole proprietorship)—this determines liability, taxation, and annual filings

  
  

• File formation documents with the Secretary of State (Articles of Organization for LLCs, Articles of Incorporation for corps). The Tennessee LLC fee starts at $300 (higher than most states).

  
  

• Draft an Operating Agreement or Bylaws which are the rules and governing regulations of the business. If you have partners, these are absolutely essential.

  
  

• Get a federal EIN from the IRS.

  
  

• Register with the TN Department of Revenue through TNTAP for business tax, franchise & excise tax, sales tax, and withholding tax. These taxes may be owed monthly or yearly.

  
  

• Get your local business license from your county/city clerk ($15 fee) as you can’t legally operate without it

  
  

• Obtain any industry-specific permits (food, alcohol, healthcare, construction, etc.)

  
  

• Open a business bank account —commingling personal and business funds can pierce your liability protection

What You Likely Owe Every Year After That

The following chart provides a practical estimate of the typical compliance obligations, filing deadlines, and associated costs involved in maintaining your business. Actual requirements and expenses may vary depending on your entity type, tax elections, industry, and operational structure.

Obligation	Due*	Cost	Consequence
Annual Report (SOS)	Apr 1	$300+ LLC / $20 Corp	Dissolution after 120 days
Franchise & Excise Tax	Apr 15	$100 min (even at $0 profit)	Penalties + interest
Business Tax Return	Apr 15	Varies by gross receipts	Up to 25% penalty
Business License Renewal	Fiscal year end	$15 per jurisdiction	Delinquency charges
Sales Tax (if applicable)	Monthly/Quarterly	7% + local rates	Penalties + interest
Federal Income Tax	Apr 15	Varies	IRS penalties

A few things that catch new owners off guard: franchise tax is owed even with zero revenue (minimum $100/year).

The LLC Annual Report costs $300 every single year.

Tennessee has four separate categories of business tax (business tax, franchise tax, excise tax, and sales tax) all with different filings. And if you close your business, you have 15 days to notify the Department of Revenue and file a final return.

See! It's a lot! But we believe its worth it.

Why This Matters

All of this is manageable with the right people in your corner. An attorney ensures your structure and documents are solid. A CPA keeps your filings on time and your tax strategy optimized. Together, they prevent the kind of mistakes that cost far more to fix than to avoid.

Conclusion

Starting a business should feel exciting - not overwhelming. At our firm, we work with entrepreneurs and business owners to build a proper legal foundation from day one, ensuring your entity, documents, and compliance structure are set up correctly. Just as importantly, we help implement systems designed to keep you on track, including reminders of ongoing obligations and filing deadlines. Our goal is to remove the stress, reduce the risk, and allow you to focus on growing your business. Enjoy the part that made you want to start it in the first place.

Please reach out today for a free consultation to discuss your legal needs.

If you are interested in our flat fee business packages, please click here.

DISCLAIMER: This article is provided for general informational purposes only and does not constitute legal advice. Reading this material does not create an attorney-client relationship. Business requirements vary based on specific facts and circumstances. You should consult with a qualified attorney and CPA regarding your particular situation.