How to Start a Business in Tennessee: 8-Step Guide (2026)

Tennessee has no personal income tax, a business-friendly regulatory environment, and major metro areas like Nashville and Memphis driving growth. LLC formation costs $300 — higher than average — but the annual savings from zero income tax can offset that quickly. Here's everything you need to start a business in Tennessee in 2026.

Step 1: Choose Your Business Structure

Most Tennessee small businesses form an LLC for liability protection and tax flexibility. Your options:

Structure	Liability Protection	Filing Cost	Best For
Sole Proprietorship	None	$0	Testing an idea
LLC	Yes	$300	Most small businesses
Corporation	Yes	$100+	Seeking investors

Why LLC?

LLCs are the most popular structure in Tennessee. They protect personal assets, offer pass-through taxation, and Tennessee's lack of personal income tax means your LLC profits are only taxed at the federal level (plus franchise/excise taxes at the entity level).

Step 2: Choose and Check Your Business Name

Search name availability at sos.tn.gov. Tennessee does not require a name reservation before filing — your name is approved when your Articles of Organization are processed.

✓ Name must include "LLC" or "Limited Liability Company"
✓ Must be distinguishable from existing entities in Tennessee
✓ Optional: reserve a name for 120 days ($20)

Step 3: File Your Articles of Organization

File with the Tennessee Secretary of State to officially create your LLC.

Method	Cost	Processing
Online (recommended)	$300 + processing fee	1-2 business days
Mail	$300	2-3 weeks

The $300 fee covers LLCs with up to 6 members. If you have more than 6 members, add $50 per additional member (maximum $3,000).

Step 4: Designate a Registered Agent

Tennessee law requires every LLC to have a registered agent with a physical street address in the state. This person receives legal documents on your behalf.

You can serve as your own agent (free) or hire a professional service ($100-$200/year). A professional agent keeps your home address off public records.

Step 5: Get Your EIN (Free)

Apply for a free Employer Identification Number from the IRS at irs.gov. You need this for a business bank account, taxes, and hiring. Takes about 5 minutes online.

Watch out

Many websites charge $50-$150 to file your EIN. It is always free directly from the IRS.

Step 6: Get Business Licenses & Permits

Tennessee has no universal general business license. But you may need:

✓ Business tax registration: Required if gross receipts exceed $3,000/year. Register with the Tennessee Department of Revenue ($15).
✓ Industry-specific licenses: Contractors, food service, healthcare, and other regulated industries need state permits.
✓ Sales tax permit: Register with the Department of Revenue if you sell taxable goods. Tennessee state sales tax is 7% (plus local up to 2.75%).

Step 7: Open a Business Bank Account

Separating personal and business finances is essential for maintaining LLC liability protection. You will need your Articles of Organization, EIN, and a government-issued ID.

Step 8: Register for State Taxes

Tennessee LLCs must register with the Tennessee Department of Revenue for:

✓ Franchise tax: 0.25% on the greater of net worth or real/tangible property in Tennessee. Minimum $100/year.
✓ Excise tax: 6.5% on net earnings. This is Tennessee's equivalent of a corporate income tax — it applies to LLCs.
✓ Sales & use tax: 7% state rate + local (up to 2.75%). Register via the Tennessee Taxpayer Access Point.

No personal income tax

Tennessee does not tax personal income — including LLC pass-through profits. Your LLC profits are only subject to federal income tax plus Tennessee franchise and excise taxes at the entity level.

Total Cost to Start a Business in Tennessee

Item	Cost	Frequency
Articles of Organization	$300	One-time
EIN (IRS)	$0	One-time
Registered Agent (optional)	$100-$200	Annual
Business Tax Registration	$15	One-time
Annual Report	$300	Annual
Franchise Tax (minimum)	$100	Annual
General Liability Insurance	$300-$1,000	Annual
FIRST YEAR TOTAL	$815-$1,915+

Tennessee Business Resources

✓ Tennessee Secretary of State — LLC filing, name search, annual reports
✓ Tennessee Department of Revenue — Tax registration, franchise/excise taxes, sales tax
✓ Tennessee SBDC — Free business counseling and startup support

Common questions n=6

Frequently Asked Questions

Q.01 How much does it cost to start a business in Tennessee?

The minimum cost is $300 to file an LLC (Articles of Organization). The annual report is also $300/year for LLCs with 6 or fewer members. Total first-year cost with basic insurance runs $1,200-$2,500 depending on your industry.

Q.02 Do I need a business license in Tennessee?

Tennessee has no universal general business license. However, businesses making over $3,000 in annual gross receipts must register with the Department of Revenue ($15). Certain industries need state or local licenses. Check the Tennessee SmartStart portal.

Q.03 How long does it take to form an LLC in Tennessee?

Online filing through the Tennessee Secretary of State portal is typically processed within 1-2 business days. There is no expedited option since online processing is already fast.

Q.04 What taxes do businesses pay in Tennessee?

Tennessee LLCs don't pay personal income tax. However, they are subject to a franchise tax (0.25% of net worth, minimum $100) and excise tax (6.5% on net earnings). Sales tax is 7% state rate plus local additions.

Q.05 Does Tennessee have a franchise tax?

Yes. All LLCs doing business in Tennessee must pay a franchise tax of 0.25% on the greater of net worth or real/tangible property in the state, with a minimum payment of $100 per year.

Q.06 Can I be my own registered agent in Tennessee?

Yes. Your registered agent must have a physical street address in Tennessee and be available during business hours. Many owners use a professional service ($100-$200/year) for convenience.