What Business Licenses and Permits are Needed in Tennessee?

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What Business Licenses and Permits are Needed in Tennessee?

Starting a business in Tennessee will mean potentially registering with a number of federal, state, and local agencies.  Let’s take a look at common licenses and permits a business will register for in Tennessee.

Before applying for any licenses, the legal structure of the business will need to be established. Learn more about the differences between the sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC).

Related: Comparison of Business Entities

County Business Licenses

Most businesses in Tennessee (even home-based businesses occasionally) need to purchase an annual business license with the County Clerk in the county where the business is located and possibly with the Municipal Clerk if it is located within the city limits. The two common licenses are the Standard Business License and the Minimal Activity Business License.

Standard Business License – The Standard Business License is for businesses that gross more than $10,000 annually and are not exempt. You initially file for the Standard Business License with your county clerk, and then you file a tax return of your gross receipts (gross sales) with the TN Department of Revenue. Keep in mind that your tax year is based on the fiscal year-end of your business.  The fee for the Standard Business License is $15 annually for each location.

You may also need to obtain a business license from your municipal clerk if your business is located within certain city limits.

Minimal Business Activity License – The Minimal Business Activity License is for businesses that gross more than $3,000 and less than $10,000 annually. You initially file the Minimal Activity License with your county clerk, but no annual report on gross receipts is required. Your license must be renewed at the end of the fiscal year-end of your business.  The filing fee for the Minimal Business Activity License is $15 annually for each location.

You may also need to obtain a business license from your municipal clerk if your business is located within some city limits.

Some businesses don’t need to register for either a Standard or Minimal Activity Business License. Those include:

    • Businesses with gross revenue of less than $3,000 annually.
    • Certain Services (but not tangible property sales) – Exempt services generally include but are not limited to doctors, dentists, veterinarians, attorneys, accountants, insurance agents, loan companies, manufacturers, and farms.  They may be subject to business tax on sales. If you are unsure of your exempt status, check with your county clerk.

The cost of the business license varies by location but is typically less than $30.

Building & Zoning Permits

ZoningDepending on the location of the business, it’s important to verify whether the business needs an occupancy permit or has specific zoning regulations to follow. Depending on city requirements, home-based businesses may need to apply for a home occupation permit.

Building Permit – A building permit may be needed from the city or county building and planning department if there is any construction or renovations to a facility.

Signage Permit – Some municipalities require a permit before adding signage.

Sales Tax Permit

Generally, businesses making sales within any county and/or incorporated municipality in Tennessee will need to register for and remit business tax.  The business tax consists of two separate taxes: the state business tax and the city business tax.  With a few exceptions, all businesses that sell goods or services must pay the state business tax.  This includes businesses with a physical location in the state as well as out-of-state businesses performing certain activities in the state.

Learn how to register for a Tennessee Sales Tax Permit from the Tennessee Department of Revenue.

Certificate of Resale

Businesses purchasing merchandise to resell will usually want to obtain a Tennessee Certificate of Resale (often referred to as a Resale Certificate) to not pay sales tax for merchandise that is being resold to customers.

Professional License

A variety of professions in the state are regulated and need to be registered before offering certain services.  A few common professions that require licensing in Tennessee include; appraisers, home inspectors, food establishments, barbers, scrap metal companies, and many more.  

Employer Identification Number (EIN)

Many businesses will register with the Internal Revenue Service (IRS) for an EIN (also referred to as a FEIN, Federal Employer Identification Number, or Federal Tax ID Number). The EIN is the business equivalent of a Social Security Number for an individual. Corporations, Limited Liability Companies, Partnerships, and Sole Proprietorships with employees will all need to register for one. Sole Proprietorships without employees can use the owner’s Social Security Number.

There is no cost for an EIN, and it only takes a few minutes to get.

Learn how to apply for an EIN

 

Assumed Name Registration

While not a business license, it’s common for Sole Proprietorships and Partnerships operating under a business name that is different from the full name of the owner(s) to register for an Assumed Name (also known as a Doing Business As or DBA) with the Register of Deed’s Office in the county where the business is located.

 

These are just some of the most common business licenses a new business will need to register before starting. Before starting your business, be sure to check with the County Clerk’s Office, City Hall, Chamber of Commerce, and/or Economic Developer in your area to get more information regarding business licensing.

For some additional peace of mind, companies like IncFile or CorpNet can do the research and ensure you have all of the proper federal, state, and local licenses to start your business.