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.
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 the business is located within 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 that 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 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 Business 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 or your exempt status, check with your county clerk.
The cost of the business license varies by location, but is typically less than $30.
Employer Identification Number (EIN) – Many businesses will register with the Internal Revenue Service (IRS) for an EIN or Employer Identification Number. The EIN is the business equivalent for 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.
Tennessee Business 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. 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) in order 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.
Assumed Name Registration – While not a business license, it’s common for Sole Proprietorships and Partnerships operating under a 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 a few of the most common business licenses, but there are way too many licenses and permits in Tennessee for us to keep track of. Before starting your business, check with the City Hall, County Clerk, Chamber of Commerce and/or Economic Developer in your area to get more information regarding business licensing. Additionally, there are companies like IncFile or CorpNet that can do the research to ensure you have the proper federal, state and local licenses.