Doing Business in Tennessee: Everything You Need To Know

Doing business in Tennessee occurs when you operate a company here for profit and Tennessee ranks fourth when it comes to advantages for small businesses.3 min read

Doing business in Tennessee occurs when you operate a company in the state for profit. According to a report by Area Development, Tennessee ranks fourth in the nation when it comes to advantages for small businesses. This is measured by the cost of doing business, including everything from workforce to real estate, as well as local legislation, business taxation, state capital investment, and other incentives. Other states that rank high in these measures include Texas, South Carolina, and Georgia.

Benefits of a Tennessee-Based Business

More than 70,000 private sector jobs in Tennessee have been created by Bill Hagerty, economic development commissioner, and Bill Hasham, governor. This is a record-setting level of growth that has made national headlines.

165px;" class="adsbygoogle">More than $32 billion in Tennessee-made products were exported globally in 2013 alone. Nearly 900 foreign-owned companies are headquartered in the state, employing more than 113,000 residents. International brands based in Tennessee include Smuckers, Unilever, Mars, Volkswagen, Electrolux, Nissan, Whirlpool, Gibson, and Jack Daniels. That's not all--FedEx, Dollar General, International Paper, Dollar General, Community Health Systems, AutoZone, Eastman Chemical Company, Nissan North America, Bridgestone, ServiceMaster, Tractor Supply Company, and Regal Entertainment Group also call Tennessee home.

In 2014, the state was ranked first in the nation for Automotive Manufacturing Strength in Business Facilities for the fifth consecutive year.

Small business owners can benefit from Launch TN. This partnership funds the expansion of fast-growing companies based in the state. From technology and research and development to data and call centers, Tennessee has the manpower and resources your company needs to take off. More than 250 call centers state-wide employ more than 14,000 residents.

Companies also benefit from the fact that Tennessee is a right to work state, its central location, business-friendly laws, and low corporate taxation.

Science and Technology in Tennessee

Some of the biggest sectors of the state's $287 billion economy include health care, agriculture, biotech, aerospace, energy, entertainment, auto manufacturing, chemical production, logistics, and food production. This sector supports one of the world's most innovative and influential R&D centers. Global research institutions based in Tennessee include:

  • The University of Tennessee
  • Vanderbilt University
  • Oak Ridge National Laboratory
  • St. Jude's Children's Research Hospital
  • U.S. Airforce Arnold Engineering Development Complex

The state's R&D industry includes more than 10,000 businesses employing more than 138,000 Tennessee residents.

Naming Your Tennessee Business

If you plan to start a sole proprietorship or partnership in Tennessee, you must do business under your own legal name in most cases. Doing business as (DBA) names are available for corporations and limited liability companies.

When you decide on a name for your LLC or corporation, check the state's database and the U.S. Patent and Trademark Office trademark search system to make sure it is available. You can usually register a business online under a DBA name. In some counties, however, you may need to appear in person, so check with the county clerk's office to learn more about regulations.

When filing, you'll need to provide:

  • Your complete name, address, and telephone number
  • The name you want to use for your business
  • The address in Tennessee where your business is located

The filing fee for the DBA form is $20 and can be paid by check or cash. Once the process is complete, the state will confirm that your business name is registered.

State Business Taxes

When deciding to open a new business, you need to consider the state and local tax rates. Tennessee charges 6.5 percent excise and franchise tax on corporate income and state sales tax of 7 percent. Local sales tax varies by county but averages 2.45 percent.

As of July 2016, Tennessee using triple-weighting sales apportionment to calculate excise tax. This relieves the franchise and excise tax costs for larger companies based in the state while emphasizing sales tax over personal property and payroll tax.

Individual income is not taxed in Tennessee. However, a 6 percent tax called Hall income tax is applied to income from dividends and interest. Legislative sessions have recently focused on gradually eliminating this tax. Before opting to start a business in Tennessee, be sure to review and understand applicable tax laws.

If you need help with doing business in Tennessee, you can post your legal need on Legal Marketplace's marketplace.

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