How To Start a Business in Tennessee: 10 Steps (2025)

Learn how to start a business in Tennessee, including choosing a business name, obtaining a license, and registering your business.

This content doesn’t contain and isn’t meant to provide legal, tax or business advice.*

Tennessee has emerged as a popular spot for new businesses in recent years. As of 2024, more than 711,000 small businesses call the Volunteer State home. Its low cost of housing, major manufacturers, and competitive corporate tax rate draw entrepreneurs from across the country.

Whether you’re looking to start a business in the urban hubs of Nashville or Memphis, in smaller cities like Chattanooga or Knoxville, or in one of the abundant rural regions, here are nine steps to help you start a business in Tennessee. 

How to start a business in Tennessee

1. Choose a business idea
2. Name your Tennessee business
3. Create a business plan
4. Choose a business structure
5. Get a federal employer identification number (EIN)
6. Obtain business licenses and permits
7. Examine business insurance options in Tennessee
8. Open a business bank account
9. Get funding for your business entity
10. Market your business

Whether you’re a longtime resident of Tennessee or moving to the State to set up your business, here’s what you need to do to get started: 

1. Choose a business idea

A great business idea can vault you past the competition. You may want to create a new product or service or improve an existing one. 

Here are two questions you can ask yourself to find your next great business idea:

• Who is your customer? Analyze your target market, paying particular attention to customers who aren’t fully served by current offerings. You may want to survey prospective customers, investigate successful businesses in your sector and look into industry trends. Conduct market research to steer you in the right direction before you open your doors for business.
• What’s your projected profitability? It isn’t enough to simply make money. You have to make more than you spend over the long term. How many products or services do you need to sell to cover your costs and turn a profit? How long will this take?

2. Name your Tennessee business

After finding a great business idea, you need to choose a business name that helps it stand out from the crowd. Customers can glean a lot about a business’s product offerings, prices, and quality simply from its business name. Here’s how to secure a strong business name for your Tennessee business:

• Register your original name. Before registering your business online in Tennessee, confirm another business hasn’t already claimed it. The Tennessee Secretary of State provides a business name availability tool to help with this. Once you have a name, file Tennessee Form SS-9425: Application for Name Reservation by mailing or emailing it to the Secretary of State. The filing fee is $20.
• Include required phrases. Tennessee requires LLCs to include the term “Limited Liability Company” or its abbreviations (“LLC” or “L.L.C.”) in their official business names. Tennessee corporation names must contain the word “Corporation,” “Company,” or “Incorporated” (or an abbreviation of one of these words). Tennessee professional corporations must include the phrase “Professional Services Corporation” or the abbreviation “PSC.”
• Register a DBA. DBA stands for “doing business as.” The term applies to companies organized under one legal business entity that interface with customers using an assumed name. For instance, Whittinghill Agricultural Ventures LLC might use Happy Chickens Grain Feed as a DBA. To use a DBA, register an assumed name with the state of Tennessee for $20. 
• Reserve an online domain name and social media handles. Secure a domain name and social media handles aligned with your business name or DBA, so your customers can find you online. You can use a domain name generator to create a URL for your business website.

3. Create a business plan

Many successful small business owners craft and follow business plans to establish organizational objectives, plot growth, and set benchmarks for success. Most of these also include a financial plan balancing business income with business expenses.

If you’re unsure how to start, consult a business plan template or browse business plan examples for inspiration. Comprehensive business plans include:

• An executive summary
• A mission statement and company description
• An outline of the organizational and managerial structure
• An operations and logistics plan, including forecasted business costs
• A portfolio of products or services
• Market research and analysis
• A marketing plan
• A customer segmentation report

4. Choose a business structure

Your new business entity will likely take one of four business structures: sole proprietorship, limited liability company (LLC), general partnership, or corporation. Each has its benefits, operational requirements, and tax exposure. Here’s how these structures compare:

• Sole proprietorship. Sole proprietorships are owned and operated by a single person. They’re not recognized as legal entities, meaning there’s no legal distinction between an owner’s personal and business expenses. These informal business structures have few legal paperwork requirements and keep all their profits. 
• General partnership. A general partnership is similar to a sole proprietorship, but involves two or more partners who share in the company’s profits, losses, and assets.
• LLC. A limited liability company (LLC) is a formal business structure owned by individuals called LLC members. Members control their company’s operations without the oversight of a corporate board of directors and often abide by an LLC operating agreement. LLCs provide personal liability protection, meaning owners’ personal assets are not at risk.
• Corporation. A corporation is a legal business entity owned by shareholders. Like LLCs, corporations do not mingle company assets with their owners’ personal assets. The shares-based corporate business structure makes it easier to welcome new shareholders and raise capital for business expenses. Corporations are taxed at a corporate rate, which differs from the personal income tax rate. In Tennessee, the corporate excise tax rate is 6.5%. 

Before you choose a business structure, it’s important to note that Tennessee corporations must file a corporate charter via the Tennessee Secretary of State’s website or by mailing in a form. 

The filing fee is $100. If your corporation is based outside of Tennessee and wants to expand into the state, file Tennessee’s Form SS-4429 and pay a $20 filing fee to the Secretary of State’s office. 

A $600 fee accompanies the separate application for the Certificate of Authority. Further details about how to register a business in Tennessee are included in the Tennessee Smart Start Small Business Guide.

5. Get a federal employer identification number (EIN)

If your Tennessee business plans to hire employees, you must apply for a federal employer identification number (EIN) with the Internal Revenue Service (IRS). An EIN functions as a business’s federal tax number.

You’ll need to present your EIN in various business ownership scenarios, from hiring employees to establishing a business bank account and paying business taxes. You also need your EIN to obtain a state sales tax number from the Tennessee Taxpayer Access Point (TNTAP).

6. Obtain business licenses and permits

Tennessee business law subjects most companies to licensing and permitting regulations. Many Tennessee business licenses are issued at the county level. The Tennessee Department of Revenue provides more information to get you started. Common Tennessee business licenses include:

• Standard business license. If your Tennessee business has gross receipts of $100,000 or greater, you must obtain a standard business license from your local county clerk. The registration fee is $15.
• Minimal activity license. Tennessee businesses with gross receipts of more than $3,000 but less than $100,000 must obtain a minimal activity license from their local county clerk. (You don’t need a license if your business income from gross receipts is less than $3,000.) The registration fee is $15.
• Sales and use tax certificate. Tennessee LLCs must collect a 7% sales tax on goods and certain services, and localities can add additional amounts. You’ll need a Sales and Use Tax Certificate to conduct retail sales in the state legally. Many Tennessee industries require unique certification and business licenses, including medicine, architecture, accounting, insurance, home inspection, and cosmetology. Consult the Tennessee Department of Commerce & Insurance website for more details.

This is also a great time to research possible business certifications—national, state, and local—that can help your business access opportunities for certified small businesses and minority-, veteran- and women-owned businesses.

7. Examine business insurance options in Tennessee

Starting a business in Tennessee (or any state) comes with some risk. Even with the personal asset protection afforded by LLC and corporate business structures, most small business owners purchase insurance to shield their business assets against costly mishaps. In Tennessee, some types of insurance, like workers’ compensation insurance, are required by state law (with some conditions). Other insurance is not state mandated but may be required by other entities such as landlords or lenders.

The Tennessee Department of Commerce & Insurance provides business resources to help you determine what insurance you need. Standard business insurance policies include:

• Workers’ compensation insurance. Tennessee requires all businesses with five or more employees to purchase workers’ compensation insurance to cover on-the-job injuries.
• Commercial general liability insurance. Commercial general liability insurance (CGL) protects businesses from financial claims involving property damage, bodily injury, libel, slander, and misleading advertising.
• Professional liability insurance. A professional liability insurance policy protects your business against claims that your advice or services caused a customer financial harm. For example, a real estate agent who fails to note mold in a basement can be liable for damages.
• Cyber liability insurance. Cyber liability insurance protects against financial losses from cyberattacks and data breaches. You may find this coverage invaluable (and more comprehensive than data breach insurance alone) if your business collects customers’ credit card numbers or other personal information.
• Commercial automobile insurance. If you own a vehicle in Tennessee, it must be covered by vehicle insurance, whether it’s for commercial or personal purposes. For your business vehicles, obtain commercial auto insurance.

8. Open a business bank account

Choose a financial institution to handle your company’s business banking. Use this account to separate personal and business expenses when paying workers or business tax and to receive income.

9. Get funding for your business entity

It can be really hard to start a business without money, so new companies often need cash infusions to get off the ground. Several Tennessee agencies connect business owners with funding, grants, and information about tax benefits, including the Tennessee Small Business Development Centers network and the Tennessee Department of Economic and Community Development.

Additionally, the US Small Business Administration is an independent federal agency supporting entrepreneurs and small businesses. It maintains an office in Nashville.

To save on taxes and stretch your business budget a bit further, check incentives offered by your state or city government. The Tennessee Department of Revenue lists a plethora of incentives on its website, such as the Jobs Tax Credit, which allows qualified businesses a credit against franchise and excise taxes based on capital investment and the number of jobs created.

10. Market your business

Marketing starts with building a brand and identifying what makes it stand out. Effective marketing takes into consideration color schemes, fonts, logos, and slogans. Once you’ve honed in on your brand identity, you’re ready to promote your business online and in person. 

Popular methods include:

• Awareness content (articles, blog posts, videos, newsletters)
• Store displays
• Pay-per-click (PPC) web ads
• Social media accounts
• Influencer marketing campaigns
• Partnerships
• TV and radio ads

Examples of Tennessee businesses 

Uncommon James

Uncommon James, founded by reality TV star Kristen Cavallari, is a standout jewelry and lifestyle brand based in Nashville. Known for its stylish yet affordable pieces, Uncommon James offers a range of jewelry, home décor, and beauty products that blend modern sophistication with a laid-back Southern vibe.

Singer

Edward Singer patented the first practical sewing machine in 1851. Since then, Singer, a Tennessee company, has cemented its brand and introduced numerous inventions, including the world’s first zig-zag sewing machine, the first electronic machines, and even a sewing assistant app for mobile devices. 

Vibrant Meals

Founded in 2016, Vibrant Meals was built on a passion for functional, nutritious food. Rooted in Tennessee, Vibrant Meals delivers on this mission by making wholesome eating effortless for busy people across Nashville, Franklin, and Chattanooga. Thanks to Zapiet’s seamless Shopify integration, customers can easily schedule local pickup or delivery, ensuring fresh, nourishing meals are always within reach.

Resources and tips for starting a business in Tennessee

Starting a successful business can take a village, so don’t be afraid to ask for support during your startup days. Here are some resources to get you up and running: 

• Shopify Starting a Business Checklist outlines essential steps to get your business off the ground.
• The Tennessee Department of Economic & Community Development’s (ECD) Business Enterprise Resource Office (BERO) offers a comprehensive Tennessee Smart Start Guide with step-by-step instructions for those looking to start their own business.
• The Tennessee Small Business Administration (SBA) office gives access to SBA loans and grants, federal programs, and mentorship opportunities for new and growing businesses.
• Launch Tennessee supports tech-based startups with mentorship, accelerator programs, and funding opportunities to help businesses scale in the state.
• The Tennessee Technology Development Corporation (TTDC) focuses on innovation hubs, funding options, and networking events for tech startups.
• The Tennessee Secretary of State offers services for business registration, incorporation and trademark filings, as well as guidance on state regulations.
• Tennessee SCORE provides free mentorship from experienced business leaders, and workshops and webinars to help entrepreneurs grow their small businesses.

Starting a business in Tennessee FAQ

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

Wondering how to start a small business in TN? According to the Tennessee Secretary of State's website, filing fees for a limited liability company (LLC) are $300, while fees for incorporating a corporation are typically $100. Additional costs may arise depending on business type, due to the need to obtain any necessary permits or licenses, which can vary based on your industry. It’s also important to consider other costs like insurance, marketing, and business resources, which can fluctuate depending on the scale and needs of your business. You can find more details on the fees via the Tennessee Secretary of State.

Is Tennessee a good state to start a business?

Tennessee is highly conducive for small businesses (more than 711,000 small businesses as of 2024), due to its vibrant economy, diverse industries, and significant small business employment—more than 1.1 million people are employed by small businesses in Tennessee. The state is also home to ample business resources like the Tennessee Department of Economic & Community Development’s Business Enterprise Resource Office (BERO), which offers the Tennessee Smart Start Guide. Entrepreneurs can also access SBA loans and grants through the Tennessee SBA office or receive mentorship from Tennessee SCORE.

What is a good business to start in Tennessee?

What type of business you should start in Tennessee depends on the area’s market demand and your skills, but popular industries include health care services, real estate, and tourism-related businesses. Given the state’s strong presence in music and entertainment, opening a music venue, recording studio, or event planning service can also be profitable. Businesses that cater to outdoor enthusiasts, like hiking gear shops or eco-tourism services, can also thrive due to Tennessee’s rich natural landscape.

What do I need to start a business in Tennessee?

Here’s what you need to do to start a business in Tennessee. First, select a business structure (e.g., LLC, corporation, sole proprietorship), then register your business with the Tennessee Secretary of State and obtain any necessary licenses or permits. You’ll also need a federal employer identification number (EIN) from the IRS, business insurance, and a business bank account. Depending on the business, you might need specialized permits or zoning clearances, particularly for retail or food-related ventures.

Can I start a business in Tennessee without a physical location?

If you want to run your business from home in Tennessee, you’re in luck. From ecommerce to consulting, there are plenty of ways you can start a home business in Tennessee. For businesses that provide online services or products, a physical storefront is not required. However, you will still need to register your business with the state, secure any necessary permits, and maintain a professional business address for legal and tax purposes—even if you don’t have a brick-and-mortar location.

*Shopify Capital loans must be paid in full within a maximum of 18 months, and two minimum payments apply within the first two six-month periods. The actual duration may be less than 18 months, based on sales.