Tennessee Startup

Whether you're starting a new for-profit corporation, nonprofit corporation, LLC, or even if you've already registered in another state but you want to operate as a Tennessee corporation, we've got information for you that can help you make the best filing decisions.

While your entity type is a decision best made with the advice of your lawyer or tax advisor, the information below is designed to introduce you to a few of the main types of Tennessee startup businesses.

Tennessee Assumed Name

A corporation may file an Application for Registration of Tennessee Assumed Name in order to register a name to use as a DBA, or Doing Business As. However, in Tennessee, assumed name registration for sole proprietorship or partnership DBAs are not required.

Tennessee Corporation (For-profit)

Forming a Tennessee corporation creates a new legal entity, one that is considered legally separate from its owners. (Compare this to a DBA, or Doing Business As, which is not legally distinct from its individual owner or owners.) A corporation provides limited liability protection to its owners.

To form a corporation in Tennessee, your business must draft and submit Articles of Incorporation to the Division of Business Services, along with the appropriate filing fee.

While it is not required that the owner of a Tennessee corporation must be a resident of Tennessee, the corporation must have a registered agent on file who is physically located in the state; he or she (or it, if the registered agent is itself a business) must have a physical address within Tennessee at which service of process can be accepted on behalf of the corporation.

For-profit corporations will choose one of two tax classifications at the federal level: C corporation, or S corporation. Each have distinct tax and ownership advantages and disadvantages.

Tennessee Nonprofit Corporation

A 501c3 nonprofit corporation is formed in much the same as a for-profit corporation—by drafting and filing nonprofit Articles of Incorporation—but after it is registered as a Tennessee nonprofit corporation, there is one more step.

Before a nonprofit organization begins to accept tax-deductible donations, it must register to be treated by the IRS as a tax-exempt 501c3 corporation (one that has been organized according to one of the specific purposes laid out in IRC section 501c3). Until then, it is considered a Tennessee nonprofit corporation like any other and is still responsible for paying taxes.

Tennessee Foreign Corporation

A business that is considered to be doing business in Tennessee but has already formed a corporation or LLC outside of the state must register as a Tennessee foreign corporation first.

While the state does not define exactly what it considers to be doing business, it does state that actions such as maintaining or defending legal proceedings, maintaining a bank account, or selling through independent contractors will not be considered doing business, nor would a number of other acceptable activities.

Tennessee LLC

An LLC, or limited liability company, is also formed with the Division of Business Services. An LLC's formation document is called Articles of Organization, and it must be submitted along with the filing fee. Once accepted, a Tennessee LLC, like a corporation, is considered a separate legal entity.

However, as "LLC" is not an accepted tax classification, a new Tennessee LLC will be able to choose a tax classification (though its options are limited based on how many members/owners it has).