4 Tips for Starting a Small Business In Tennessee

Posted On Friday, 25 June 2021 20:19

Tennessee is ranked seventh in the nation by Forbes for ease of doing business. Tennessee is an ideal place for you as an entrepreneur to start your small business with zero personal income tax, developed infrastructure, affordable cost of living, and a highly educated workforce. Here are some tips to get your small Tennessee business up and running. 

1. Create a Business Plan

Through careful planning, successful companies are built. Before you commit a substantial amount of time and money to your business, analyze your idea critically and create a game plan:

  • Executive summary – Create an overview of your company and why its operations will be successful.
  • Business description – Explain your business's advantages and the problems it solves.
  • Market research – Conduct research on your industry, target market, and potential competitors.
  • Organization and personnel – Describe the detailed organization of your company, including how it is structured and who will do which tasks.
  • Product or service description – Explain what services and goods your business will be offering.
  • Marketing plan - This includes your strategies to reach and retain loyal customers through marketing.
  • Financial planning - Include the amount of finances you intend to use in a specific period and how.

 

To make sure you have an effective business plan, share the plan with your close colleagues to hear their opinions.

2. Research the Process

Before venturing into starting your desired business entity, take some time first to research the procedure and procedural requirements of starting a business in Tennessee. The state has made this procedure relatively easy with the launch of Tennessee SmartStart by the state.

If you are unsure whether you are eligible for registration or unsure where to get all the required forms, the Tennessee Secretary of State has given access to all this information.

3. Insurance and Certifications

The majority of Tennessee businesses must obtain annual commercial certifications, though some are exempted. For example, you may require errors and omissions insurance in Tennessee if you run a private law firm. A lawyer can assist you in obtaining the necessary licenses and permits to begin a business. All the same, you must:

  • Apply for an Employer Identification Number (EIN)
  • Register with the Tennessee Secretary of State
  • Register with the Tennessee Department of Revenue
  • Obtain a business license with your local state

 

In Tennessee, depending on the nature of your business, you will need to acquire insurance for it. What is business insurance? It is insurance that protects your assets in case of any damages or a lawsuit. The types of business insurance to include are:

  • General liability insurance - This type of insurance protects your business in the event of any lawsuit.
  • Professional liability insurance - This is typically used in the event of a malpractice claim or other business error by a business service provider such as an accountant or consultant.
  • Workers compensation insurance - This protects you in any incident where your employees get injured on the job.

 

Before you start your business, ensure that it has all the required federal, state, and local government insurance and certifications.

4. Select Your Entity Type

It would help if you choose the correct business entity when starting your enterprise. Each type of entity has different taxation requirements. Therefore choosing the right entity type for your business is crucial. Tennessee recognizes four main entity types: sole proprietorships, partnerships, limited liability companies (LLCs), and corporations:

  • Sole proprietorships - You are automatically seen as a sole proprietor if you do business on your own, without incorporation. You do not need to file organizational documents with the state to establish a sole proprietorship in Tennessee.
  • Partnerships - Just like sole proprietorships, partnerships are unincorporated business structures with multiple owners. Similarly, partnerships lack the liability protection that a formal business structure provides. To establish a general partnership in Tennessee, you don't have to submit any organizational documents. Although not legally necessary, all partnerships should have a written partnership agreement.
  • Limited liability companies - LLCs combine corporate asset protection with the flexibility of a partnership or sole proprietorship. Most small businesses prefer the LLC structure due to its ease of maintenance and favorable tax treatment. Furthermore, you should also prepare an operating agreement to lay down the basic rules on how your LLC works. The operating agreement is not submitted to the state.
  • Corporations - A corporation's shareholders are legal entities in their own right. Corporations are more formally regulated than LLCs and thus more appealing to investors. The vast majority of major corporations are classified as corporate.

Get Started in Tennessee

Tennessee is a state that offers an excellent environment for business owners to set up and start new businesses smoothly. Before you jump into this niche, make sure that you conduct your research properly to ensure the smooth sail of your intended business entity.

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