Tennessee Business License

For many, launching a new business in Tennessee is both exciting and challenging. Most businesses will need at least one license or permit at the federal, state, and/or county level. However, identifying the specific combination of licenses you need can prove tricky because there’s no universal Tennessee business license.

This article will help you simplify the process of ensuring your business meets all of its licensing requirements in Tennessee.

Do I Need a Business License in Tennessee

In Tennessee, businesses are required to obtain various licenses and permits at the local, state, and federal levels. Here’s a general breakdown:

Type of Business

Below, we’ve detailed common ways in which your business type can dictate the licenses you’ll be required to obtain, as well as specific examples of these:

• Business Tax Licenses: Almost everyone selling goods or services within the state will need to obtain one of two business tax licenses from the appropriate county clerk or city official in order to pay sales tax. These include the minimum activity license, which Tennessee requires for businesses with annual gross sales that exceed $3,000, and the standard business license for those with more than $100,000 in annual gross sales
• Professional Licenses: Businesses working within various professions in Tennessee will need to obtain additional licenses in order to operate legally. Medical professionals within the state that work with the public (e.g., dentists), for instance, must apply to the relevant Tennessee Department of Health (TDH) licensing board before they can start offering their services
• Environmental Permits: If your business engages in certain activities with the potential for environmental impact, such as drilling for oil, it must secure the appropriate permit from the Tennessee Department of Environment & Conservation

However, this is not the only factor influencing the exact combination of licenses you’ll need — your business location within Tennessee plays an important role as well.

Location

In this section, we’ve provided a succinct overview of the potential licenses and permits that your business may need due to local, state, and federal requirements:

• Local: While you must submit a return at the state level for business tax purposes, you’ll need to obtain licenses at a county and municipal level. If your business’s gross receipts exceed $3,000, you’ll need to get a minimum activity license. If your gross receipts exceed $100,000, you’ll need a standard business license. Submit an application at the Tennessee Department of Revenue’s Tennessee Taxpayer Access Point (TNTAP) to obtain these licenses
• State: Beyond the mandatory local licenses, your business may need a number of additional state licenses and permits. For example, in-state businesses looking to sell alcoholic beverages must obtain the relevant license from the Tennessee Alcoholic Beverage Commission to operate legally
• Federal: If your business operates within certain industries or does specific types of work, it might need a license from the federal government. These include the alcohol, aviation, firearms and explosives, radio and television broadcasting, and transportation industries, among others

Since the exact permits and licenses your business will need are entirely unique to your situation, you’ll have to conduct thorough research into your own local, state, and federal regulations to smoothly launch your business.

Alternatively, many entrepreneurs opt to leverage the expertise of third-party services to handle this on their behalf.

How to Get a Business License in Tennessee

In order to get your business license(s) in Tennessee, you will need to complete the following steps:

• Form Your Business
• Obtain an Employer Identification Number (EIN)
• Apply for the Required Licenses and Permits

Let’s take a look at each step in more detail below.

Step 1: Form Your Business

Before setting out to obtain a business license in Tennessee, it’s pivotal that you first choose an appropriate structure for your business. Sole proprietorships, general partnerships, and corporations are all common choices, however it’s often seen as the most advantageous for small businesses in Tennessee to register as a Limited Liability Company (LLC). Here are a few reasons for why:

• Limited Liability: Members are protected from personal liability for business debts, safeguarding personal assets
• Tax Benefits: LLCs typically enjoy a pass-through tax treatment, avoiding the double taxation that corporations are subjected to
• Management Flexibility: LLCs allow for flexibility in management structure, either being member-managed or manager-managed based on the preferences outlined in the certificate of formation
• Ease of Formation: With the Tennessee Secretary of State providing forms that meet the minimum state law requirements and the option to file online, setting up an LLC is relatively straightforward

Many small business owners opt to avoid the tricky process of forming an LLC by instead leveraging the help of third-party LLC formation services.

Step 2: Obtain an EIN

The second step you’ll need to complete before applying for your business license is to obtain your EIN. This is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses in the United States so that their financial transactions can be identified and tracked.

An EIN is often necessitated when applying for various permits and licenses as it allows local and state governments to ensure your business is operating within the confines of the law. You can obtain it in a number of ways:

• Online: You can apply for your EIN on the IRS’s official website by using the EIN Assistant. You should be granted your EIN shortly after completing this application
• By Fax/Mail: After completing Form SS-4, you can apply for an EIN by submitting it to the IRS via mail or fax
• By Phone: International applicants and businesses located outside US Territories are required to call the IRS at (267) 941-1099 to obtain their EIN — which they should receive during this call

Note: If you are a sole proprietor, you will be able to use your Social Security Number (SSN) instead (as long as you do not have employees).

Step 3: Apply for Licenses and Permits

After settling on the appropriate structure for your business and initiating the application for your EIN, the next step is to focus on securing the necessary licenses and permits to operate legally within your locale and industry.

• Local Licenses: While Tennessee doesn’t issue a mandatory statewide license for all businesses, local municipalities and counties often will do so for businesses operating within their jurisdiction
• Statewide Licenses: The state of Tennessee regulates a number of industries (e.g., accountancy, debt management, and insurance) to ensure quality and public safety. You’ll need to confirm if your business will operate in any of these industries in order to get an idea of the statewide licenses it’ll require
• Federal Licenses: While the federal government doesn’t mandate licenses for general business operations, if your business falls under any government-regulated category, such as agriculture, fishing, firearms, and alcohol sales, it may be required to obtain additional federal licenses or permits

Note: For more comprehensive information on the cities and counties that impose a business tax, check out the Tennessee Department of Revenue website.

Step 4: Renewal of Licenses and Permits

Many Tennessee business licenses must be renewed periodically — usually every couple of years — in order to remain valid. However, the exact renewal period and process will vary with each individual license. As such, contact the agency that issued your business license for clarification.

Alternatively, third-party services that handle this entire process are becoming an increasingly popular option because they allow business owners to avoid undertaking this business license research themselves.

How Much is a Business License in Tennessee

The total business license cost in Tennessee will largely depend on which licenses your business needs and its location. Most businesses will need a Tennessee business tax license at the very least because it’s mandatory if your annual business gross receipts exceed $3,000.

Although this is administered at a municipal level, the majority of cities typically set a $15 fee for a business license. However, Nashville, which the state categorizes as an Urban Services District (USD), has a $30 business license fee.

It’s a different story for specialized permits like liquor licenses. Administered at a state level, these specialized licenses and permits often cost between $650 and $1,200 based on the venue size.

To get an accurate picture of your specific business licensing costs, you’ll need to consult with your local county office. Alternatively, many business owners prefer to hire a third-party service to handle this on their behalf to simplify and accelerate the licensing process.