A sole proprietorship is the simplest business form to register in Tennessee. You can just start working under your legal name and use your Social Security Number as your tax ID. If you want to use a business trade name or hire employees, you’ll need to formalize your sole proprietorship.
To establish a sole proprietorship in Tennessee, you do not need to file any legal documents with the state. However, there are steps that must be taken to ensure your business meets the necessary requirements for operating.
Registration and Taxes
If your business involves selling taxable goods or services, you may need to register for a Tennessee Sales Tax Certificate to collect and remit sales tax. The owner is personally liable for the business’s debts and obligations.
The filing and issuing of DBA’s for sole proprietorships is done at the county level in Tennessee. To register your DBA, submit your Assumed Name application to the county clerk’s office and pay a filing fee.
Licensing and Employment
Sole proprietorships are subject to business and professional licensing requirements, issued at the federal, state, and local levels. The types of licenses required will vary depending on the nature of your business.
You can hire employees as a sole proprietor in Tennessee, which requires obtaining an EIN and complying with employment laws. There is no dissolution paperwork required to cease operations as a sole proprietorship.
Compliance and Exemptions
- Who is exempt from a business license in Tennessee? Businesses with less than $10,000 in taxable sales are exempt from taxes.
- Most businesses selling goods/services pay business tax and register with the state to pay.
- The most common business license needed is the business tax license.
- You must find the licenses and permits your business requires to operate in Tennessee. There is no single generic business license that ensures compliance with all requirements.
If you decide to use a “doing business as” (DBA) name, our DBA guide will help ensure you are properly registered on a state, county, and/or city level.