commenda-logo
Book a demo
Login
Talk to an expert

Doing business in

Tennessee

Navigate Tennessee’s business landscape with ease—whether you’re incorporating, expanding, or managing tax compliance. Commenda helps you stay ahead with automated solutions for incorporation, compliance, and tax filings.
Book a demo
tennessee

Business Overview

Tennessee provides diverse business opportunities in automotive manufacturing, healthcare, music, and logistics. The state offers competitive business costs, comprehensive transportation infrastructure, and no state income tax on wages. Its central location supports distribution operations.

Key Facts & Figures

Category Details
Capital Nashville
Major Cities Nashville, Memphis, Knoxville, Chattanooga, Clarksville
State Sales Tax Rate 7%
Local Sales Tax Rate Up to 2.75% additional local taxes
Corporate Income Tax No corporate income tax
Physical Nexus Threshold Physical presence through employees, offices, or inventory
Economic Nexus Threshold $100,000 in annual sales

Did you know?

Tennessee is home to major corporations like FedEx, Dollar General, and Hospital Corporation of America.

Setup & Compliance

Tennessee provides streamlined business registration with favorable tax considerations.

Setting Up a Tennessee Business:

  1. Choose Your Business Structure: Consider Tennessee’s tax environment for different entity types.
  2. Register Your Business: File formation documents with the Tennessee Secretary of State.
  3. Register for Tax Accounts: Register with the Department of Revenue for sales tax and other applicable taxes.
  4. Obtain Required Licenses: Research and secure necessary state and local business licenses.
  5. Register as an Employer: Register with the Department of Labor if hiring employees.

Key Compliance Requirements:

  • Annual Reports: Tennessee entities must file annual reports with the Secretary of State.
  • Sales Tax Collection: Collect and remit 7% state sales tax plus applicable local taxes.
  • Franchise and Excise Tax: Businesses pay franchise tax (0.25% of net worth) and excise tax (6.5% of net earnings).
  • No Personal Income Tax: Tennessee has phased out its tax on dividend and interest income.
  • Business Tax: Many businesses must pay local and state business tax based on gross receipts.

Hiring & Payroll

Tennessee provides a business-friendly environment with minimal state-level employment regulations.

Tennessee Payroll Requirements:

  • Unemployment Insurance: Rates from 0.1% to 8.0% on first $7,000 of wages.
  • No state income tax withholding.
  • Workers’ Compensation: Required for most employers.

Tennessee Employment Laws:

  • Minimum Wage: Follows federal minimum wage ($7.25/hour).
  • No state-mandated paid sick or family leave.
  • New hire reporting within 20 days.
  • Final paycheck due on next scheduled payday.
  • Tennessee is an at-will employment state with right-to-work laws.

State Incentives

Tennessee provides strategic economic incentives to attract and retain businesses.

Key Business Incentives:

  • FastTrack Job Development Program: Workforce training and infrastructure support.
  • Jobs Tax Credit: Incentives for job creation in targeted industries.
  • Research and Development Tax Credit: Supports innovative company development.

Small Business & Startup Support:

  • Tennessee Small Business Development Center: Comprehensive business consulting.
  • Rural Business Development Grants.
  • Minority Business Enterprise Certification Program.

Regulatory Considerations

Tennessee maintains a balanced regulatory environment supporting business growth.

Key Business Regulations:

  • Data Privacy: Laws protecting consumer and business information.
  • Environmental Compliance: Regulations for manufacturing and music industries.
  • Professional Licensing: Mandatory for various service professions.

Additional Regulatory Areas:

  • Music and Entertainment Industry Compliance.
  • Manufacturing Sector Regulations.

Explore Tax & Compliance Topics

Join hundreds of cross-border businesses growing fast with Commenda

Talk to an expert