Having the right business licence in Tennessee ensures your business is operating legally and complying with regulations and taxes. Tennessee requires most businesses in the state to have a business licence, and there could be additional licensing requirements at the local, state, and federal levels depending on your location and business type. If you're just starting your business, it might not be clear which licences you need, especially if you plan to operate in more than one city or county.
Whether you're an online seller working from home or you're opening a café, having the right licences and permits helps protect your business legally and financially.
Below, we'll discuss the common types of business licences you might need in Tennessee, the steps to apply for them, and how much licensing could cost.
Key takeaways
Most businesses in Tennessee are required to have a business licence to operate. Although these licences are a state requirement, county or city clerks issue them.
Out-of-state businesses typically don't need to have a business licence, but depending on how much revenue those businesses earn in Tennessee, they could be required to register for business tax.
Your business might need additional licences and permits from local governments and various state and federal agencies. The Tennessee Small Business Development Center and your city and county officials can help you determine licensing requirements.
Do you need a business licence in Tennessee?
Which licences a business needs to operate in Tennessee depends on factors such as the type of business you have, its location, and how much money it makes.
Businesses that have a physical presence in Tennessee and earn more than US$3,000 a year need a business licence to operate in the state. This licence might also be referred to as a "business tax licence," and it's issued at the local level by county clerks or city governments.
Depending on your industry and where your business operates, additional licences might be needed. Some cities require additional business licences, and various state boards also require licences for certain industries and occupations. Federally regulated businesses could need licences to operate in Tennessee, too.
What are the common business licence types that businesses need in Tennessee?
There are several types of business licences and permits that might be required for operating in Tennessee. Some of the common business licences are:
General business licence: In Tennessee, minimal activity licences are required for in-state businesses earning between US$3,000 and US$100,000 a year. Standard business licences are required for in-state businesses earning US$100,000 or more a year. Businesses earning less than US$3,000 per year and most out-of-state businesses aren't required to have a business licence.
City business licence: Cities in Tennessee that impose their own business tax also require a business licence if you're operating within city limits. You can check which cities have a business tax with this map.
Business tax registration: Most businesses operating in Tennessee that gross a minimum of US$100,000 a year are required to register for business tax through the Tennessee Taxpayer Access Point (TNTAP) online portal. This includes out-of-state businesses.
Sales and use tax registration: If your business averages at least US$400 a month in tangible personal property sales or US$100 a month in taxable services, you must register for the sales and use tax through TNTAP. There's no charge to register.
Professional licence: Certain industries (e.g., cosmetology, accountancy, real estate) require a professional licence from the Division of Regulatory Boards.
Local licensing and permitting: Check local requirements with your city, county, and state governments to make sure your business can operate there legally. Some cities require licences for certain industries. Even if you're running your business from home, you might need additional permits (e.g., a home occupation permit).
Federal licences: Certain types of businesses also need federal licences to operate legally in Tennessee (e.g., firearms dealers, alcohol sellers, and radio and TV broadcasting companies).
Tennessee doesn't have a single database for all the potential business licences and permits you might need, so it's important to research the requirements for your specific business. The Tennessee Small Business Development Center offers resources such as consultations with advisers to help you determine licensing requirements.
How do you get a business licence in Tennessee?
Here are the general steps to get a business licence in Tennessee:
Choose your business structure. Your business structure affects your liability and taxes, so consider consulting a lawyer to help you decide whether setting up as a sole proprietor, partnership, limited liability company (LLC), or corporation is best for you.
Choose your business name. Use the secretary of state's Tennessee Charity and Business (TNCaB) business entity search tool to check business name availability. If you're a sole proprietor, you can choose to do business under your own name or under a "doing business as" (DBA) name (also referred to as an "assumed name" in Tennessee).
Register your business. Corporations and LLCs must be registered through the TNCaB online portal. However, sole proprietors don't need to register through TNCaB; their business name and licence registration is handled at the county clerk's office when registering for taxes.
Get an Employer Identification Number (EIN). In the US, you're required to get an EIN from the IRS if you plan to hire employees or set up a corporation or a partnership, though sole proprietors might choose to get one as well. You can get an EIN from the IRS website.
Register for taxes. Most businesses grossing US$100,000 or more a year in Tennessee are subject to the state's business tax and must register through the TNTAP portal. Out-of-state businesses could be required to register for taxes depending on the type of business and how much revenue they earn in Tennessee. It can take up to 10 working days for your registration to process.
Apply for your business licence. Determine whether you need a minimal activity licence (for in-state businesses grossing between US$3,000 and US$100,000 a year) or a standard business licence (for in-state businesses grossing more than US$100,000 a year), then visit your county or city clerk to apply.
Apply for state- and industry-specific licences. Some industries require additional licensing. The Division of Regulatory Boards is a good place to start for professional licences, but other state agencies might require additional permitting depending on your business.
Submit zoning and building permits. Depending on your location and type of business, your city or county might require zoning and building permits for your business, even if you plan to work from home.
Pay any fees. Licences and permits generally come with application fees that you'll need to pay when you submit your application. You should keep track of renewal schedules and procedures because it's typically the business owner's responsibility to make sure all licences are current. In Tennessee, each county clerk's office can have a different renewal procedure.
Receive your business licence. The timeline for receiving your business licence from your county and/or city clerk's office can vary, but you can't operate legally until it's posted in your business's location.
How much do business licences cost in Tennessee?
Here are some of the licensing costs for Tennessee businesses:
Minimal activity business licence fees: This licence costs US$15 per year from your county or city clerk.
Standard business licence fees: A standard business licence costs US$15, and there's no fee for renewal. Standard business licence holders must also pay a minimum of US$22 in business tax.
Municipal business licence fees: Businesses in cities that impose a business tax must pay US$15 per year for an additional city business licence.
Industry-specific licence fees: The licensing costs for regulated professions in Tennessee range widely, from US$30 for a hair braider registrant to US$4,000 for debt management providers.
State agency and local permit fees: You might need additional local licences and permits from various state agencies and your county and/or city governments, and these costs can vary. For example, a food truck permit in the city of Lebanon costs US$100 a year, while a home occupation permit application in Knoxville costs US$50.
How do you renew business licences in Tennessee?
Tennessee business licences expire 30 days after your business tax returns are due. Licences must be renewed annually, but the process varies depending on which type of business licence you have.
Standard business licence renewal: File your annual business tax return with the Tennessee Department of Revenue (TDOR). This can be done online through TNTAP. Once you've paid taxes and your return has been processed, the TDOR notifies the relevant county or city clerk's office that a renewed business licence can be issued to you.
Minimal activity licence renewal: Renew with your county clerk or city official. These offices might reach out to you to initiate a renewal, but it's not a requirement, so check to find out how their renewal process works.
Your renewed licence could be mailed to you or might become available for printing through TNTAP, depending on your local clerk's office.
What are some Tennessee-specific considerations and common mistakes?
Out-of-state businesses
Out-of-state businesses with no physical locations in Tennessee are required to register for business taxes if they meet economic nexus requirements in the state. An economic nexus is created when a business reaches a certain threshold of economic activity, such as sales or revenue, in a specific jurisdiction.
In Tennessee, you're required to register with the TDOR and start collecting and paying sales tax once your business grosses US$100,000. However, most out-of-state businesses (e.g., remote sellers) are not required to get a business licence in Tennessee.
Out-of-state contractors
Contractors based in other states who work in Tennessee have different licensing requirements than other types of out-of-state businesses. If they earn more than US$100,000 in a year, they must pay business tax and get a business licence in any county or municipality they work in. The TDOR recommends that out-of-state contractors keep track of income earned in each jurisdiction every year.
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FAQs about getting a business licence in Tennessee
The content in this article is for general information and education purposes only and should not be construed as legal or tax advice. Stripe does not warrant or guarantee the accuracy, completeness, adequacy, or currency of the information in the article. You should seek the advice of a competent lawyer or accountant licensed to practise in your jurisdiction for advice on your particular situation.