Incorporating in Tennessee creates a business entity that the state recognises as legally separate from you. That change affects how your business pays taxes, signs contracts, takes on risk and raises capital. Incorporating transforms your business from an idea or informal venture into a legally recognised business under state law.

Below, we'll explain how to incorporate in Tennessee.

What's in this article?

• What does it mean to incorporate a business in Tennessee?
  
• What are the advantages of forming a corporation in Tennessee?
  
• What are the steps to incorporate your business in Tennessee?
  
• How much does it cost to incorporate in Tennessee?
  
• What are the legal requirements to incorporate in Tennessee?
  
• How Stripe Atlas can help
  

What does it mean to incorporate a business in Tennessee?

In Tennessee, incorporating means filing a charter, known as the articles of incorporation, with the secretary of state. Once you have filed your charter and it has been accepted, your business becomes a Tennessee corporation, a separate legal entity that exists on its own terms. The corporation can sign contracts, hold property, pay taxes, sue and be sued.

Before incorporation, you're operating as a sole proprietor or general partnership by default. In that setup, you're legally and financially connected to everything the business does. Incorporation draws a hard line: if your Tennessee corporation takes on debt or faces a lawsuit, your personal assets typically aren't on the hook.

The moment your charter is accepted, the corporation exists. That legal existence lets you open a corporate bank account and issue stock. Once you incorporate, you're operating a recognised corporate structure that investors, banks and partners respect.

What are the advantages of forming a corporation in Tennessee?

In 2024, the state had more than 711,000 small businesses. Incorporating in Tennessee shapes how your business is treated by the law, investors, banks and the state.

These are the advantages of founding your business in Tennessee:

• Liability protection becomes real: When your business is a corporation, Tennessee law treats it as a legal person. That separation carries weight: if the corporation is sued or falls into debt, your personal assets are usually protected.

• You can issue stock and raise money: Tennessee corporations can authorise and issue shares. That matters if you want to raise capital, offer equity to co-founders, or build an employee ownership plan. Investors typically invest in corporations rather than limited liability companies (LLCs) or sole proprietorships.

• The business outlives you: Corporations have perpetual existence under Tennessee law, so your business doesn't dissolve if you die. Instead, ownership can transfer, and operations continue. This matters if you want to build something with lasting value.

• You don't pay personal income tax on salaries: Tennessee doesn't tax wages or earned income at the state level. If you pay yourself a salary as an employee of your corporation, there's no state income tax on that income. Franchise and excise taxes still apply.

What are the steps to incorporate your business in Tennessee?

Tennessee's incorporation process is straightforward when you follow these steps.

Here's how to move from idea to legal entity:

1. Choose a name that meets Tennessee's requirements

Your corporate name must be distinguishable from others on record and must include a corporate designator such as "Corporation,” "Company” or "Incorporated,” or their abbreviations. You can run a name search on the secretary of state's website.

2. Appoint a registered agent

This person or business is responsible for receiving legal notices and government mail. They must have a physical address in Tennessee and be available during business hours. You can serve as your own agent if you're based in the state, but businesses can instead use a registered agent service for convenience or privacy.

3. Complete and file the charter

Form SS-4417 serves as your articles of incorporation, and it includes:

• Corporation name and principal office address

• Registered agent's name and address

• Name and address of at least one incorporator

• Number of authorised shares (you must authorise at least one)

• Business purpose (optional)

You'll file this online or by mail with the secretary of state along with the filing fee. When your charter is accepted, your corporation legally exists.

4. Hold your first board meeting

Once your charter is filed, your initial board of directors need to hold an organisational meeting to:

• Adopt bylaws

• Elect officers (president, secretary, etc.)

• Authorise issuance of stock

• Approve your registered agent and fiscal year

• Document everything in meeting minutes

Though you don't need to file bylaws with the state, you are legally required to have them because they serve as your corporation's internal rulebook. You'll also need to issue stock certificates, or digital equivalents, and maintain a share ledger. That's especially important if there are multiple founders or early investors.

5. Register for state tax accounts

Use Form RV-F1300501 to register with the Tennessee Department of Revenue. Depending on your business activities, this might include:

• Sales and use tax

• Franchise and excise tax

• Employer withholding tax

There's no fee to register, but it's a necessary step before operating in Tennessee.

6. Check local licensing requirements

In Tennessee, businesses with gross business taxable receipts of over US$3,000 require a minimal activity business license. If your gross taxable receipts total US$100,000 or more, you will need a standard business license. Check with your city and county clerk's offices to confirm what's required.

How much does it cost to incorporate in Tennessee?

Tennessee keeps incorporation costs relatively low. But the total depends on a few variables, such as how many shares you authorise and whether you hire outside help.

Here are the costs to incorporate:

• Charter filing fee: When you file your charter, you'll pay a fee of US$100.

• Name reservation (optional): If you want to lock in a business name before filing, Tennessee lets you reserve it for 120 days for US$20. That's useful if you're still finalising your documents but want to prevent someone else from taking the same name.

• Registered agent: There's no state fee for using a registered agent. You can act as your own agent or hire a professional registered agent service; those fees vary.

• Annual report: Every corporation must file an annual report with the secretary of state; the fee is US$20. You must create an account with the Tennessee Charities and Business online filing system to process the annual report, and file by the first day of the fourth month after your fiscal year ends (usually 1 April).

• Franchise tax: The annual franchise tax is based on the net worth or the value of real and tangible property in Tennessee. It's calculated as 0.25% of Tennessee net worth, with a US$100 minimum.

• Excise tax: Almost all businesses in Tennessee are subject to an annual excise tax, equal to 6.5% of Tennessee taxable income. Certain types of businesses are exempt from the franchise and excise taxes.

• Optional legal or filing support: You can file on your own through the secretary of state's online portal. But if you want help from an attorney or formation service, that will incur extra costs.

What are the legal requirements to incorporate in Tennessee?

Once you've filed your charter in Tennessee, you must maintain good standing, file taxes and reports on time and keep your business' records in compliance with state requirements.

These are the legal requirements to stay compliant:

• Maintain a registered agent: Every Tennessee corporation must designate a registered agent, a person or business responsible for receiving legal and official documents. The agent must have a physical address in Tennessee and must always be kept up-to-date.

• Keep corporate records: You're expected to maintain a complete record of your formation documents, bylaws, meeting minutes and stock ledger. These records exist to preserve your liability shield and show that your corporation is operating properly under state law.

• Comply with Tennessee business laws: If your corporation will sell goods, hire employees or operate in any taxable category, you'll need to keep up with the Tennessee Department of Revenue. Prepare to file for annual state sales tax, franchise and excise tax and employment tax.

How Stripe Atlas can help

Stripe Atlas sets up your company's legal foundations so you can fundraise, open a bank account and accept payments within two business days from anywhere in the world.

Join 75K+ companies incorporated using Atlas, including startups backed by top investors like Y Combinator, a16z and General Catalyst.

Applying to Atlas

Applying to form a company with Atlas takes less than 10 minutes. You'll choose your company structure, instantly confirm whether your company name is available and add up to four co-founders. You'll also decide how to split equity, reserve a pool of equity for future investors and employees, appoint officers and then e-sign all your documents. Any co-founders will receive emails inviting them to e-sign their documents, too.

Accepting payments and banking before your EIN arrives

After forming your company, Atlas files for your Employer Identification Number (EIN). Founders with a US Social Security number, address and mobile phone number are eligible for IRS expedited processing, whilst others will receive standard processing, which can take a little longer. Additionally, Atlas enables pre-EIN payments and banking, so you can start accepting payments and making transactions before your EIN arrives.

Cashless founder stock purchase

Founders can purchase initial shares using their intellectual property (e.g. copyrights or patents) instead of cash, with proof of purchase stored in your Atlas Dashboard. Your IP must be valued at US$100 or less to use this feature; if you own IP above that value, consult a lawyer before proceeding.

Automatic 83(b) tax election filing

Founders can file an 83(b) tax election to reduce personal Income taxes. Atlas will file it for you – whether you are a US or non-US founder – with USPS Certified Mail and tracking. You'll receive a signed 83(b) election and proof of filing directly in your Stripe Dashboard.

World-class company legal documents

Atlas provides all the legal documents you need to start running your company. Atlas C corp documents are built in collaboration with Cooley, one of the world's leading venture capital law firms. These documents are designed to help you fundraise immediately and ensure your company is legally protected, covering aspects like ownership structure, equity distribution and tax compliance.

A free year of Stripe Payments, plus $50K in partner credits and discounts

Atlas collaborates with top-tier partners to give founders exclusive discounts and credits. These include discounts on essential tools for engineering, tax, finance, compliance and operations from industry leaders like AWS, Carta and Perplexity. We also provide you with your required Delaware registered agent for free in your first year. Plus, as an Atlas user, you'll access additional Stripe benefits, including up to a year of free payment processing for up to US$100K in payments volume.

Learn more about how Atlas can help you set up your new business quickly and easily and get started today.