Tennessee has no filing requirement to register a sole proprietorship. Instead, the entity is legally formed when a business transaction is completed. A sole proprietorship may remain unincorporated, and the sole owner of the proprietorship owns all of the business's assets and is personally liable for its debts. However, a sole proprietor should take a number of steps to comply with tax law and local business licensing requirements.
Search for the availability of your fictitious business name if you wish to do business under a different name than your own. Although it is not a legal requirement in Tennessee for sole proprietorships to register their fictitious business name, the search will assure that there is no other business in the state with the same name. To complete the search, visit the Tennessee Secretary of State website. From there, click on "Business Services," then select "Business Name Availability" under "Business Search Services." Type in your desired business name to find out if it is available.
Read More: How to Become a Registered Business
Apply for a business license in the county where you plan to do business. There is no requirement to obtain a business license at the state level, so you must contact your local town or county clerk to discover the filing requirements for a business license. Ask the clerk if there are any other required licenses for your type of business. Some professions require professional licenses or permits that must be acquired at the state level in Tennessee.
Apply for an Employer Identification Number. An EIN is a distinct number for your business enterprise that will be used on tax documents, and may also be used for your bank account. To apply for an EIN, visit the Internal Revenue Service's EIN web page and click on "Apply for an EIN Online." From there, follow the on-screen directions, and you will be issued an EIN.
Register for Tennessee state taxes. If your business will involve manufacturing, selling or renting personal property or providing taxable services, you must apply for a Certificate of Registration with the Department of Revenue. Visit the Tennessee Department of Revenue's Online Tax Registration page to register your business and obtain a Certificate of Registration.
Pay federal and state taxes. There is no federal corporate tax for sole proprietorships, but the income will pass to the owner as personal income. Further, depending on the type of business, you may be liable to the state for sales or use tax, franchise tax, alcoholic beverages tax or other taxes. In addition to the state taxes, all businesses must pay a local business tax in their county.
- Tennessee Chamber of Commerce: Setting Up Your Business
- Small Business Administration: Register Your Fictitious or 'Doing Business As' Name
- Tennessee Secretary of State: Business Name Availability
- IRS: Employer ID Numbers
- Tennessee Department of Revenue: Registering Your Business in Tennessee
- Tennessee Department of Revenue: Online Tax Registration
Elizabeth Rayne earned her J.D. from Penn State University and has been practicing law since 2009, advising clients on issues ranging from employment law to nonprofit management. For two years, she served as a contributing editor for the "Vermont Environmental Monitor."