Why Incorporate in Tennessee?
Considered one of the most business-friendly states in the nation, Tennessee offers a variety of incentive packages to new and expanding businesses in Tennessee provided the corporations meet certain criteria.
For example, the Job Tax Credit allows qualified businesses a credit against franchise and excise taxes based on capital investment and number of jobs created. The standard job tax credit may offset up to 50% of the taxpayers franchise and excise taxes.
For many entrepreneurs looking to start a larger business, forming a Tennessee corporation may be the best choice. As a corporation, your business is able to buy and trade stock, and when it comes to excess profits, corporations offer more flexibility than a limited liability company (LLC). A corporation is allowed to pass income and losses to its shareholders, who report taxes on an individual tax return at ordinary levels.
Is an LLC Better Than a Corporation?
That depends on your goals. Limited liability companies are usually better for smaller businesses. An LLC is easier to set up, and you receive many of the same benefits as a corporation, but with less regulation.
Learn more about forming a Tennessee LLC so you can decide which business entity is right for you.
Benefits of Forming a Tennessee C Corp
It offers you numerous advantages including, but not limited to:
- The strongest form of liability protection possible by insulating your personal assets and finances from business debts, obligations, damages, bankruptcy or other liabilities
- Several options to create, buy, sell or transfer stock, including publicly
- The ability to issue more than one type of stock
- The ability to raise more funds by issuing more stock
- The ability to sell stock to investors inside and outside the U.S.
Benefits of Forming a Tennessee S Corp
It offers several advantages similar to those provided by a C Corp including, but not limited to:
- Options for creating, transferring and selling stock, though not as many as a C Corp
- The capacity for up to 100 shareholders
- Simpler rules than those applicable to C Corporations
- Easy transfer of ownership simply by selling your stock
- The possibility of saving money by allowing you to pay less self-employment tax
In this guide, you’ll find information on naming your corporation, getting a Registered Agent, the fees you’ll need to pay, business taxes and much more. We also cover what you'll need to register your corporation and how you'll interact with the TN Secretary of State.
Start a Business in Tennessee Checklist
To help you along the way, use our Starting a Business checklist to keep track of everything you need to do to get your business up and running.
How to Form a Tennessee Corporation Yourself in 6 Steps
Step 1 - Choose a Unique Business Name and Complete a State Business Search
Step 2 - Provide an Official Business Address for Your Corporation
Step 3 - Assign a Registered Agent
Step 4 - File Your Charter Paperwork with the TN Secretary of State
Step 5 - Get an Employer Identification Number (EIN) from the Internal Revenue Service
Step 6 - Write Your Bylaws
1
Choose a Unique Business Name and Complete a State Business Search
Every Tennessee business must have a unique name that isn't already being used by another business in the state. If you’re having a tough time coming up with a name, try using our Business Name Generator to gather ideas. You'll need to follow a few naming rules, which you can read about in detail on the Tennessee Corporation Names page.
Once you’ve chosen a name, you’ll need to make sure it’s available in Tennessee. To learn whether another company in the state is using your desired business name, use our tool to do a Tennessee entity search.
You can also carry out a name search on the TN Secretary of State website.
2
Provide an Official Business Address for Your Corporation
Every Tennessee corporation must have a designated address. That could be the address of your home (if you’re running the company from your residence), a building where your office is located or any physical address of your preference. The address can be outside the state of Tennessee and can be a P.O. Box.
You may also be able to use a virtual mailbox for your business address. This can be especially helpful if you run a home-based business and don't want your home address published as part of your business public record.
3
Assign a Registered Agent
Someone who receives any official correspondence and is responsible for filing reports with the Secretary of State is known as a Registered Agent. Every Tennessee corporation is required to have a Registered Agent.
You can fill this position yourself, assign another manager in your business or use a Registered Agent service. If your Registered Agent in Tennessee is a person, they must have a physical street address in Tennessee and must be available during business hours to receive important documents on behalf of your company.
You'll appoint your Registered Agent when you file your Tennessee Charter with the Secretary of State and formally create your business.
All of Incfile’s business formation packages include Registered Agent service. It’s free for the first year and just $119 per year after that. You can also access a digital dashboard to view any document we've received on your behalf.
4
File Your Charter with the TN Secretary of State
Once you've gathered all the information for your corporation, you’ll need to file a form with the Secretary of State. This form is called a Charter but is sometimes referred to as Articles of Incorporation. By filing this form you will officially create your business.
Here’s what is typically included with in the Charter:
- Your business name
- Registered Agent's name and address
- The corporation’s capital structure (number of shares to be issued, who owns them, pricing, etc.)
- Address of principal executive
- Names and addresses of each incorporator
- Incorporator's signature
Your Charter can be filed online via the state's digital portal. You can also mail or file the form in person to the Office of the Secretary of State, or Incfile can file it on your behalf. The Tennessee corporation filing fee is $100.
File by Mail
Secretary of State Office
6th FL – Snodgrass Tower ATTN:
Corporate Filing
312 Rosa L. Parks AVE, Nashville, TN 37243.
Submit in Person
Secretary of State Office
Business Services Division
6th FL – Snodgrass Tower
312 Rosa L. Parks AVE, Nashville, TN 37243.
You only need to file your Tennessee Charter once, but every year after, you'll also need to file an annual report. Incfile can remind you about this every year, or we can do it for you if you have us handle the paperwork.
What are the fees and requirements to incorporate in Tennessee?
| State Fee | State Filing Time | Expedited Filing Time |
| $108 | 3 Weeks | 1 Business Day |
| State Fee | $108 | |
| State Filing Time | 3 Weeks | |
| Expedited Filing Time | 1 Business Day |
Annual Report
Frequency
Annually
Due Date
Calender Year: April 1st.
Fiscal Year: 1st day of 4th month following close of fiscal year.
Filing Fee
$225
Get an Employer Identification Number (EIN) from the Internal Revenue Service
You'll need an EIN to identify your business to the IRS. You use this number when filing and paying taxes, when submitting payroll information and payments for your employees and for opening a business bank account. You can obtain one directly from the IRS, or Incfile can get one for you as part of the Tennessee corporation formation process.
6
Write Bylaws
A set of rules that govern how a corporation will be run, bylaws detail how many directors the corporation will have, whether the board of directors will have annual meetings and what the voting requirements are, among other things.
Some states - including Tennessee - require companies to create bylaws. You're not legally required to file them with the Secretary of State in Tennessee, simply keep them with your business records. It's always a good idea to write bylaws to protect your business from any future changes and events.
Tennessee Corporation Types
C Corporation
When you file to start a corporation, by default, it's a C Corp. This is the choice for large businesses that will trade shares in the stock market.
A Tennessee C Corp will offer you several liability protections, but it will also be required to adhere to numerous strict rules and regulations. It will also likely have a substantial amount of administrative overhead and won't enjoy as many tax advantages as other corporation types.
Learn more about C Corporations.
S Corporation
Technically, an S Corporation isn't a business entity the way LLCs and C Corporations are. It's a tax filing status. An LLC or a C Corporation can be an S Corporation. It's just a matter of filing a form with the IRS.
The main reason to file as an S Corp is to save money on self-employment taxes. To get an idea of how much money you might save, use our S Corp Tax Calculator.
If you want your business to be treated as a Tennessee S Corp, file the IRS Election by a Small Business Corporation form, also known as Form 2553 or an S Corp Election form.
Consult with your tax advisor or accountant to determine whether this is your best option.
Learn more about S Corporations.
Compare S Corp vs. C Corp to learn the benefits and drawbacks of both, and decide which one will best suit your needs.
Professional Corporation
Some states, including Tennessee, allow certain occupations to form Professional Corporations. The state's Business Organizations Code defines this as:
"...a corporation for profit, other than a foreign professional corporation, subject to this part and a “professional service” means a service that may be lawfully rendered only by a person licensed or otherwise authorized by a licensing authority in this state to render the service, and that may not be lawfully rendered by a corporation under the Tennessee Business Corporation Act, compiled in chapters 11-27 of this title; and “Qualified person” means an individual, general partnership or professional corporation to whom shares under this part may be issued."
Professions permitted to form Tennessee Professional Corporation aren't listed in the Tennessee Professional Corporation Act, but may include:
- Architects
- Attorneys
- Certified public accountant
- Dentists
- Physicians
- Veterinarians
Check with the TN Secretary of State first to confirm whether your business should and can be a Professional Corporation.
Foreign Corporation
If your business operates in another state and you want to expand into Tennessee — or vice versa — you’ll need to form a Foreign Corporation.
Learn more about Tennessee Foreign Corporation registration.
Nonprofit Corporation
Charitable organizations can incorporate as nonprofit corporations. This means all the profits they generate are donated to the organization supported by the charity, minus administrative costs.
A nonprofit corporation is also exempt from federal and state taxes, allowing more of the profit to benefit the charity.
Note: Everything in this guide applies to for-profit corporations, and mostly to C Corps and S Corps. Items listed as requirements for forming a corporation may or may not also apply to nonprofits.
Limited Liability Company
Depending on the type of business you want to form, or your personal circumstances and goals, an LLC may be a better option. For example, you may not need the options to buy and sell stock. Or you may simply want to build a small business with a few employees or even just yourself.
A Tennessee LLC is usually a better option for a smaller business. It's easier to set up, but it still offers you certain advantages you'd get from a corporation. You can even have your LLC treated as an S Corporation for tax purposes to save you money.
Regardless of which way you decide to go, we can help you with your Tennessee business registration.
Learn more about limited liability companies.
Sole Proprietorship or Partnership
Because there's no real setup to do, these are the simplest types of businesses to set up. If you don't choose to form a separate business entity, by default, you'll have either a sole proprietorship (just you) or a partnership (you and one or more other people).
Neither of these options provide you with any special benefits or liability protections and can leave your personal assets vulnerable. For these reasons, we don't recommend them.
Compare business entity types to decide which one is best for you.
Helpful Resources from the State of Tennessee
More Information in This Guide
You’ll find plenty more insight and guidance on the other pages of this guide, including:
How to search the state business registry and find the right name. Includes information on naming rules, assumed names, reserving a corporation name and more.
How to appoint, change and search for Registered Agents. Also includes the duties they fulfill and the rules they’re required to follow.
Details the various fees you’ll need to pay, as well as the state and federal requirements you’ll need to meet. Includes details about Employer Identification Numbers (EINs), state and federal business licenses, annual reports and more.
Covers the various taxes you’ll have to pay to the state and federal governments. Includes details about state taxes such as sales and franchise, and federal taxes such as income and self-employment.
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