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Tennessee runs a two step system. The state taxes business gross receipts, and local clerks issue the license. The Department of Revenue explains both on its business tax page and its registration and licensing page. The Secretary of State files your LLC. The license steps on this page all come from Revenue.
What is the Tennessee business tax?
It consists of two separate taxes: a state business tax and a city business tax. Revenue says that, in general, if you do business in any county or incorporated city and your business grosses $100,000 or more, you should register for and pay the tax. With a few exceptions, all businesses that sell goods or services pay the state business tax. That includes out-of-state businesses doing certain things in Tennessee.
If your business sits in a city that has enacted the tax, you owe the city tax as well. Revenue has a map of the cities and counties with the tax. A place missing from the map may still be part of an adjoining city, so check before you assume you are exempt.
How do you register?
Apply electronically through the Tennessee Taxpayer Access Point (TNTAP). It takes up to 10 business days for the department to register your business. The business tax is based on gross receipts and is due each year on the 15th day of the fourth month after your fiscal year ends.
What does the clerk issue, and what does it cost?
After you register for the tax, contact your county or municipal clerk. You pay a separate $15 business license registration fee for each new business. Which license you get depends on gross receipts at an in-state location:
| Gross receipts | License from the clerk |
|---|---|
| More than $3,000 and under $100,000 | Minimal activity license |
| $100,000 or more | Standard business license |
Revenue says you are not allowed to operate until the required license is obtained and posted in your business location. Revenue says the $100,000 figures came from a recent law change, so check its page for the current number before you rely on them. We did not read what a business below $3,000 in receipts must do, so ask the clerk.
What about out-of-state businesses?
An out-of-state business that is not a contractor and has substantial nexus to Tennessee must register with the department and remit business tax on sales of $100,000 or more in a county. It does not need a local business license from a county. Out-of-state contractors have their own rules, and Revenue sends them to its help pages, which we did not read.
What should you do after forming the LLC?
- File the LLC with the Secretary of State. See the Tennessee LLC guide.
- Get an EIN.
- Register for business tax in TNTAP.
- Pay the clerk for the license that fits your receipts.
- If you will trade under another name, see Tennessee DBA.
Closing the business means a final business tax return within 15 days of closing. Holders of minimal activity licenses that file no returns should tell the local officials or the department that the business is closed.
Where do you check a license?
We did not read a Tennessee tool for checking a clerk-issued license, so ask the issuing clerk. For general methods, see our business license lookup guide. To compare neighbors, see Kentucky and Virginia.
This page does not cover professional licenses, city tax rates, contractor rules or industry permits.