Famous for its great whiskey and country music, Tennessee is a popular state to start a business. But the process might be a bit daunting if you’ve never started a business on your own before. From choosing an idea to registering the company and more, starting a business can seem like a formidable task.
But this step-by-step guide will hold your hand and guide you through everything you need to do to successfully start your own business in Tennessee. This guide won’t skip a single step and will even go through how to choose a name and get funding, among other steps. By the end of these 12 steps, you should be able to successfully start a business on your own!
Step 1: Choose Your Idea
The first step of starting a business in Tennessee is choosing an idea. This idea forms the building blocks of the business. The idea does not have to be thoroughly planned at this stage.
It can be difficult to come up with a new and original business idea, but by answering the following questions, you will be well on your way to coming up with a good idea:
- Do you have any skills, passions, or hobbies?
- Can these activities be turned into a profitable business?
- Can you see yourself working in the business every day?
- Are there any businesses like yours already?
- Do you have the skills to run the business?
- Is there a need for your business?
- How is your company different from others?
- How does your business solve a consumer’s problem?
Your answers will help you decide if your business idea will work. You can always tweak or rethink your vision if you still need to. And don’t forget to ask your friends and family for their valuable consumer insights as well!
Step 2: Pick a Name
Picking a name for your business is the next step. It is crucial to pick a name that you are 100% happy with, as it is not a good idea to change names partway through opening your business – especially from a marketing standpoint.
Your name should be easy enough for potential customers to read and pronounce. It should also be unique but relevant to your services and the industry that you are in. In Tennessee, you cannot register a business with a name already registered with the state.
To check if the name you want to use is still available, you can do a business name availability search on the Tennessee Secretary of State’s website.
Sometimes coming up with and picking a name can be more challenging than it looks. If you are stuck, try out these helpful methods:
- Create a word dump. This is a list of words that pops into your mind when you think about your business. Don’t think too hard about what to write down.
- Use an online name generator. These are free and come up with randomized names.
- Brainstorm with friends and family.
Step 3: Write Your Business Plan
After picking an idea and business name, you must write a business plan to flesh out your business. Think of your business plan as the blueprint or guide to your business. Someone should be able to read the business plan and know precisely how to run it without you.
A good business plan should be as thorough as possible as you can use it to apply for funding or to attract investors.
While there are no rules about what should be included in your business plan, you should aim to answer the following questions:
- Why have you started the business?
- What products or services does your business offer?
- Who are your direct competitors?
- Who is your target audience?
- How do you plan on turning your target audience into paying customers?
- How much money will you need to start the business?
- Will you need to get funding from elsewhere?
- How much will you need to make to break even?
- What equipment is required?
- What type of employees will you need?
- What are your financial goals and predictions?
If you are still stuck and struggling to get started, you can find plenty of business plan templates with a quick Google search.
Step 4: Get Funding
To start your business, you will need enough money for the startup costs like equipment and supplies. If you don’t have the money in hand, you will need to get funding from elsewhere. In Tennessee, you can generally get funding for your business from a grant, loan, or investor.
While Tennessee does offer business grants, these are usually awarded to NPOs. But you can check on the Secretary of State’s website to see what grants your business might qualify for. If you don’t qualify for a grant, take a look at getting a loan. You can apply for a loan at your local bank or any other financial institution. You can even get a loan from your friends and family, but make sure you get this agreement in writing!
Tennessee does have an investor program funded by TNInvestco. To learn more about this opportunity, you can visit the Department of Economic and Community Development website.
Step 5: Choose a Business Structure
Choosing a structure for your business is crucial as each structure has its own benefits and different features. Here are the four different business structures for businesses in Tennesee:
Sole Proprietorship
There is no separation between the owner’s and the business’s assets in a sole proprietorship. In other words, the sole owner is liable for the company. A sole proprietorship is commonly used for low-risk businesses.
Partnership
A partnership is an informal business structure similar to a sole proprietorship, as there is still no separation between the owner’s assets and the business’s. The only difference between the two structures is that there is more than one owner in a partnership, all with equal shares in the company.
Limited Liability Company
A limited liability company, also known as an LLC, is a formal business structure and the most popular choice for small to medium-sized businesses. An LLC is so popular because it combines two different types of business structures, offering the best of both worlds. It has the flexibility and ease of a sole proprietorship or partnership and the liability protection of a corporation.
Corporation
A corporation is a formal business structure used by large companies with multiple shareholders. A corporation is an entirely separate entity from its owners. This business structure offers some tax benefits as well.
Step 6: Register the Business
Depending on your chosen structure, you may need to register it with the state of Tennessee to remain compliant.
Sole Proprietorship
As this is not a formal business structure, you do not need to register the sole proprietorship with the state of Tennessee. However, if you want to operate under a different business name than your personal one, you will need to file a Doing Business As (DBA) with the Secretary of State.
Partnership
This business structure does not need to be registered either. And as with a sole proprietorship, you also have the option to file a DBA with the state.
It is also a good idea to have all the owners of the business sign a partnership agreement in case of future conflicts.
Limited Liability Company
To register your LLC in Tennessee, you must fill out the Articles of Organization and submit them to the Secretary of State. The fee to register online is $50 per member of the LLC. The minimum amount is $300, and the maximum is $3,000.
Corporation
To register a corporation with the state of Tennessee, you must file your Corporate Charter. The fee to register a corporation is $100.
Step 7: Set Up Your Finances & Accounting
You should set up all the finances and accounting before you begin trading. To set up your finances, open a bank account for the business, apply for a company credit card, and set up a payment method for customers to use. Additionally, install a payroll system to manage employee salaries and taxes if you have employees.
Looking after your business’s books can get complicated. So, consider hiring an accountant to assist you.
Step 8: Get Business Insurance
It is not a legal requirement by the state of Tennessee to obtain business insurance. However, disaster can strike anytime, and you should be prepared if and when it does. For this reason, it is recommended that you have a general liability insurance policy. This broad policy will cover the business from damage or injury and everything you need on a day-to-day basis.
Other insurance policies to choose from include:
- Business owner’s insurance
- Commercial auto insurance
- Commercial property insurance
- Workers compensation insurance
- Limited liability company insurance
Chat with your local insurance broker for professional advice on what insurance to get.
Step 9: Obtain Any Permits or Licenses Needed
In Tennessee, not all businesses need licenses. However, you will need a standard business license if your gross receipts are more than $10,000. More information about applying for one can be found on the Department of Revenue website.
If you want to collect sales tax, you will also need a Sales Tax permit. You can get this from the Tennessee Taxpayer Access Point.
In addition, depending on your business type and your local laws, you may be required to obtain further permits or licenses. Check the One-Stop Licensing App for more information on what you may need to remain compliant.
Step 10: Build a Website
Every business should have a website, as it is an excellent way to engage with potential clients, advertise, and build your brand. Building a website is also very easy as there are many ready-made templates to use or services to hire.
When you are building your website, you should keep a few things in mind:
- The domain name should be unique.
- Your business name should be bold and easy to find.
- All the fonts you use should be a good size that is clear and easy to read.
- Do not clutter your webpage with unnecessary images, videos, and graphics, as this can slow down the loading times.
- Make sure all your content is relevant.
- Make sure all your content is your own, or make sure you have permission to use it.
- Include a call to action.
Step 11: Hire Employees (If Any)
If you are planning on hiring employees for the business, post a job on your local job board or online. Interview your favorite candidates, and offer the job to the most qualified individual best suited for the role. When interviewing, make sure to ask a mix of behavioral, situational, and skill-based questions.
You must report all new hires to the Tennessee Department of Labor and Workforce Development. This needs to be done within 20 days from the hire date, and there is no fee to report hires.
Step 12: Market Your Business
The last step in starting your business in Tennessee is marketing your business. When you are marketing, make sure that your content is relevant and you are consistent.
Here are various ways to market your new Tennessee business:
- Use social media like Facebook and Instagram.
- Advertise on your business website.
- Make use of pay-per-click advertising.
- Create a Google Business profile.
- Advertise in your local newspaper.
- Attend markets and expos.
- Run competitions and giveaways.
- Attend local networking events.
Alternatively, you can hire a marketing expert to take care of this aspect of the business for you.