You might be unsure of your need for a business license if you’re launching a sole proprietorship in Tennessee. The gist of the response is that it depends on the kind of business you run and where in the state you are located. In general, before a firm can start operating legally in Tennessee, it must obtain some kind of business license or permit.
In comparison to other business formats, registering a sole proprietorship in Tennessee is quite inexpensive. A “Doing Business As” (DBA) form must be submitted to the county clerk’s office. Tennessee’s DBA filing fees range from $20 to $50 and depend on the county. In addition, based on the kind of business you’re running, you might need to acquire additional permits or licenses. What Makes You a Sole Proprietor, Specifically? A sole proprietor is a person who owns and manages a business by themselves. This means that the owner is personally responsible for any debts or legal problems that the firm may have because it is not a separate legal entity from them. Those who operate small enterprises as sole owners are often independent contractors who work from home or as consultants. How Can I Establish a Sole Proprietorship in Tennessee? You must complete a few simple steps in Tennessee to form a single proprietorship:
1. Decide on a company name: You must select a name for your company that is both original and not in use by another company in Tennessee. 2. Register your business name: After deciding on a name, you must do so with the relevant authorities. In most cases, this entails submitting a DBA form to your county clerk’s office. 3. Obtain the required licenses and permits: Depending on the type of business you’re operating, you might need to apply for additional licenses or permits from state or local authorities. 4. Obtain an EIN:
Getting an Employer Identification Number (EIN) from the IRS, even though it is not necessary for sole owners, can help you establish your company as a distinct entity and make it simpler to create a business bank account.
You will be liable for paying self-employment taxes on your business revenue as a lone owner. This includes the quarterly payments for both Social Security and Medicare taxes. Your business income will also be subject to federal and state income taxes. To make sure you’re appropriately reporting your revenue and paying the proper taxes, it’s crucial to keep thorough records of all business income and costs.
In conclusion, even though sole proprietors in Tennessee are not required to have a special business license, you may still need to apply for various permissions and licenses depending on the kind of company you run. To make sure that your firm is running properly, it’s also crucial to keep accurate records and pay the proper taxes.
Various variables, including the amount of personal liability you are ready to accept, the tax ramifications, and the type of your firm, will determine whether you should form an LLC or a sole proprietorship. An LLC often offers greater liability protection and may provide certain tax benefits, but it generally requires more paperwork and costs than a sole proprietorship. A company attorney or accountant should be consulted to help you choose the best course of action for your particular circumstance.
Yes, sole proprietors in Tennessee must get a business license and register with the state. To lawfully run a business in the state, you need the license.