If you’re in the market to start a new business, you’re probably thinking of a million things – logos, products, names, and more. Unfortunately, there are less “fun” things to think about when starting a new small business. For example, business licenses.
In the midst of all the legal jargon, business licenses can seem confusing or overwhelming, but are a necessary step to success. Obtaining a business license will help you determine and track the amount of tax owed to the state you are operating in.
Here, we’ll break down the steps you need to take with the Tennessee Department of Revenue to get your business operating legally in no time!
First, you need to classify yourself as a certain type of business.
There are ten different categories ranging from business selling food to hardware to gasoline. This classification will determine how you and your goods will be taxed. You also need to decide whether you are a retailer or wholesaler.
Our KEC mentors are happy to sit down with you and discuss the right classification for your business.
Next, you will register your business.
You can do so using the Tennessee Taxpayer Access Point. This will allow you to pay the taxes required each year. Once registered, you will receive your business license in about ten days. Each time a new business license is requested, a $15 fee is required. Here are some frequently asked questions about TNTAP.
Next, there is a distinction in businesses selling in-state and out-of-state.
Locally selling businesses must register with the county that they are selling in, and receive an additional business license. This can be done through the County Clerk’s office. For example, here are the requirements in Knox County. Businesses selling to Tennessee from out-of-state must register separately with the Tennessee Department of Revenue, and pay separate taxes.
As always, there are exceptions and additions to these rules.
Religious organizations and charities, among others, are eligible for tax exemption, however, they are still required to register with the state. Some businesses may be allowed a reduction in tax if they fall under certain guidelines.
Business licenses are not as complicated or as intimidating as they seem. Once you’ve established your business and how it’s classified, it comes down to technicalities. Reach out to your local Chamber of Commerce or County Clerk to see how you can get your business started today!
This blog post was written by Jesse Kelly, one of our Spring Practicum students through the UTK College of Communication.