What's The First Step In Getting A Business Registry In Tennessee?

Doing business in Tennessee comes with a lot of advantages. Knowing how to complete the business registry for the business and ensuring the compliance of the company with the state can help owners maximize those benefits.

Choosing Tennessee

Generally, the business climate in the state is good. It offers solid infrastructure as well. Additionally, the state offers various incentives and programs for business entities.

• Valley Incentive Programs – The state offers economic incentives to businesses. These include Investment Credit, which is a performance-based program rewarding companies establishing as startups or existing businesses planning to expand operations. The awards apply as a credit to the company’s monthly power bills. Qualified businesses can save up to 10-20% on expenses annually over a 5- or 10-year period.Another program is access to loan funds. Through this, newly established companies can get a loan amount of up to $3 million with a loan term varying from 5 to 20 years.
• Taxation Benefits – If a company qualifies for the tax incentives of the state, it can enjoy low to no taxes. Among them are the following:
  • No personal income tax
  • No sales taxes on raw materials
  • No sales taxes on pollution control equipment
  • No state sales taxes on manufacturing equipment
  • Lower sales taxes on energy fuel that manufacturers use
  • 1% tax credit on capital equipment
• Economic Development Incentive Programs – To help small businesses and startups ensure the sustainability of their growth, the state provides assistance in achieving short- and long-term business goals. These include the following:
  • FastTrack Economic Development Fund
  • FastTrack Infrastructure Program
  • FastTrack Job Training Assistance Program
  • Industrial Machinery Tax Credit
  • Job Tax Credit
  • Enhanced Job Tax Credit
  • Sales Tax Exemption Program

The Business Registry Process

The business registry process in Tennessee includes the completion of multiple steps. Generally, that includes the submission of formal paperwork and payment of the corresponding fees. It is important for a company to properly complete all of the necessary tasks to prevent any issues.

But a common question is, where should you start? What is the first step in getting a business registry in the state of Tennessee?

The answer is simple. Choose the legal entity structure suitable for the needs and circumstances of the business.

Types Of Business Entity Structure

The choice of structure will have a long-term impact on the company. It will determine the liabilities, taxation responsibilities, and record-keeping requirements of the business.

• Sole proprietorship – This is known to be the simplest structure. It involves one owner, who is also in charge of the business operations. When it comes to taxes, the company is a pass-through entity. That means all the business income and losses will be included in the personal income tax return of the owner. However, the owner will also have personal liability for the company’s financial obligations.
• Partnership – If the company has two or more owners, then a partnership may be a good option. In this structure, the owners agree to share business profits and losses. Partnerships are also pass-through entities in terms of taxation. However, like a sole proprietorship, the owners of a partnership have personal liability for the company’s financial obligations as well.
• Limited Partnership – In a limited partnership, there will be two types of partners. The first type is the general partner. These are those who bear liability for the debts and obligations of the company and have full management control of the business. The second type refers to limited partners. Also known as silent partners, these are those that have no voting power and control over the company’s day-to-day operations. The advantages of limited partnership include personal asset protection for limited partners up to the amount of their investment, pass-through taxation of the company, and generation of capital investments through the addition of limited partners.
• Corporation – One of the advantages of a corporation is that the company is a separate entity. That means the owners will not be held personally liable for the actions and debts of the company. When it comes to taxation, a corporation will be taxed at a corporate level, so you can expect double taxation. Double taxation happens when a company has to pay income taxes twice. The first one is at a corporate level, while the second one is at the personal level. Additionally, this structure requires detailed record-keeping.
• Limited Liability Company (LLC) – Known as a hybrid structure, the LLC incorporates the features of corporations and sole proprietorships/partnerships. It can have one or more owners. An LLC is a separate entity, so the owners will have asset protection. They will not be held liable for the actions and debts of the company. Additionally, it is a pass-through entity by default when it comes to taxation.

Choosing A Legal Entity Structure

There are various considerations when choosing a business entity structure. But it may help to focus on the following aspects:

• Legal Liability – Determine the extent of legal liability business owners are willing to have. Will it be okay to have personal liability? Or is it better to have asset protection?
• Taxation – There are different regulations when it comes to the taxation of each structure. Take federal, state, and local taxes into account.
• Business Registry Requirements – The state also imposes different requirements to form each business entity. These include formal paperwork and fees.
• Flexibility In Ownership Structure – Each business entity has unique needs. Add to those the personal needs of the company owners. That is why it is important to be highly critical in choosing. Think about the goals, concerns, and financial situation of each owner. It would also help to figure out how to share profits and losses as well as the responsibilities that come with running a business.

The Next Step

After choosing the most appropriate business entity structure, the company will have to properly register with the state. Doing this requires the completion of the business registry process that the state has set. It involves multiple steps.

But to formalize the registration, the company has to submit formal paperwork and pay for the filing fee. For example, forming an LLC requires the submission of the Articles of Organization, while starting a corporation includes the filing of the Articles of Incorporation.

All LLCs and corporations operating in the state have to appoint and maintain a registered agent. Depending on the industry, business activities, and location, companies may also need to acquire additional business licenses and permits.

For some entrepreneurs, handling the registration process can be a bit overwhelming. Others find it to be time-consuming. In such cases, the best option is to hire a seasoned third-party organization like DoMyLLC. This way, a team of experts will be handling the preparation and filing of formal paperwork and will help in ensuring compliance with state obligations.

Regardless of the legal entity structure of your company, DoMyLLC can help. We can also serve as a registered agent. Contact us now to request more information about our services.