How to start a Tennessee corporation

It might seem like a lot at first, but once you understand the steps, it’s very doable. This guide will walk you through everything you need to know to start your Tennessee corporation.

How to start a corporation in Tennessee

Incorporating means registering your business as a corporation so the law sees it as its own entity, separate from you. Each state has its own rules for how to do this, so the process can seem confusing. Let’s go through each step: 

1. Choose a name for your Tennessee corporation

Your corporation’s name should be unique and make a statement about your business. Make sure it complies with the following Tennessee requirements:

• Your name must include "Corporation," "Incorporated," "Company," or an abbreviation of one of these terms. You may also use words with the same meaning in another language, as long as they're written in Roman characters or letters. A banking or insurance company doesn't have to use these words or abbreviations.
• Your name can't imply that your corporation is affiliated with a fraternal, religious, professional, or other similar organization, unless the organization certifies the affiliation in writing.
• Your name should not suggest that your corporation has organized for any purpose other than that which is allowed by state law or stated in your charter. For example, if you say your company sells camping supplies, don't call it "Video Game World, Inc."
• Your name must be unique enough that it avoids confusion with any other business name already in use, registered, or reserved with the Secretary of State.

Need help coming up with a business name for your corporation? Try the Rocket Copilot™ AI Business Name Generator, a free tool to help you brainstorm business names and get started registering your corporation.

2. Decide between a Tennessee S-Corp and C-Corp tax designation

There are similarities between a Tennessee S-Corp and a C-Corp regarding personal liability, management, structure, and compliance. The differences, however, come down to the following:

• Ownership Rules: A C-Corp can have an unlimited number of shareholders and stock classes. An S-Corp is limited to no more than 100 shareholders and only one stock class. All shareholders in an S-Corp must be citizens or legal residents of the United States.
• Taxes: A C-Corp is taxed as its own entity. It files and pays corporate taxes on its earnings. Shareholders may also pay taxes on dividends they receive. An S-Corp is not a separate entity for tax purposes. It's a "pass-through" entity. It passes its earnings to its shareholders, who then pay taxes on their individual returns.
• Documents: When you file as a corporation, the default designation is the C-Corp. If you want your business to be an S-Corp instead, you must file IRS Form 2553, Election by a Small Business Corporation, to elect this status.

3. Appoint directors and shareholders for your Tennessee corporation

Each state has its own personnel requirements for incorporating. In Tennessee, most corporations must have at least one director. A corporation with 50 or fewer shareholders does not need directors, as long as its charter describes how the duties of a board of directors will be carried out.

Tennessee does not require that directors live in the state, and the state does not have age restrictions for corporate directors or incorporators. You may list your directors in your Articles of Incorporation.

4. Choose a Registered Agent

A Registered Agent is the person or business responsible for receiving tax, legal, and government documents during regular business hours. It's important that every business has one. You can either serve as your own registered agent (if you have a Tennessee address) or choose one to do that service for you (if you are not located in Tennessee or would like an extra layer of privacy).

5. File your Articles of Incorporation with the state of Tennessee

Once you have a business name and registered agent, you can register your business as a Tennessee corporation with the state by filing your Articles of Incorporation. This document may be referred to in other states as "Certificate of Organization," "Certificate of Filing," or "Articles of Organization."

6. Get an Employer Identification Number (EIN)

Before opening your doors for business, apply to the IRS for an employer identification number, or EIN. All corporations with employees in Tennessee must have an EIN. An EIN is similar to your Social Security number, but it's for businesses. You'll also need an EIN to open your corporate bank account.

Congratulations! After you have completed all these steps, you have formed your Tennessee corporation.

What to do after incorporating in Tennessee

Tennessee requires that corporations create certain records to maintain their corporate status. The most important of these are Bylaws and Corporate Meeting Minutes.

• A corporation's Bylaws set rules and regulations for how it will operate. You can include any provisions you'd like in this document, as long as they are consistent with your Charter and the law.
• Minutes record actions and decisions taken during your board meetings and shareholders' meetings. You must keep copies of your Meeting Minutes at your office for three years.

Although Tennessee requires these documents, you don't have to file them with the state. Just keep them with your other corporate papers. We have more detailed information about Tennessee's requirements for Bylaws and Meeting Minutes.

Still have questions? Learn more about how to start your own business with Rocket Lawyer and get started today!
 

Key takeaways Starting a corporation in Tennessee means following state rules, like choosing a unique name, filling out paperwork, and paying fees to make it official. One important choice is deciding how your corporation will be taxed in Tennessee, either as an S-Corp or a C-Corp. This affects how the business and owners pay taxes, and the differences between the two change from state to state. After forming the corporation, it’s required to keep records – like Bylaws and Meeting Notes – to stay in good standing with the state and prove your business is real and operating correctly.

Additional resources

Learning how to enforce a contract is just one step. Explore these additional topics to learn more and take the next steps.

• What is a corporation?
• What is an S-corporation?
• How are corporations taxed?
• How to start a corporation
• How to register a corporation by state