How to Register for a Sales Tax Permit in Tennessee

After years of working as an employee, you have grown an appetite for more, for your own business. Every day spent at every position in your professional career has been a crash course in the processes needed to run a successful business. You have devoted your days to learning, honing your skills to the point when you are capable of venturing into the new phase of your professional life: owning your own business.

While you might have learned all the market dynamics, found the supply and demand gaps and understood the general functioning of the business, you might not have been there from the beginning, the phase when you set up the business. There are certain legal steps businesses all over the world need to fulfill, if they plan on operating within the regulatory framework. The same goes for the U.S. state of Tennessee. In case you are living in the state and plan on running your own business, whether it is a physical store or an online business, there are certain rules you have to comply with.

Registering a New Business in Tennessee

Choosing the legal form for your business is the first step you need to take. In order to understand all the advantages and disadvantages of each legal form, the Tennessee State Government advises seeking professional advice from attorneys, CPAs or business counselors. Tennessee offers a number of options when it comes to the legal structure of your business, from sole proprietorship, which the majority of small businesses opt for when starting, to limited liability partnerships.

If you opt for a sole proprietorship, you will be the owner of the business’ assets as well as the profits, but you will also be responsible for all of the business’ liabilities. However, a benefit of sole proprietorship is the lower taxation. To operate as a sole proprietorship you will have to obtain appropriate licenses from the county or municipality where your business operates.

Once the legal form of your business is selected, you will have to register a business name. This, together with your business registration, is done through the Tennessee Secretary of State. You can also check if the name you’d like to register is available.

In order to file for taxes or acquire any permits, you will have to use either your social security number, or apply for a Federal Employer Identification Number (FEIN) from the IRS. This can be done online or by calling the number provided in the contact details below.

In order to simplify and fast-track the business registration process, Tennessee’s Department of Economic and Community Development has set up SmartStart, a website that will guide every new entrepreneur through the business registration process. It will also direct you to a number of support organizations that can support you in getting your business off the mark.

The government has also set up a Tennessee Smart Start Small Business Guide, covering all the relevant aspects of the business registration process.

Tennessee Sales Tax Permits

The support provided by the state of Tennessee extends to the tax requirements as well. The IRS and the state’s Department of Revenue will provide assistance for businesses to comply with tax requirements.

The state’s Department of Revenue says that sales tax is imposed on all retail sale, leases and rentals of most goods, as well as taxable services. This means that if your business includes any of the above, you might be required to register for a sales tax permit. However, you also must have a sales tax nexus in Tennessee or a significant presence in the state that entails a business office, an employee, lease or rental of tangible property or owning a real or personal property as well as having independent contractors in the state.

If you do have a sales tax nexus, your next step is to see whether your business operates or sells taxable goods and services. Services are generally not taxable unless you are repairing, creating or installing a product. Sales of tangible products are taxable, with the exception of medical supplies, food and packaging.

In addition, if you plan or running an online business, the Tennessee Department of Revenue considers this the same as having a physical storefront.

If you have determined that you do have to file for a Tennessee sales tax permit, you can apply online or by filling out Tennessee Department of Revenue’s Application for Registration and mailing it to the DoR address listed in the contact section below. To apply for a Tennessee sales tax permit you have to provide a reason for applying, gross sales, the date you started your business, the business name and location, mailing address, type of ownership, business activity as well as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT), if applicable.

It has to be noted that the state of Tennessee requires you to make at least $4800 in revenue during a year to keep your sales tax permit.

There is no application fee, although other business registration fees may apply. Depending on the option you chose to register for a sales tax permit, it could take up to two days (online registration) or up to two weeks (mailed form) to receive the permit. However, once received, you do not have to renew the sales tax permit again.

Sales Tax Exemptions in Tennessee

Like many other states, Tennessee has certain exemptions when it comes to sales tax. If you plan on running a business that will include you purchasing products for resale, you can avoid paying tax on these products. This can be done by providing a Tennessee resale certificate to your seller.

To file for a Tennessee resale certificate you must have previously registered for the sales tax permit. Once that process is complete, you can request the resale certificate through the Department of Revenue’s Tennessee Taxpayer Access Point (TNTAP), or by calling (615) 253-0601.

According to the Department of Revenue, “a business registered for sales and use tax may use a resale certificate only when purchasing merchandise that will be resold by the business.”

However, the same way you can use the Tennessee resale certificate to avoid paying tax, you might be presented the same certificate by your buyers. In that case, you have to verify if the resale certificate has been properly filled out and signed by the buyer. Also, you can also verify the validity of a resale certificate by logging onto your TNTAP account.

While this is a short guide on how to register your business and register for a sales tax permit in the state of Tennessee, we urge you contact your local authorities for details on any special requirements you might have to comply with, as some businesses might need specific permits.

Contact Details

Tennessee Department of Economic & Community Development

312 Rosa L. Parks Ave.
Nashville, TN 37243
Phone: (615) 741-1888

Tennessee Secretary of State

Business Filings and Information
312 Rosa L. Parks Avenue
6th Floor, Snodgrass Tower
Nashville , TN 37243-1102
Phone: (615) 741-2286

Tennessee Department of Revenue

500 Deaderick Street
Nashville, TN 37242

Tax Information Lines: (615) 253-0600 or (800) 342-1003

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