Tennessee can pride itself on one of the country’s best business climates. This state fosters a pro-business climate that gives access to vital economic components. To name a few, there is a right-to-work environment, a dependable and educated workforce, as well as a wealth of technology resources. All of these provide a fertile ground for business growth and profitability. Not to mention that Tennessee offers a reasonable cost of living, and does not impose a personal state income tax or a state property tax. These factors work in your favor if you plan on starting a business in Tennessee. And, if this is really something you intend on doing, here is a simple and straightforward guide that ought to help you go about this process.
A journey of a thousand miles begins with a single step, and your venture of starting a business will be no exception. At this point, it is worth mentioning that small businesses make up the majority of all the companies in Tennessee. You can call them the backbone of our state’s economy and not worry about being wrong. What’s more, some of the largest, most well-known companies in Tennessee today started off as good ideas belonging to small business owners. These people were not scared to dream big, nor hesitant to work hard. So, before you even start worrying about how you are going to move into your new premises and transport equipment necessary for your work, it is crucial that you choose your business idea carefully. Once you have a strong foundation, everything else will run much more smoothly.
Step 1: Clearly define your business idea
Deciding what kind of business you will be running is the first step towards business ownership. It would be best that you look for an idea that suits your interest, as well as personal goals, and natural abilities. The work ahead will require a lot from you, and you need to have all of the latter motives to keep you going if and when the times get tough. Here are some ideas that have gained popularity in 2020:
- real estate
- pet care
- green living consulting
- fitness services
Mind you, these ought to serve as an inspiration, in case you are not already adamant about a certain idea. If you have a clear vision of what your business should look like, by all means, follow it.
Step 2: Create a game plan
When starting a business in Tennessee with a goal of success, you will not only have to work hard, but smart as well. Successful businesses are developed through careful planning and thoughtful organization. Before you commit any significant amount of money and other resources into your business idea, make sure to critically analyze it first. You will also need a clear game plan. At the very least, the latter should have firm answers to the following points:
- Business name – consider this to be one of the most paramount steps in getting started. Make sure that you choose the brand name that is in accordance with Tennessee naming rules. It should also reflect your line of work, and be available in Tennesee and as a URL.
- Product development – your business will build its strength on the problems it solves. Ensure that the product or service you offer is indeed necessary to Tennessee residents. Try to define what differentiates you from the competition, so that you will know how to value yourself on the market, and advertise accordingly.
- People and potential partnerships – will you need assistance with your work, and how big of a workforce will you need to hire? Are there any professional relationships that may be crucial to the success of your business?
- Financial planning – try to define the number of clients or sales you will need to reach in order to break even. Knowing how much money it will take to get there will allow you to create the best plan of action.
Step 3: Decide on a legal structure
The most common legal structure for small businesses is the sole proprietorship, partnership, limited liability company (LLC), and corporation. Before you choose one, consider which business entity structure offers the type of liability protection you want. Be mindful of the tax, financing, and financial benefits for you and your business. Having that you plan on starting a business in Tennessee, I would advise you to consider going for an LLC or a Corporation, for they have two major advantages:
- increased credibility
- protection form personal liability in the event your business gets sued
Out of these two, LLC might be your best option. It is easy to set up and manage, and it has a rather favorable tax treatment. In the state of Tennessee, you can set up an LLC for $350.
Step 4: Register for Taxes, and sort your licenses and permits
Most businesses require an Employer Identification Number (EIN), with very few exceptions. This number is also known as a Tax ID Number. It has the purpose of identifying a business in its federal tax filings. Not having it will prohibit you from hiring employees or opening a business bank account. In addition to this, you will need to register for Tennessee Sales Tax, if you are selling a physical product. If you are hiring employees, you will have to register for the Unemployment Insurance Tax on behalf of your employees.
Regulatory licenses and permits cover areas such as health and safety, the environment, building construction, and specific industries or services. Different licenses and permits are issued by different agencies, so make sure that you locate the ones that are in accordance with your product or service.
Step 5: Get insured
Acquiring business insurance will help you manage risks, and allow you to focus on growing your business. While there are various types of business insurance, I recommend that you purchase a general liability policy. I believe it to be a good choice for a person planning on starting a small business in Tennessee. If you plan on having five or more employees, including LLC members and corporate officers, you are required by law to have workers compensation insurance.
Patricia Cavanaugh primarily works for Spyder Moving Services. However, she also enjoys selling her art in forms of wedding, birthday, and party decorations. In her free time, she likes to inform herself on better ways of growing her small business.