Do I have to file a business tax return in Tennessee?
Overview. Generally, if you conduct business within any county and/or incorporated municipality in Tennessee, and your business grosses $100,000 or more, then you should register for and remit business tax.
Certain entities under specific circ*mstances are exempt from paying the business tax. These may include, but are not limited to, people acting as employees, manufacturers, religious and charitable entities selling donated items, direct-to-home satellite providers, and movie theaters.
Tennessee requires LLCs to file an annual report and pay a franchise tax. The annual report is due on or before the first day of the fourth month following the close of the LLC's fiscal year. The filing fee is $50 per member, with a minimum fee of $300 and a maximum fee of $3000.
Tennessee Tax Rates, Collections, and Burdens
Tennessee does not have an individual income tax. Tennessee has a flat 6.50 percent corporate income tax rate and levies a gross receipts tax.
Tennessee does not tax individual's earned income, so you are not required to file a Tennessee tax return since the Hall Tax in Tennessee has ended.
Therefore, if you are a business with annual gross receipts in excess of $3,000, but under $100,000, you are no longer required to obtain a Standard Business License and pay business tax. Instead, you must obtain a Minimal Activity License from the appropriate county clerk for each business location.
Obtain a Business License
No business license: Under $3,000 in gross sales. Minimum activity license: Between $3,000 and $100,000* in gross sales. A business tax account and filing are not required with a minimum activity license. A business will renew directly with their local county clerk's office.
If you are a corporation, limited partnership, limited liability company, or business trust chartered, qualified, or registered in Tennessee or doing business in this state, then you must register for and pay franchise and excise taxes.
LLC members' income is also taxed at the federal self-employment tax rate of 15.3% (12.4% for social security and 2.9% for Medicare). Tennessee LLC members will catch a break on state income tax, because there is none. There is a state franchise tax for LLCs, as well as sales and industry-specific taxes.
A single-member LLC is a disregarded entity for federal tax purposes. Therefore, if the single-member is an individual, the business income is reported on the member's personal tax return on Schedule C of Form 1040. A single-member LLC is subject to Tennessee franchise and excise taxes.
Do you need a business license to own a business in Tennessee?
No business license required: If you make less than $3,000 in gross sales, then you don't need a business license. Minimum activity license: If you make between $3,000 and $100,000 in gross sales, you'll need a minimum activity license from your county clerk's office.
Business tax can be filed and paid online using the Tennessee Taxpayer Access Point (TNTAP). A TNTAP logon should be created to file this tax. Click here for help creating your logon.
South Dakota and Wyoming are the only states that levy neither a corporate income nor gross receipts tax.
Tennessee residents do not need to file a state income tax return because there is no personal income tax. The deadline for filing federal income tax returns is April 15, 2024. For help estimating your annual income taxes, use AARP's Tax Calculator.
Income tax is generally levied at a state-level on the income you earn within a tax year. Yet, Tennessee is one of several states that doesn't levy a state-level income tax on personal income. Business income and real property taxes as well as sales taxes are levied in Tennessee.
If you earn less than the standard deduction for your filing status, you likely don't need to file a tax return. Even if you don't meet the filing threshold, you may still have to file taxes if you have other types of income.
Along with most states, Tennessee doesn't require a general business operating license, regardless of whether you're a sole proprietor or own a registered business.
The term trade or business generally includes any activity carried on for the production of income from selling goods or performing services. It is not limited to integrated aggregates of assets, activities, and goodwill that comprise businesses for purposes of certain other provisions of the Internal Revenue Code.
However, Tennessee does require most LLCs to pay taxes on gross receipts by applying for and maintaining a business license. Any business with gross receipts above $3,000 must apply for this license.
Tennessee, unlike most other states, doesn't treat LLCs as pass-through entities. Instead, LLCs are subject to the same taxes as corporations. Must pay a franchise and excise taxes. Tennessee imposes a franchise tax and an excise tax on most LLCs.
How much is a LLC business license in TN?
How much does it cost to form an LLC in Tennessee? The Tennessee Secretary of State charges $50 per LLC member included in the filing, with a minimum total fee of $300. The filing fee cannot exceed $3,000 for the Articles of Organization. A convenience fee will also be charged when paying online by credit card.
- No state income tax on limited liability companies.
- Asset protection and limited liability.
- LLC assets are safe from personal liabilities.
- Charging order protection extended to single member LLC's.
- Members nor managers are not listed with the state.
If You are Self-Employed
The self-employment tax rate is 15.3% of net earnings, consisting of a 12.4% Social Security tax and a 2.9% Medicare tax on net profits. The same 2022 wage base limit of $147,000 applies to self-employed individuals to pay Social Security taxes.
Tennessee has a pro-business environment that features some of the lowest state and local tax burdens in the U.S. and no personal income tax. If you're wondering how to start an LLC in Tennessee, this guide will provide you with the basic information you'll need.
The excise tax is based on net earnings or income for the tax year. The rate is 6.5 percent of Tennessee taxable income.
