New business formation and tax setup in Nashville

The Secretary of State filing is what brings the entity into existence under Tennessee law. A limited liability company is formed with Articles of Organization, form SS-4270, and a for-profit corporation with a Charter, form SS-4417, both filed with the Tennessee Secretary of State, which also handles later amendments and the annual reports that keep an entity active.

The filing has a tax consequence the same day. Once a business is incorporated, domesticated, qualified or otherwise registered through the Secretary of State, Tennessee’s $100 minimum franchise tax applies to it every year, whether the company is active or not. An LLC formed for a project that never started still owes it until the entity is properly closed.

The old site describes this part of the practice in one line: Tyrone “assists small businesses in their start-up phases and focuses on making sure they are compliant in their tax filings.”

The IRS classifies a business by its structure unless the owners elect otherwise. A single-member LLC is disregarded as separate from its owner for income tax, so its income is reported on the owner’s return. For employment taxes and certain excise taxes, the IRS still treats it as a separate entity, which matters the moment it hires.

A domestic LLC with two or more members is classified as a partnership for federal income tax unless it elects corporate treatment. Either kind of LLC can file Form 8832 to be taxed as a corporation, and that election cannot take effect more than 75 days before it is filed.

Each choice carries its own return, its own deadlines and its own payroll questions for owners who work in the business. Those questions are picked up on the payroll page once there are employees.

A new Tennessee entity typically registers for two state taxes besides its formation filing. Corporations, limited partnerships, LLCs and business trusts chartered, qualified or registered in Tennessee, or doing business here, must register for and pay franchise and excise tax. Franchise tax is figured at 0.25% of net worth in Tennessee, and excise tax at 6.5% of the business’s Tennessee taxable income.

Business tax is the second. A business conducting business in a Tennessee county or incorporated city that grosses $100,000 or more should register for and remit it. It is two taxes, the state business tax and the city business tax, and the city portion applies where the city has enacted one. Registration with the Department of Revenue runs through its Tennessee Taxpayer Access Point (TNTAP).

Start-up compliance matters because the problems the firm resolves later can start with a filing missed in the first year. A new LLC that misses its first franchise and excise return, or a first employee whose withholding is never deposited, becomes the balance that a Revenue Officer works years later.

Getting the setup right is cheaper than any resolution. That covers the entity’s classification, the federal return that goes with it, the Tennessee registrations, the deposit schedule once there is payroll, and the owner’s own estimated payments. The books behind all of it are on the accounting and bookkeeping page.

What a formation engagement includes is settled with Tyrone at the first meeting. The old site lists the service without that detail, and so does this page.