Starting an S-corp in Tennessee is a great way to protect your personal assets while enjoying the tax benefits and opportunities for growth that come with running a small business. Forming an S-corporation, which is a small business that elects to be taxed like a partnership rather than as a standard corporation, requires careful planning and execution. In this article, we'll provide an overview of the legal steps and requirements that need to be taken to start an S-corp in Tennessee.
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Step 1: Select a Name and Register
Before you can begin the process of starting an S-corp in Tennessee, you'll need to select a name for your business. Make sure to choose a name that is not already taken by another business. You can do a name search on the Secretary of State website to check whether your desired name is available or not. Once you have a name that is available, you will need to register it with the Tennessee Secretary of State.
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Step 2: File Articles of Incorporation
After you have selected and registered your business name, you'll need to file Articles of Incorporation with the Tennessee Secretary of State. The Articles of Incorporation are the legal documents that formally create the corporation and set forth its purpose, management structure, and other important details. You can complete this process online through the Tennessee Secretary of State's website, or by mail. This then requires a fee, so make sure to bring that into account.
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Step 3: Obtain a Federal Employer Identification Number
An S-corp needs to obtain a Federal Employer Identification Number (FEIN) from the IRS. This number is essentially a social security number for a business and is required for opening bank accounts, filing tax returns, and more. With the FEIN ready and set, all of the funds that enter the bank capable of merging with the owner's are therefore taxed as income. You'll need to provide the name and contact information of the company, the company’s structure such as a corporation or limited liability entity as in this case, as well as concrete information about the workforce and taxation. To get this, you can head to the official IRS website.
Step 4: Draft a Corporate Bylaws
After the Articles of Incorporation is complete, you need to draft corporate bylaws. This document provides information about the day-to-day operations, governance and management of the S-corporation. Bylaws would include standard operating for business procedures such as number of meeting every year, noting every year, necessary person to be present for the business to take place for the year, handling shares, roles of executives, payouts, obligations, shareholders communications, etc.
Step 5: Register for state and local taxes and obtain any required licenses and permits
In Tennessee, depending on your business's relevant industry activities, you may need the following permits and licenses to operate legally:
- A sales tax license
- A business license
- Permits and inspections for a business location
- Additional requirements
You can easily register this on average online which takess up to one to two weeks to be confirmed by Tennessee.
Step 6: Hold an Organizational Meeting
After the necessary business metrics have been setup one is required allocate owner’s shares as well as well, establish leadership roles. HOlding an actually organized meeting at a specified outdoor, conference center or in office is essential for this step.
# Final Thoughts
While starting an S-corp in Tennessee is a complicated process. With some knowledge about each step and great, these obstacles can be easily resolved over the span of a a couple of weeks where you bring your company online transitioning it from a “LLC” equity protection to having the successful taxes and growth opportunities that are attached to an S-corp in the state of Tennesee. Once it carves out your positioning in terms of registered agents, coveted Tennessee, office space and the bank filling pace, your corporations has the potential to become one of both prosperity and longevity in the coming years.
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