Starting your own business can be a daunting experience. In addition to planning your business activities, you need to be in compliance with local, state, and federal regulations related to your business. The following serves as a starting point to understand the various requirements governments have for small businesses and how to comply.
Federal Employer Identification Number
You must obtain a Federal Employer Identification Number (EIN) if you have one or more employees, or if you operate as a trust, estate, corporation, partnership, or a similar non- individual organization (whether you have employees or not). There is no cost to obtain an EIN. You can apply on-line to get your EIN from the IRS at this web address: http://www.irs.gov/businesses/small/article/0,,id=102767,00.html. You will obtain it immediately upon completion of the validation. When filling out the form the only punctuation and special characters allowed are hyphen (-) and ampersand (&). (NOTE for LLC EIN applicants)
Alternative methods of obtaining an EIN include
· Complete Form SS-4, available by downloading on line at this IRS address: http://www.irs.gov/pub/irs-pdf/fss4.pdf. Download the instructions for this form here: http://www.irs.gov/pub/irs-pdf/iss4.pdf. The form is also available from any Internal Revenue Service office, Social Security Administration office or SCORE offices (part of the IRS Business Tax Kit).
· Mail to the Internal Revenue Service, Stop 8143, Memphis, Tennessee 37501
· Fax to (901) 546-3916. This number is available from 3 am to 11 pm Central Standard Time.
Tennessee Employer Number (SUTA)
You must obtain a Tennessee Employer Identification Number if
· You employ one or more persons during twenty different calendar weeks in a calendar year
· You paid $1,500 in gross wages during any calendar quarter
· You are liable under the Federal Unemployment Tax Act,
A “new” employer must complete a “Report to Determine Status – Application for Employer Number”; https://www.tn.gov/workforce/topic/unemployment-insurance-tax
If you are liable for unemployment insurance premiums in Tennessee, you will be assigned an eight digit employer account number (i.e. 0000-000 0). Applications may be obtained by calling any local Employer Accounts Office such as this office in Knoxville.
Employer Accounts Office
2700 Middlebrook Pk., Ste 100
Knoxville, TN 37921
P.O. Box 2031
Knoxville, TN 37901-2031
or by calling toll free 1-800-344-8337 and pressing 1. Make sure you specify whether you are a Regular Business, a Nonprofit Organization or a Government Employer.
There is no cost
Sales & Use Tax Certificate (Sales Tax Number)
Businesses selling retail are liable for collection and payment of Tennessee Sales and Use Taxes. Contact the Tennessee Department of Revenue 531 Henley Street, Knoxville, Tennessee 37902. Telephone: (865) 594-6100 to obtain your Certificate. There is no cost. Application registration can be found on-line at https://www.tn.gov/revenue/article/forms-sales-and-use-tax
A week to ten days after the application you will receive a Certificate and a package including the original Certificate of Resale which can be used to purchase items used for resale without paying sales tax. Many vendors will only accept the original Certificate of Resale with the State seal. Other copies can be obtained by calling the revenue office at 615-253-0600 and providing your account number. Company account numbers can be verified on-line at https://www.tn.gov/revenue/article/sales-and-use-tax-certificate-verification-application
You must register your business and obtain a Business License from the appropriate County Court Clerk and/or the city tax collection authority. The cost is $15 renewable annually. There may be additional classification fees depending on the type of your business. Currently businesses with $3,000 or more in annual gross sales must have a business license for each place of business. As of January 1, 2014, the amount is increased to $10,000 or more in gross sales. Businesses with between $3,000 and $10,000 in gross sales must obtain a $15 minimal activity license, which can also be obtained online at the county clerk’s website.
Some types of professions are exempt only because the Tennessee Business Tax or the Minimum Business Tax License Fee does not apply to them. Upon application for a business license your information will be forwarded by the licensing office to the Tennessee State Department of Revenue responsible for tax collection including Tennessee Gross Receipts Tax outlined below.
Tennessee Gross Receipts Tax: All retail & wholesale businesses are subject to these annual taxes. The tax rate is set by the State of Tennessee. Your Business Tax Classification determines the fiscal year & the date that payment is due. This classification is determined by the type of the business and is provided upon obtaining the appropriate local business licenses.
· CLASS 1: Fiscal year January 1 to December 31 – Due before March 1. Includes gasoline service stations, grocery stores, food wholesalers, hardware stores, building materials, feed stores, food brokers, beer package stores, beer wholesalers, wholesale gasoline, and diesel fuel.
· CLASS 2: Fiscal year April 1 to March 31 – Due before June 1 Includes advertising specialties, automobile & motorcycle dealers, boat & camper dealers, department stores, florists & plant stores, home furnishings, appliance & electronics retailers, restaurants, liquor store, liquor wholesalers, all businesses not listed elsewhere.
· CLASS 3: fiscal year July 1 to June 30. Due before September 1. Includes antique dealers, delicatessens, jewelry stores, card shops & book stores, pawn shops, beauty & barber shops & schools, architectural & artist supply sales, hearing aids, razors, luggage, optical & ophthalmological supplies, typewriter, sporting goods, sales of services or furnishing/rendering services.
· CLASS 4: Fiscal year October 1 to September 30. Due before December 1. Includes general contractors, subcontractors, produce dealers.
The forms for TENNESSEE DEPARTMENT OF REVENUE MUNICIPAL BUSINESS TAX RETURN can be perused for filing, (including current tax rates) for Classes 1, 2, 3, & 4 & can be downloaded at http://www.tn.gov/revenue/forms/business/bus416_1d.pdf
The forms for TENNESSEE DEPARTMENT OF REVENUE COUNTY BUSINESS TAX RETURN can be viewed for filing, (including current tax rates) for all four classes & can be downloaded at https://www.tn.gov/revenue/article/forms-gross-receipts-taxes
Based upon the location of your business you can be subject to one or both of these TENNESSEE GROSS RECEIPTS TAXES.
Responsibilities If I Hire Employees?
For every employee, you must
· Have each employee complete Form W-4 to determine the amount of income tax to withhold from the employee’s wages.
· Deduct from their wages Social Security taxes, Medicare taxes, and income tax
· Pay Federal Unemployment (FUTA) Tax.
· Pay State Unemployment (SUTA) Tax.
· Complete Form W-2 at the end of the year for each employee
Governmental Reporting Requirements:
FEDERAL: For each employee, you must maintain an Employment Eligibility Verification (Form I-9) for the US Department of Homeland Security, US Citizenship and Immigration Services. You can download Form I-9 instructions and the form from the Employment Eligibility Verification page found by clicking HERE or go to their main web site http://www.uscis.gov/portal/site/uscis
TENNESSEE: If you hire or re-hire an employee, you must report such employees within twenty (20) days after hire date. The preferred reporting method is on-line and registration is at: http://www.tnnewhire.com/. Alternate reporting methods are:
· Faxing a copy of the state reporting form found at https://www.tnnewhire.com/PDFs/Reporting.pdf
· Faxing a copy of the employee’s Form W-4 (obtainable from any IRS office or online at http://www.irs.gov/pub/irs-pdf/fw4.pdf to Tennessee New Hire at fax (877)-505-4761.
· Mail to Tennessee New Hire Reporting, PO Box 17367, Nashville, TN 37217, or by phone at: 1-888-715-2280.
FEDERAL TAXES:Taxes are reported to the Internal Revenue Service on Form 940 and Form 941… Most of the information you will need about IRS requirements is contained in IRS Publication 15 and can be downloaded from website http://www.irs.gov/pub/irs-pdf/p15.pdf obtained at the SCORE office or from the IRS office located in the John Duncan Building, 710 Locust Street, Knoxville, Tennessee.
What Else Do I Need to Investigate?
FEDERAL EXCISE TAX: Your business may also be required to pay excise taxes. Excise taxes apply to businesses that manufacture or sell certain products; operate certain kinds of businesses; or use various kinds of equipment, facilities, or products. To determine whether you must pay excise taxes, refer to IRS Publication 510. This publication can be downloaded from website http://www.irs.gov/pub/irs-pdf/p510.pdf or obtained at the IRS office or the SCORE offices.
TENNESSEE FRANCHISE & EXCISE TAX: Tennessee State Franchise & Excise taxes are excluded for sole proprietorships and general partnerships. Upon incorporation with the Secretary of State, you will be assigned a control number. The Department of Revenue will send you a welcome notice with your control number and request for additional registration information. The registration form should be mailed to the Tennessee Department of Revenue, 500 Deaderick Street, Nashville, TN 37242 or faxed to (615) 741-0682. The form can be downloaded from https://www.tn.gov/revenue/article/franchise-excise-tax-registration The Tennessee Department of Revenue Regional Office is located at 531 Henley Street, Room 606, Knoxville, TN 37902 at phone (865)-594-6100. The Franchise & Excise Tax Guide is found at https://www.tn.gov/revenue/article/franchise-excise-tax-publications
Free counseling about these requirements or any other concerns you may have about starting your business is available by calling SCORE (865)692-0716 to schedule a counseling session.
source: Walt Williams, SCORE Counselor May 2015