All businesses must file an income report yearly, even if there are no profits or losses. You can do it online or use paper forms. If you choose to go digital, you’ll want to start off with the free version of TurboTax. But if you’d rather keep things simple, you can always download the free 1040EZ form. And if you’re filing jointly, you’ll want to make sure you include your spouse’s information.
You’ll need to set up payroll records if you decide to hire employees. This includes keeping track of W2s, pay stubs, and withholding taxes. For help, check out our guide to setting up payroll software.
You’ll also need to register your business with the state. You can find the necessary forms here. Once you’ve completed the registration process, you’ll receive a letter confirming your status as a registered business. Keep this handy because you’ll need it to open bank accounts and obtain licenses.
And finally, you’ll need to apply for a Tax Identification Number (TIN). A TIN number allows you to file taxes electronically, and it’s required for most small businesses. You can apply online, or you can print out the appropriate form and mail it in.
To learn more about registering your business, read our full article here.
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What is an EIN Number?
An EIN number is like your Social Security Number for your small business. You use it to file taxes each year, pay payroll tax, and open bank accounts. But what exactly is an EIN? And why do you need one?
The IRS requires businesses to have an Employer Identification Number (EIN). This number is used to identify employers for filing federal income tax returns, paying employment taxes, opening bank accounts, and many other things. If you don’t already have an EIN, you’ll want to apply for one immediately. Here are some reasons why:
1. Get ready for payroll tax
Businesses must withhold certain amounts of money from employee wages to cover Social Security and Medicare taxes. These withheld funds are held in trust for the government. When the employer files his/her annual return, he/she reports how much was withheld and pays the appropriate amount of taxes. To make sure you’re doing everything correctly, it’s important to know your EIN.
2. Open bank accounts
If you plan to open a business checking account, you’ll need an EIN. Banks won’t let you open a business account without one. They’ll ask for your social security number, too, so you might as well get an EIN now.
3. Payroll taxes
How to Register Your Business in Tennessee and Obtain an EIN Number
To register an organization in Tennessee requires completing an application form and submitting it to the state. Once your application is approved you will receive a tax ID number (EIN). This number allows you to file federal and state taxes electronically.
The process to obtain an EIN varies depending on whether you are filing online or offline. For online applications, there is no fee to apply. You can find instructions here. If you prefer to use paper, you can download the form here.
Once you have completed the form, you must mail it to the following address:
Tennessee Division of Finance
Taxpayer Services Section
Department of Revenue
Attn: EIN Application
1. Tennessee Means Business
Small businesses create two out of three jobs in the United States. Small businesses account for over half of all job growth in the US economy. And according to a recent report published by the Kauffman Foundation, nearly 9 million small businesses are operating in the United States today.
Tennessee is one of the best places to start a business because it offers entrepreneurs low taxes, affordable real estate options, and access to capital. But there are many different ways to look for startup resources in Tennessee. Here are some of our favorites:
The Tennessee Enterprise Center – This is the state’s primary resource for startups. They provide free legal advice and help with financing. Their goal is to connect entrepreneurs with local resources. Startup Tennessee – Startup Tennessee provides information and tools to help entrepreneurs succeed. You can use their site to find funding opportunities, build a business plan, and more. Tennessee Venture Capital Association – TVCA connects investors and entrepreneurs throughout Tennessee. They offer mentorship programs, workshops, and networking events. Tennessee Angel Network – TNAN is a statewide network of angel investors. They work closely with entrepreneurs to identify investment opportunities. Forbes recently ranked Nashville as one of America’s Best Cities for Entrepreneurs.
2. Tennessee Business Formation
The easiest way to start a business in Tennessee is to use a sole proprietorship. This type of business structure allows you to operate without paying taxes. However, there is no protection against personal liability. If someone sues you, it could ruin your credit rating, make it difficult to obtain loans, and even cause you to lose your job. An S Corporation or an LLC offers limited liability protection. These types of businesses are taxed differently than sole proprietorships. They pay less in taxes because they don’t report profits or losses. But they still must file corporate tax returns.
Corporations offer many benefits, including payroll, insurance, and legal protections. For example, corporations cannot be sued unless shareholders authorize it. In addition, corporations are subject to double taxation.
A corporation is formed by filing articles of incorporation with the Secretary of State. The cost of incorporating a single-member business is $200 plus the fees charged by the Secretary of State. Each additional shareholder adds another $200 per person.
If you plan to incorporate, consider whether you need to hire employees. Depending on how much work you do, it might be cheaper to form an S Corp than a corporation.
Incorporate now while thinking about what kind of business you’ll start.
3. Getting a Federal Tax ID (EIN) Number
An EIN is a unique identification number used to identify individual entities such as individuals, corporations, partnerships, and trusts. It is also known as Employer Identification Number or Individual Taxpayer Identification Number. A federal tax form is required to obtain an EIN. If you are filing taxes as an individual, corporation, partnership, or trust, you must file Form SS-4 Application For Employer Identification Number with the IRS. This form requires information about yourself, including your name, address, Social Security number, date of birth, employer’s name and address, and telephone number. Once you apply, it takes up to three weeks for the IRS to process and issue your EIN.
You do not need to apply for an EIN if you already have a valid social security number. However, if you want to open a business bank account, you will need one. Banks require an EIN to verify your identity.
You can use an EIN to pay your taxes online. When paying electronically, you must enter your EIN into the payment system.
4. State Tax ID for Tennessee
A TN state tax ID number helps you file your federal returns. If you’re filing online, it’ll allow you to use TurboTax Online Free Edition. And if you want to use our free software, we’ll give you one.
If you already have a valid EIN, you don’t need to apply separately for a TN state tax ID. Just call us at 866-908-8990, and we’ll walk you through the process.
5. Localized Tennessee Licenses and Permits
To open a business in Tennessee requires an application for an annual business license, regardless of whether the business is located within a municipality. You can find out what type of license you need by checking with the local county clerk. If your business does not fall under one of the categories listed here, it doesn’t mean you won’t be able to operate a business in Tennessee; it just means you will have to pay a lower fee.
There are three types of licenses: general, special, and limited. General licenses cover businesses like restaurants, retail stores, gas stations, and grocery stores. Special licenses include bars, adult entertainment establishments, bowling alleys, and massage parlors. Limited licenses cover construction contractors, funeral homes, florists, veterinarians, and veterinary clinics.
If your business falls into one of the above categories, you will likely need a special or limited license. However, there are some exceptions. For example, if you run a bar, restaurant, or grocery store, you might qualify for a general license. Also, if you are running a medical clinic, you might be able to use a limited license.
The fees associated with each license vary based on location. In addition to the licensing fee, you will need a permit, which costs $50.00 per year. A permit allows you to display signs outside your business, and you can add additional signage inside your building.
You can check with the local county clerk to see if you need a license. If you do, you will need to complete an online form and submit it to the county clerk, along with payment. Once you receive approval, you must sign a copy of the license agreement and return it to the county clerk. This process usually takes about 30 days.
Frequently Asked Questions
How to Cancel an EIN?
If there was a mistake with filing your initial EIN application or you want to cancel it for some reason, you just need to send a letter canceling your EIN number to the IRS. Here are the steps:
1. Go to www.irs.gov/ein/cancel
2. Enter your Social Security Number and date of birth into the fields on the left side of the screen.
3. Click the “Submit Form” button.
4. Your request will take up to 10 days to process.
5. Once processed, you’ll receive an email confirmation.
Who needs an EIN?
If you’re starting a small business, you might think about getting an Employer Identification Number (EIN), but don’t just jump into applying for one. There are some things you’ll need to know before you do.
The EIN is used for federal tax purposes and is necessary for businesses that are registered as a partnership, corporation, multi-member limited liability company (LLC), or a sole proprietorship or single member LLC that has employees. The IRS requires each partner/owner to file Form SS-4, Application for Employer Identification Number for those business entities.
Those business entities will use the owners’ Social Security numbers (SSNs) or Individual Taxpayer Identifier Numbers (ITINS) instead of an EIN. However, using an EIN instead of the owner’s SSNs can help prevent identity theft.
If you’re a sole proprietor or single-member LLC without employees, applying for an EIN is no requirement. But it’s still a good idea to do so anyway because it helps protect your personal information.
James Rourke is a business and legal writer. He has written extensively on subjects such as contract law, company law, and intellectual property. His work has been featured in publications such as The Times, The Guardian, and Forbes. When he’s not writing, James enjoys spending time with his family and playing golf.