Whether you are following the EverEmployed program or going it on your own, many entrepreneurs choose to operate as an S-corp for a number of reasons. While we can’t offer legal advice, here are general instructions and resources on setting up an S-corp in Tennessee. If you are still unsure as to what an S-Corp is, please refer to our article, “What is an S-Corp?“
Though it seems choosing a name for a company would be the easiest step in this process, there are still some rules and regulations to follow. The name must include one of the following words or their abbreviations: Incorporated (Inc.), Corporation (Corp.), or Company (Co.). If the company name includes the words bank, banks, banking, credit union, trust or insurance company, written approval must be obtained before organizational paperwork can be filed. More information can be found at the Business Services Division.
The chosen name must also be distinguishable from any other entity on the books with the Secretary of State Division of Business Services. You may do a preliminary search of the business name for availability. If the name is available, you can either file a Name reservation form to hold the chosen name for four months (a $20 filing fee will be assessed); or proceed with the paperwork to legally begin the company.
File Organizational Documents
To legally begin your corporation, you will need to file a corporate charter. This charter is submitted by mail to the Tennessee Department of state and details the name and address of the corporation, name and address of a registered agent, how many shares the company is authorized to issue, the address and name of each incorporator as well as an effective dat of the corporation.
Each corporation ding business in the state of Tennessee will also be required to submit an annual report. The report can be submitted online or through the mail, and are due on the first day of the fourth month after the fiscal years end. An additional processing fee will be assessed if changes are made to either the registered agent and/or office.
Additional Forms to File
By submitting your charter, your corporation is a legal entity in the state of Tennessee. In order to elect s-Corp status for Federal taxes, each shareholder in the corporation will need to sign Form 2553: Election by a Small Business Corporation. This form must be submitted within 2.5 months of the corporations’ first tax year.
Each corporation will also need to apply for a Federal Employer Identification Number (EIN) through the IRS website. By answering a few questions online, the number will be immediately issued.
Finish Up the Prep Work
Once your S-corp is set up, remember to get a business license in the city you are operating. Most cities pull data from newly-registered businesses in the state so they can track down who in their city should have a license. While you can wait for your city to come knocking if you are on a tight budget (and many will simply give you a deadline to get a license), some municipalities may not be so friendly about it.