Tennessee, unlike many other states, does not have an individual state income tax. However, Tennessee does have other taxes required for LLC, including but not limited to, Business Taxes and Franchise & Excise Taxes. Since these taxes are not related to payroll taxes, Collective members with LLCs, registered to do business in Tennessee, will need to set up and administer these tax accounts using the Tennessee Taxpayer Access Point (TNTAP)
The business tax is a privilege tax on the privilege of doing business by making sales of tangible personal property and services within Tennessee and its local jurisdictions. While anyone doing business in the state is subject to the state-level business tax, unless specifically exempt, each municipality must adopt the tax to impose it within its city limits. The business tax applies to a taxpayer’s gross sales. Taxpayers multiply the gross sales derived from taxable sales per location by the appropriate state and local tax rates to calculate the amount of tax owed per location. There are several different business tax rates. The rates are determined based on the taxpayer’s “dominant business activity”
Register with the State:
You must determine if you are required to remit and pay Business Tax and identify your classification. If you need help to determine these requirements, you can contact your county clerk, city business tax office, or the Tennessee Department of Revenue. If required must register with the state using the Tennessee Taxpayer Access Point (TNTAP)
Register with the County/City:
Click here for a comprehensive list of cities that have enacted business tax.
A separate $15 business license registration fee must be paid to the county and/or municipal clerk for each new business. Once you register for business tax, please get in touch with the individual county and/or municipal clerk to arrange for payment of this required fee and to obtain your business license. It takes up to 10 business days for the Department of Revenue to register your business.
The Business Tax return is due on April 15th (given that your fiscal year ends in December)
Franchise & Excise Tax
The franchise tax is based on the greater net worth or the book value of real or tangible personal property owned or used in Tennessee. (Currently 0.25%. The minimum franchise tax of $100 is payable if you are incorporated, domesticated, qualified, or otherwise registered through the Secretary of State to do business in Tennessee, regardless of whether the company is active or inactive.)
The excise tax is based on net earnings or income for the tax year. (Currently 6.5%)
Collective members with LLCs registered to do business in Tennessee must register and pay for Franchise & Excise Taxes. You will also need to file the Franchise Tax & Excise Tax reports for the assigned period (quarterly or annually). Your filing frequency will be assigned to your business post registration.
Registration of Franchise Tax & Excise Taxes is available on the Tennessee Taxpayer Access Point (TNTAP). To apply, please go to the Tennessee Taxpayer Access Point (TNTAP) and select Register a New Business.
Step-by-Step Guide to Tax Registration Process
To register for Business Tax and/or Franchise & Excise Tax, please see this step-by-step guide and follow the instructions.
Collective does not support filing Business Tax nor Franchise Tax & Excise Tax reports. As a member at Collective with a Tennessee LLC, you are responsible for:
Creating a log on with the Tennessee Department of Revenue online portal (TNTAP). For assistance, please watch this video.
Registering for Business Tax
Registering for Franchise & Excise Tax
Calculating taxes owed and filing tax returns. All tax returns and associated payments must be submitted electronically. This can be accomplished by using the Tennessee Taxpayer Access Point (TNTAP).
Uploading a copy of the tax returns showing the breakdown of the taxes you paid to your Collective dashboard.
What Collective Will Do
After you've paid your Business Tax and Franchise & Excise Taxes from your business checking account, save your payment confirmation and upload it along with your tax return to your Collective Dashboard on the Documents Tab. Collective will categorize this transaction in your books as "Taxes and Licenses".
Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as financial or tax advice. It is not intended to be a substitute for obtaining accounting or other financial advice from an appropriate financial adviser or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.