Recently, I had an out-of-state client call me after their LLC was cited by the Tennessee Department of Revenue for failing to register their business in Tennessee. When I asked them what had happened, the client told me that they had been doing business in Tennessee for well over three years. However, they had never registered the business through the Secretary of State or Department of Revenue. They had to pay significant fees and were prohibited from taking certain actions because the business was not registered properly.
Understand that when you have an established out of state business and ready to start doing business in Tennessee, you must make sure you handle all of the administrative details correctly. Transacting business in Tennessee without proper registration with the Secretary of State and the Tennessee Department of Revenue can result in significant fines and penalties.
If you fail to register a business in Tennessee, the state can require you to pay all taxes you would otherwise pay to the state. Moreover, failure to register can cripple your business’s ability to enforce actions or contracts in court. See Tenn. Code Ann. § 48-25-102 (2016); § 61-2-907 (2010).
While the Tennessee Business Corporation Act doesn’t define what constitutes “transacting” or doing business in Tennessee, it does provide a helpful list of activities that are not considering transacting business:
- Maintaining, defending or settling any proceeding, claim or dispute;
- Holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs;
- Maintaining bank accounts;
- Maintaining offices or agencies for the transfer, exchange, and registration of the corporation’s own securities or appointing and maintaining trustees or depositories with respect to those securities;
- Selling through independent contractors;
- Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside Tennessee before they become contracts;
- Creating or acquiring indebtedness, deeds of trusts, mortgages and security interests in real or personal property;
- Securing or collecting debts or enforcing mortgages, deeds of trust, and security interests in property securing the debts;
- Owning, without more, real or personal property (including, for a reasonable time, the management and rental of real property acquired in connection with enforcing a mortgage or deed of trust if the owner is attempting to liquidate the owner’s investment and if no office or other agency, other than an independent agency, is maintained in Tennessee);
- Conducting an isolated transaction completed within one month and that is not one in the course of repeated transactions of a like nature; or
- Transacting business in interstate commerce.
So, simply performing any of the activities on this list alone means that you probably don’t have to register your business in Tennessee. But if you have an office, store, warehouse, employees, or sell items online in Tennessee you will probably need to register your business in the state.
Register as a Foreign Business in Tennessee
A “foreign” business isn’t necessarily one located out of the country. Rather, it’s a business incorporated or formed in another state, such as Kentucky, Alabama, Georgia, etc. Foreign businesses can receive a certificate of authority to transact business in Tennessee by applying with the Secretary of State’s Division of Business Services.
To register a foreign business in Tennessee, you’ll need to complete forms with the Tennessee Secretary of State’s office:
- Application for Certificate of Authority for a Foreign LLC: Form ss-4233
- Application for Certificate of Authority for a Foreign Corporation: Form ss-4431
The application requires:
- The name of the corporation and, if different, the name under which the certificate of authority is to be obtained;
- The state or country of incorporation;
- The date of incorporation (month, day, year);
- The period of duration if other than perpetual;
- The street address, including zip code, of the principal office;
- The street address, including zip code, of the registered office in Tennessee, the county where the office is located, and the name of the registered agent at that office;
- The names and business addresses, including zip codes, of the current officers of the business;
- The names and business addresses, including zip codes, of the current members of the board of directors;
- A statement that the corporation is for-profit;
- The delayed effective date/time, if the document is not to be effective upon filing with the Division of Business Services; and
- The signature of the applicant, the signer’s name typed or printed, and the signer’s capacity.
You’ll also need to provide an original Certificate of Good Standing from the Secretary of State in the state where you originally incorporated your business.
File with the Tennessee Department of Revenue
After you receive your Certificate of Authority to do business in Tennessee, you’ll need to register with the Department of Revenue. You can file for the following taxes online:
- Business tax for gross receipts;
- Sales and use tax;
- Franchise and excise tax;
- Tobacco tax and licenses;
- Liquor taxes;
- Television and telecommunications sales taxes.
Regardless of the nature of your business, before you open up shop in Tennessee, it’s important to consult with a knowledgeable Clarksville estate planning attorney. Feel free to reach out to us should you have any questions. We are always happy to help.