Starting a service business in Tennessee comes down to four things: picking a structure, registering with the state, getting licensed for your trade, and setting up a way to bill customers. Filing an LLC in TN costs $300 per member (min $300), ongoing reporting is $300 min/yr, sales tax is 7% + local, and personal income tax runs No income tax (Hall tax eliminated). Below is the full sequence, the fees you should budget for, the licenses most trades need, and the deadlines that catch new Tennessee owners off guard.
Most new registrations come out of Nashville, Memphis, Knoxville and the rest of Tennessee — local business licenses are issued at the city or county level, so check yours after the state filing clears.
| Item | TN cost |
|---|---|
| LLC / entity filing (one-time) | $300 per member (min $300) |
| Annual / periodic report | $300 min/yr |
| Federal EIN (IRS) | Free |
| Sales tax registration | Typically free |
| Trade / professional license | Varies by trade |
| Local business license | Set by city / county |
Fees change — confirm current amounts with the TN Secretary of State and the Tennessee Department of Revenue.
Choose your structure and file with the TN Secretary of State ($300 per member (min $300)). Get your free EIN from the IRS the same day.
Register for Tennessee sales tax with the Tennessee Department of Revenue, then open a business bank account under the registered name.
Apply for your trade license and local business license. This is usually the longest step: Sales tax permit; Professional license.
Get general liability insurance (and workers' comp before your first hire), then set up estimates and invoicing so you can bill the day you're cleared to work.
LLC Filing Fee
$300 per member (min $300)
Annual Report
$300 min/yr
Sales Tax
7% + local
Income Tax
No income tax (Hall tax eliminated)
Choose business structure
File with TN Secretary of State
Get EIN
Register for state taxes
Get local permits
Open business bank account
No income tax but LLC filing is expensive ($300/member)
Tennessee has the highest combined sales tax rates in the US
No income tax is great, but LLC costs are high ($300/member) and sales tax is the highest in the US.
Online LLC filings with the TN Secretary of State are typically processed in a few business days, and an EIN from the IRS is issued immediately online. Trade licensing and local permits usually take longest — plan on two to six weeks before you're fully cleared to work, depending on your trade.
No — you can operate as a sole proprietor in Tennessee and still invoice customers legally. An LLC ($300 per member (min $300) to file, $300 min/yr) separates your personal assets from business liability, which matters most once you're on customer property, hiring help, or signing contracts.
Tennessee sales tax is 7% + local. Materials and goods are commonly taxable, while labor treatment depends on the type of work, so bill parts and labor as separate lines and register with the Tennessee Department of Revenue before you start collecting.
Open a business bank account under the registered name, then invoice from a tool that applies TN tax per line item and accepts cards. Glo Invoice sends invoices by text with a one-tap pay link, and Tap to Pay lets you charge on site before you leave the job.