Starting a service business in Tennessee

Form your business in Tennessee

You form a Tennessee LLC by filing Articles of Organization (form SS-4270) with the Secretary of State's Division of Business Services, online through the state's TNBear system or by mail. The filing fee is $50 for each member on the date of filing, with a minimum of $300 and a maximum of $3,000, as listed by the Secretary of State in October 2026. A one-person LLC pays $300. Paying by card online adds a convenience fee.

Ongoing state filings

Tennessee LLCs file an annual report every year, due on or before the first day of the fourth month after the end of the company's fiscal year (April 1 for a calendar-year LLC). The fee uses the same scale as formation: $50 per member, $300 minimum and $3,000 maximum, as listed by the Secretary of State in October 2026. So a single-member LLC pays $300 a year just to stay in good standing, which belongs in your pricing from day one.

Using a business name (DBA)

An LLC that operates under a different name files an application for registration of an assumed name with the Secretary of State. The fee is $20 as listed in October 2026, the registration lasts 5 years, and the renewal is also $20. Sole proprietors using a trade name should ask the county clerk where they do business how local trade name rules work.

Not sure whether you need an LLC at all? Read LLC vs sole proprietor for contractors, then get your free EIN from the IRS.

Licensing for service trades

The Board for Licensing Contractors requires a state contractor license before you bid, offer or negotiate a price on any project of $25,000 or more as a prime contractor, residential or commercial. Subcontractors need a license when their electrical, mechanical, plumbing, HVAC or roofing portion reaches $25,000 (masonry at $100,000). Below that line, two things can still apply. First, a home improvement license is required for residential remodeling projects from $3,000 to $24,999 in Bradley, Davidson, Hamilton, Haywood, Knox, Marion, Robertson, Rutherford and Shelby counties; the board's definition includes driveways, pools, porches, garages, landscaping, fences, roofing and painting. Second, electricians and plumbers working on jobs under $25,000 need a limited licensed electrician (LLE) or limited licensed plumber (LLP) license in municipalities that use the state Division of Fire Prevention for permits or inspections; general plumbing maintenance under $500 is exempt from the LLP. Many cities and counties run their own trade licensing, so the board itself tells applicants to check with the local government first.

• Tennessee Board for Licensing Contractors: Contractor licenses ($25,000 and up), limited licensed electricians and plumbers
• Tennessee Board for Licensing Contractors: Home improvement license: Residential remodeling from $3,000 to $24,999 in nine counties
• Tennessee Department of Revenue, Business Tax: Minimal activity and standard business licenses, issued through county and city clerks

Workers' compensation

Tennessee splits the rule by industry. The Bureau of Workers' Compensation says businesses in the construction industry must cover everyone, including the owners, once they have one or more employees, counting seasonal, part-time and family workers. Owners of construction businesses can apply through the state's exemption registry to be exempt themselves, but the exemption covers only the named person, never employees. Businesses outside construction need coverage once they have five or more full or part-time employees. Whether your work counts as construction depends on the contracting class codes the bureau uses, so a remodeler and a house cleaner with the same headcount can have different obligations.

More on coverage: business insurance for contractors.

Sales tax on services

Tennessee taxes goods unless they are exempt, but it taxes services only when the law names them. A Department of Revenue presentation on services (August 2021) lists the named services that matter for home-service companies: repair of tangible personal property, installation of property that stays personal property after installation (such as a window air conditioner), and cleaning of tangible personal property. In the same presentation the department says grass cutting, trimming, bush trimming and leaf raking are services to real property and not subject to sales tax. If you sell taxable goods or services, register in the Tennessee Taxpayer Access Point (TNTAP); the department says registration can take up to 10 business days.

Recording business calls in Tennessee

Tennessee follows one-party consent. Tenn. Code Ann. § 39-13-601(b)(5) makes interception lawful when the person recording is a participant, or when any participant consented beforehand, except where the goal is a criminal or tortious act. Recording your own business calls is allowed; announce it anyway when a caller could be in a state that requires everyone's consent, as our guide to recording business calls explains.

See our guide to recording business calls before you turn on call recording or an AI receptionist.

How the seasons shape the work

Tennessee's long, humid summers keep lawn, landscaping, pest and HVAC companies busy from March into November, and mild winters mean lawn crews rarely get a true off-season in Memphis or Chattanooga. Spring brings severe thunderstorms and tornado outbreaks across Middle and West Tennessee, which drive tree, roof and cleanup work. East Tennessee's mountains bring occasional heavy snow and ice that a flat-country crew is not set up for, and the vacation rental market around the Smokies creates steady turnover cleaning and maintenance demand.

Business tax license from your county and city clerk

Tennessee has a separate business tax administered by the Department of Revenue. An in-state business with more than $3,000 but less than $100,000 in gross receipts needs a minimal activity license from its county and/or municipal clerk; at $100,000 or more you need a standard business license and register with the Department of Revenue through TNTAP. The department lists a separate $15 business license registration fee paid to the clerk for each new business. These thresholds were updated by Public Chapter 377 (2023).

Then set up the back end that gets you hired

The paperwork makes you legal. Customers still have to find you, reach you and pay you. Before your first job, set up a business phone number, email on your own domain, a Google Business Profile, a simple website, and a way to send quotes and take card payments. The launch checklist lays out the order.

Tennessee questions