What types of business entities file documents with the Division of Business Services?

• Corporations
• Limited Liability Companies (LLC’s)
• Limited Partnerships (LP’s)
• Limited Liability Partnerships (LLP’s)
• General Partnerships

All of the above business entities file formation documents.

Filings by general partnerships are not for the purpose of forming or maintaining a general partnership in Tennessee. Document filing is for the purpose of providing public notice of basic information about a general partnership, such as the agency authority of its partners, and such filings are optional and voluntary.

How Do I decide on the business structure for my Company?

Often the tax treatment of a business will be the determining factor in your choice of a type of business entity.  For information on types of business entities and tax treatment consult the IRS. 

Why does my business entity show up as inactive?

A business entity that has failed to file its annual report on a timely basis may be administratively dissolved and placed in inactive status. The filing history of every business is shown in the Business Information Search. Click on “filing history” for details on your business.

What are the most common reasons for rejection of a filing?

• The required filing fee was not enclosed.
• The document has not been signed
• The document is not clear and legible.
• The document was not enclosed.
• The documented is not dated.
• The name that you have requested is unavailable because it is not distinguishable from another business entity on file.
• We were not able to obtain tax clearance from the Department of Revenue.  Please, contact the Tennessee Department of Revenue at 615-741-8999 or 800-342-1003.  Once you have satisfied their requirements, resubmit your document to our office for filing.
• The address of the registered office must be a physical Tennessee address; it cannot be a post office box, route number or box number alone.

What are the most common reasons for rejection of an Annual Report?

1. The correct fee is not paid. The annual report fee is $20, and an additional $20 is required if any change is made concerning the registered agent/registered office. The annual report fee for LLC's is $300 minimum up to a maximum of $3000. The fee increases by an additional $50 per member for every member over 6 members up to a maximum of $3,000.
2. A president and secretary are not listed. If the business is a Tennessee corporation, the corporation must list at least a president and a secretary as officers. (If the corporation has only one shareholder, that shareholder may hold both required offices; in all other cases, these required offices must be held by different individuals).
3. The board of directors are not listed, the box indicating that the board is the same as the officers listed is not marked, or the box indicating that the corporation does not have directors is not marked.
4. The annual report is not signed and/or dated, the signer’s name is not printed or typed, and/or the signer’s title is not given.
5. The annual report is not typed or filled out in ink.
6. The annual report is submitted after the corporation has been administratively dissolved. Submittal requires a reinstatement application together with an additional $70.00 fee.
7. The principal address or the registered agent address is changed to a post office box.

How Do I Change My Business Address?

You can change the mailing address for a business via e-mail, regular mail, or in person. A change in Registered Agent or principal address requires filing Articles of Amendment and paying the statutory filing fee.

• Form 4421 for for-profit corp (link:Articles of Amendment to the Charter (ss-4421)
• Form 4416 for non-profit corp (link: Articles of Amendment to the Charter (ss-4416)
• Form 4247 for LLC (link: Articles of Amendment (ss-4247)
• Form 4483 for LLP (link:Amendment of Certificate (ss-4483)
• Form 4471 for LP (link: Amendment to Certificate (ss-4471)

Do You Have To Use An Attorney To Incorporate?

The statutes do not require the use of an attorney to incorporate; however, enlisting the services of a professional may be advisable.

What Is A Charter?

The charter is the document filed to become incorporated. It is composed of the articles of incorporation that set forth certain minimum information about the corporation that is required by law.

What Is An Incorporator?

The incorporator is the person that files the charter of the corporation. The incorporator must be of legal age to enter into contracts. Once the articles of incorporation are filed, the incorporator’s function is complete.

What Is An Assumed Name?

An assumed name, also known as a DBA (doing business as) or fictitious name, is a name other than the true corporate name under which the corporation conducts business.

What are Franchise and Excise Taxes?

Franchise and excise taxes are privilege taxes imposed on each corporation, limited partnership, limited liability company and business trust chartered/organized in Tennessee or doing business in this state. These taxes are paid to the Tennessee Department of Revenue. For tax delinquencies: http://www.tn.gov/revenue/tntaxes/fae.htm

When do I need a certificate of tax clearance from the Department of Revenue?

Failure to pay your franchise or excise tax will prevent you from receiving tax clearance which is needed to dissolve or terminate a corporate business.

What is Administrative Revocation?

Administrative revocation occurs when a corporation’s charter is administratively dissolved by the Division of Business Services for any of the following reasons:

1. Failure to file annual report with the Division of Business Services within two months after it is due;
2. The corporation is without a registered agent or registered office for two or more months;
3. The name of a corporation fails to comply with the name provisions of TCA §48-14-101
4. The corporation fails to notify the Division of Business Services within two months that its registered agent or registered office has been changed, that its registered agent has resigned, or that its registered office has been discontinued;
5. The corporation’s period of duration stated in its charter expires; or
6. The corporation submits to the Division of Business Services a check, bank draft, money order or other such instrument, for payment of any fee and it is dishonored upon presentation for payment.

The Division of Business Services administratively dissolves the corporation by issuing a Certificate of Dissolution. The certificate shows the reason(s) for dissolution and its effective date.   An administratively dissolved corporation continues its corporate existence but may not carry on any business except that which is necessary to liquidate its business, close operations, and notify claimants.  The administrative dissolution of a corporation does not terminate the authority of its registered agent.

What Is A Registered Agent?

A corporation transacting business in Tennessee is required to have a person or legal entity located in this State designated to receive documents on its behalf, and this function is served by the registered agent. The registered agent’s name and street address in Tennessee must be on file with the Division of Business Services at all times.

What Is The Board Of Directors?

The board of directors is a group of people who direct and oversee the business activities of the corporation. The board hires officers to conduct the day to day operation of the corporation. In the case of small, tightly held corporations, the board of directors and the officers may serve in both capacities.

What Are Bylaws?

Bylaws are the code or rules by which the corporation is run, and explain the conditions and limitations that the corporation must follow in conducting its business.

What Are Authorized Shares?

Authorized shares are the number of shares that the charter allows the corporation to issue. If there is more than one class of shares, there must be a prescribed number for each class and the limitations of each class must be specified.

What Is The Difference Between Issued And Authorized Shares?

Authorized shares are the total number of shares that the board of directors may issue. Issued shares are the shares that have been distributed to shareholder(s).

How Many Shares Of Stock And Stockholders Are Required?

One share of stock and one shareholder are the minimum requirements. There is no limit on the maximum number of shares or shareholders.

What Is An “S” Corporation?

The Federal Internal Revenue Service (IRS) makes the determination as to how a corporation will be taxed. Many small, tightly held corporations want the tax advantages of a partnership but want the liability protection of a corporation. A corporation may apply for “S” status under subchapter “S” of the IRS code, resulting in the corporation’s profits and losses being passed to the corporation’s shareholders as individuals.

What Is A Certificate Of Existence?

The Certificate of Existence, in some jurisdictions called the Certificate of Incorporation or the Certificate of Good Standing, is a document issued by the state or country of incorporation that certifies that a corporation is active and has met the filing requirements for that jurisdiction.

What Is An Annual Meeting?

Each corporation in accordance with its bylaws must hold an annual meeting of its shareholders. The time of the meeting may be stated in or fixed in accordance with the bylaws. The meetings are intended for the corporate directors and officers to inform the shareholders of the status of their investment.

What Is The Fewest Number Of People Needed To Incorporate?

It takes only one person to act as the incorporator when a corporation is formed.

However, each domestic corporation is required to have a president and a secretary; these required positions must be held by different individuals unless the corporation has only one shareholder and that one shareholder holds these offices. Every other position, such as director, may be held by one person.

Does A Corporation Need A Certain Amount Of Capital To Incorporate?

Tennessee does not set a minimum amount of capital to incorporate.

Do I Have To Be Incorporated To Open A Business Bank Account?

A person can conduct business as a sole proprietorship or a partnership without being incorporated, and can have bank accounts in the unincorporated business name.

Does The Corporation Have To Be Recorded Anywhere Else?

Once the charter has been filed with the Division of Business Services, the charter has to be filed with the Register of Deeds in the county in which the corporation has its principal office. Charter amendments, restated charters and certain other documents must also be filed with the Register of Deeds. Articles of merger or share exchange must be filed with the Register of Deeds in the county in which the new or surviving corporation has its principal office.

What is necessary for a foreign or out of state business to do business in Tennessee?

A foreign corporation may apply for a certificate of authority to transact business in Tennessee by filing an application with the Division of Business Services.  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 its principal office;
• The street address, including zip code, of its registered office in Tennessee, the county in which the office is located, and the name of its 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 capacity of the signer.

The application must be accompanied by an original Certificate of Existence (often referred to as a Certificate of Good Standing) duly authenticated by the Secretary of State or other official having custody of corporate records in the state or country of incorporation. This certificate may not be more than two months old when received by the Division of Business Services.

Additional requirements for professional corporations. The application of a foreign professional corporation for a certificate of authority to render professional services in this State must also state its purpose to render a specified professional service, and include a statement that all of its shareholders, not less than ½ of its directors, and all of its officers other than its secretary and any assistant secretary and treasurer (if any) and any assistant treasurer, are qualified persons with respect to the corporation. Prior to rendering professional services in this State, a certified copy of the foreign corporation’s charter may have to be filed with appropriate licensing authorities. See TCA §48-101-628.

What is transacting business in Tennessee?
The Tennessee Business Corporation Act (TCA 48-11-101 et. seq.) does not define “transacting business,” but does provide the following non-inclusive and non-exhaustive list of activities that do not constitute transacting business in Tennessee:

• 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 that is 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.

NOTE: In performing its ministerial filing duties, the Division of Business Services does not resolve or determine whether specific activities constitute “transacting business” under the Tennessee Business Corporation Act.