Tennessee small business taxes

Pay Your Tennessee Small Business Taxes

Most small businesses are required to pay state taxes. Learn about your Tennessee business taxes and how we can help you stay compliant.

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If you’re the owner of a Tennessee small business, there are countless tasks and responsibilities that you need to take care of to stay legally compliant. One of the most important is staying up to date with and paying your business’s taxes. Not only must you keep track of the important business papers, but you also have to figure out how much taxes you owe and how to file them. Making a mistake in paying local, state, and federal taxes can cost you down the line.

No matter how big or small your business is, there are state taxes that apply to you. Read on to learn what kinds of taxes your Tennessee small business may face and when they are due. You’ll also learn how we can help make the process easier.

If you need more comprehensive compliance help, our Worry-Free Compliance Service can organize all of your business’s important documents. It will also keep track of its required compliance filings like annual reports.

If you’re looking for information about federal taxes, head over to our page on federal taxes for small businesses.

Step 1: Establish your Tennessee business’s corporate income tax obligations

Before creating your business, you need to know how to file small business taxes in Tennessee. Staying compliant with your tax payments is important because you don’t want to get into trouble with the state and accrue extra penalties and interest. Different types of business structures are taxed differently in Tennessee. Businesses subject to taxation must be classified to determine the correct amount of business tax due. Business tax rates vary based on the type of business and whether the business sells at wholesale or retail. 

Taxes for corporations are at the Tennessee business tax rate of 6.5%. Other types of business structures are taxed as pass-through entities. A pass-through tax is where the profits made by S corporations, limited liability companies (LLCs), partnerships, and sole proprietorships aren’t taxed at the company level. Instead, this tax passes through to the owners who pay individual taxes on the income.

Your business tax return is due on the 15th day of the fourth month following the end of your fiscal year. For example, if your fiscal year coincides with the calendar year, then your return will be due on April 15. File and pay your business tax online using the Tennessee Taxpayer Access Point (TNTAP).  Create a TNTAP login to file this tax.

Step 2: Determine your Tennessee business’s withholding taxes

In most states, if your company employs workers, you’ll need to take out withholding taxes from the employees’ paychecks and pay them to the state on a quarterly basis. However, Tennessee has no state income tax on earned income and therefore has no withholding requirements.

Step 3: Establish your Tennessee business’s additional state tax obligations

The other taxes you may need to understand are usually referred to as “payroll” taxes. Pay these Tennessee small business taxes on a quarterly or yearly basis.

Unemployment Insurance Tax

Employers pay unemployment insurance tax. The Tennessee Department of Labor and Workforce Development administers and collects Tennessee unemployment insurance. Effective July 1, 2021, Tennessee’s experienced-employer unemployment tax rates range from 0.01% to 10%. The new-employer tax rate will remain unchanged at 2.7%.

Social Security and Medicare

With few exceptions, employee wages are subject to federal income tax withholding and social security and medicare taxes. The Internal Revenue Services provides tax tables to calculate federal income taxes. They take into account the marital status and number of exemptions reported on the employee’s W-4. Social Security taxes are calculated at a rate of 6.2% of taxable wages up to the Social Security maximum. Medicare taxes are calculated at a rate of 1.45% of taxable wages with no yearly maximum.

Step 4: Prepare to file and pay your Tennessee small business taxes

All entities may file and pay electronically using the Tennessee Taxpayer Access Point (TNTAP) through one of its approved software vendors.  If an individual taxpayer does not use a certified software vendor or does not have an EIN, they may file a paper return. However, mail in filing takes significantly more time than online filing, which remains the state’s preferred submission method.

The easiest way to make sure your taxes are filed correctly and on time is to collect and file all of the necessary documents throughout the year. 

Do I need an accountant?

The best course of action is to have an experienced accountant help you draft and file your Tennessee small business taxes. A good accountant will help you take advantage of the legal loopholes so you’re not paying any more taxes than necessary. Accountants are experts at drafting and filing tax returns, and you should rely upon that expertise. The IRS has a guide to tax preparer qualifications on its website.

Not sure how to stay compliant? Learn more about legal compliance for small business owners.

How we can help

Staying legally compliant is rough enough, but tax season is a special beast that can rattle even the most experienced Tennessee business owners. Luckily, we have the tools to help you succeed. With our ZenBusiness Money App, you can keep track of the information you need to file your taxes correctly and on time, easily send custom invoices, accept credit card and bank transfer payments, and manage your clients all on one easy to use dashboard. 

If your small business is still in the formation stage, our Tennessee LLC Formation Services or Corporation Formation Services can help you get started.

No matter where your business is in its lifecycle, we have the tools you need to help it thrive.

Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

FAQs

  • How much can a Tennessee small business make before paying taxes?

    Tennessee businesses have to pay taxes on any net income the company makes. Net income is the amount of money left over after business expenses are taken out.

  • What percentage does a Tennessee small business pay in taxes?

    As of 2021, the Tennessee business tax rate is 6.5% of net taxable income.

  • How does a Tennessee small business pay taxes?

    Business tax can be filed and paid online using the Tennessee Taxpayer Access Point (TNTAP). A TNTAP logon should be created to file this tax and can be done at the TNTAP website.

  • Do I have to file taxes for my small business in Tennessee?

    With a few exceptions, all businesses that sell goods or services must pay the state business tax. If your company doesn’t have any net income, a tax filing is still necessary.

Small Business Tax Information by State

Learn about your business taxes and how we can help you stay compliant.

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