Plan and organize your business first. Decide on a name, a headquarters address, what legal form of organization your business will be, and what kind of business you operate. You should then review the following tax and licensing requirements to see if they apply to you at this time. Also, there may be other special tax and licensing requirements for your kind of business. If in doubt, check with the tax authorities, your accountant or the Small Business Development Center.

Most counties and cities in Tennessee require a business if you sell over $3,000 of goods or services in a year. The fee for each is usually $20 per year, they renew July 1st of every year, and they can be purchased from the County Clerk and/or City Administrator.

The State of Tennessee levies a Franchise and Excise tax on most businesses headquartered in Tennessee. You will need to calculate and submit your franchise and excise tax return after the close of each fiscal year. To register your company or for more information, call (865) 594-6100 or 800-342-1003.

Depending on what and how you sell your products or services, you may be required to obtain a Tennessee Sales and Use Tax Certificate. This State tax number requires you to collect Tennessee sales and use tax on stock-in-trade products sold to end users in Tennessee, and it exempts you from paying sales and use tax on those items. You will be required to report and pay taxes collected to the State Department of Revenue. For further information or to register, call (865) 594-6100 or 800-342-1003.

If you hire employees, you will need to register with the State and obtain insurance. Businesses with less than five employees are exempt from the Workman's Compensation Act, but business owners are liable for the safety of employees, and you should obtain adequate insurance from your insurance agent. You should also make sure you have adequate and proper property and liability insurance for your business. For more information, call your insurance agent or (615) 741-2705.

If you are a sole proprietor without employees, you may use your Social Security Number as your Federal Tax Identification Number on all Federal tax forms. For all other businesses, that is sole proprietors with employees, partnerships, corporations and limited liability companies, a unique Federal Employer Identification Number (FEIN) is required. You should apply by using IRS Form SS-4, or by calling (901) 546-3920. You may fax your completed SS-4 to (901) 546-3916.

If you have one or more employees, you must deduct the employees' part of Social Security taxes (FICA) from their wages and report these deductions along with payment of your part of these taxes each quarter, month or pay period on Form 941, and at the end of the year on Form 940.

Also, if you employ one or more persons during twenty different calendar weeks in a year or pay $1,500 taxable wages in a calendar year, or if you are deemed liable under the Federal Unemployment Tax Act, you should obtain a Tennessee Employer Identification Number (TEIN). You may register or obtain more information by calling (865) 594-6380.

You are required to have every employee who works for you show proof of eligibility to work legally in the U.S. and sign Form I-9, Employment Eligibility Verification. You can obtain these forms from the IRS, or from the U.S. Department of Justice Immigration and Naturalization Service, (901) 544-0264 or 800-999-9111.

Income from your business is taxable. Different forms of business use different forms, but Federal income taxes as well as Social Security taxes should be paid in a timely manner to avoid penalty. You should set up your accounting system and begin recordkeeping even before you are open for business. Pre-opening costs may be an expense deduction for your business. Also, if you have taxable income throughout the year, you should file IRS from 1040-ES on a quarterly basis to avoid penalty.

Other tax regulations may affect your business. Also, tax laws change frequently. It is your responsibility as a business owner to know the rules and abide by them. You may choose to hire an accountant or take care of all the above items yourself. Either way, you are responsible for what your business does. If you want to know more about business taxes, both the Tennessee Department of Revenue and the Internal Revenue Service conduct tax seminars for small business owners throughout the year. For information about these seminars, call (865) 483-2668 or (865) 632-2980.

To many first-time small business owners, the above tax and license requirements seem complicated. And they can be for some. Every business is different. As you set up and begin your new business, keep two things in mind. First, that the above applies to all alike, and second that they were not designed to keep you from doing business. Most successful business owners find a way to handle tax and license requirements and get on with the business of their business.

The Tennessee Small Business Development Center operates in partnership with the U.S. Small Business Administration (Cooperative Agreement No. 2-603001-G-0045-20). The support given by the U.S. Small Business Administration through such funding does not constitute an express or implied endorsement of the co-sponsors or participants' opinions, products or services. Arrangements for the handicapped can be provided where possible with advance notifications. The Oak Ridge Small Business Development Center is jointly sponsored by the Oak Ridge Chamber of Commerce, Roane State Community College and Technology 2020.