Welcome to the Tennessee Smart Start Guide, a guide for small businesses

and entrepreneurs, future and present.

Small businesses make up the majority of all the companies in Tennessee

and are the backbone of our state’s economy. Some of the largest, most well-
known companies in Tennessee today began with small business owners
who dared to dream big and worked hard.

The challenges and obstacles that small business owners and entrepreneurs
face are often intimidating. Access to support and resources are crucial to
navigating the early days of a new venture and beyond.

This guide is designed to support the successful growth and expansion of

small businesses and aspiring entrepreneurs. With one of the country’s best
business climates, there’s no better place to start or grow a business than in
Tennessee and no better time than now.

We invite you to explore the opportunities!

tn.gov/ecd/bero
ABOUT THE GUIDE

The Tennessee Smart Start Guide is published by the Tennessee Department

of Economic and Community Development (TNECD) Business Enterprise
Resource Office (BERO) with the assistance of the marketing division. The
guide is published and distributed in hard copy and is available online for
download at tn.gov/ecd/bero.

ABOUT BERO

The Business Enterprise Resource Office (BERO) is housed within the

Department of Economic and Community Development (TNECD). BERO
serves as a voice for and advocate of economic inclusion for disadvantaged
businesses (DBE); analyzes, disseminates and promotes best practices and
access to capital to service providers; and reports on the status of DBEs
statewide. For more information, visit tn.gov/ecd/bero.

ABOUT TNECD

The Tennessee Department of Economic and Community Development

is passionate about developing dynamic, diverse economies and thriving
communities for generations of Tennesseans. To find out more,
visit TNECD.com.
CONTENTS
SELECTING A BUSINESS 4 • Tennessee Manufacturing Extension
• Purchasing an Existing Business Program
• Buying a Franchise • Business Incubators and
• Starting a New Business Entrepreneur Centers

SETTING UP YOUR BUSINESS 10 TAXES AND INSURANCE 38

• Sole Proprietorships • Local, State, and Federal Tax
• Partnerships • Franchise and Excise Tax
• Corporations • Sales and Use Tax
• Limited Liability Company • Tax-Based Incentives
• Relocating Your Business to • Insurance and Bonding
Tennessee • Health Insurance

THE BUSINESS PLAN 18 RESPONSIBILITIES AND

• Business Model Canvas vs. REGULATIONS 48
Traditional Business Plan • Responsibilities
• Executive Summary • Regulations
• Introduction • Employees
• Financial Projections
• Personal Financials TARGETED BUSINESS
• The Marketing Plan AND ADDITIONAL TOPICS 54
• Management Team • Home and Internet-Based
Businesses
GETTING FUNDED 26 • Inventors
• Family, Friends, and Colleagues • Patents, Copyrights and Trademarks
• Credit Cards • Technology-Based Businesses
• Commercial Credit • Veteran-Owned Businesses
• Federal Government Loans • Government Contracting
• State Government Loans • Business Owners with Disabilities
• Nontraditional Financing • Agri-tourism and Pick TN Products
• Small Business Investment • Exporting
Companies • Regulatory Assistance
• Government Grants
RESOURCES 66
BUSINESS ASSISTANCE • Resource Contacts
AND TRAINING 34
• Business Enterprise Resource Office CENTER PULL OUT
(BERO) • Side 1: Resource Map
• Tennessee Small Business • Side 2: How to Start a Business,
Development Centers flowchart
• SCORE
• SBA Learning Center
 H
ANC ISE
FR

TIN
NEW EXIS G

SELECTING A

BUSINESS
For the starting entrepreneur, one may not be as rosy as the owner
of the first decisions you will need projects.
to make is whether to purchase an
existing business, franchise or start Once you have decided to purchase
a new business. There are unique an existing business, there are a
benefits and concerns for each few steps to take. Decide what you
option; however, it is ultimately up want the business to accomplish. Do
to you to decide which course to you want to make a living? Provide
take. employment for you, a spouse,
children and their spouses? Locate
PURCHASE AN EXISTING BUSINESS an existing business that is for sale?
Entrepreneurs may use business
You may save time and trouble by brokers to find businesses that are
purchasing an existing business. If for sale; chambers of commerce,
you are considering purchasing a and business advisors, such as
business that is a sole proprietorship attorneys and CPAs, may also know
or general partnership, you are of businesses for sale. Determine
buying assets from the owner. You the value of the business you
will need to obtain a new business plan to buy. This is as much art as
license for the existing business science. A business is valued by
from your county clerk office. You either the worth of its assets, ability
are not assuming liabilities unless to generate cash, the client base,
you specifically agree to it. Make earning ability or physical assets
sure all taxes that were due prior to only. An analysis of the company’s
the purchase are paid or you may be profit-and-loss statements from
required to pay outstanding taxes. three years should help you
determine trends, a rough cash flow
The advantages of buying a business and profitability of the business.
are avoidance of startup costs,
usually little to no downtime in Most entrepreneurs are compelled
acquiring customers, established to seek outside financing to close
vendor relations and some kind the deal. In these cases, most
of financial history on which lenders will require some owner
you can base your decision. The financing. This serves to reduce their
disadvantages of buying a business risk as well as keep some owner
may be the other side of the involvement or at least interest
advantages listed. There may be in the continued success of the
few customers to acquire, vendor venture.
relations may be terrible because of
unpaid bills and the financial history

5
 pricing, trends, estimated sales
projections, product design and
delivery. This gives you the benefit
of a large corporate support staff
for minimum cost. On the other
hand, as the franchisee, you usually
pay an up-front fee plus periodic
franchise fees for corporate
overhead (management, advertising,
etc.). A franchise may require you to
purchase inventory from approved
vendors or from the corporate
office exclusively. Some franchisors
The bottom line is that after careful require a minimum level of sales or
and knowledgeable analysis, you can profitability for continuation of the
purchase a business that can help relationship.
you realize your dreams; however,
without a careful and knowledgeable When you are interested in
analysis, the purchase can turn purchasing a franchise, you will
into a nightmare of bankruptcy and need to sign a contract with the
strained relationships. franchising company. The franchise
contract explains the conditions
BUYING A FRANCHISE of the relationship between the
franchisor and franchisee. You
A franchise is the right or license must make the initial contact either
to sell the franchisor’s products in writing or by phone. The object
or services. The benefits of the of the initial contact is to obtain
franchise industry are they offer a the franchisor’s Uniform Franchise
package of assistance, marketing Offering Circular (UFOC) or Uniform
data, proven products and/ Franchiser Disclosure Agreement.
or services. Depending on the The UFOC will provide enough
franchise purchased, your risk information to enable you to make
may be considerably less than an informed decision. By law, the
starting a venture from scratch. A UFOC must meet the requirements
successful franchise may offer a of the Federal Trade Commission’s
known product or service, a certain Franchise Rule. The law also requires
level of demand and established the UFOC be provided at the first
pricing. Many franchisors perform “personal” meeting, 10 business
marketing studies, including data days prior to signing a franchise
about the target market, analysis contract or 10 business days prior to
of competitors’ products and any payments. In Tennessee, there
6
are no other disclosure documents identify the franchise that is right for
required; however, there are them. These companies will do a lot
additional laws governing packaging, of research for you and they have
alcoholic beverages and petroleum- relationships with many existing
based fuels (TCA 47-25). In addition, franchisors. They can also assist you
there are several laws covering with turning your existing business
termination of franchises. into a franchise model. These
companies include Entrepreneur’s
There are a couple of different Source, FranNet and Fran Choice,
franchising formats. Business among others. These companies will
Format franchising includes ongoing either charge you or the franchisors
operational interface with the a fee for their services.
franchise. Franchisees may purchase
inventory, trademark goods, take The Entrepreneur’s Source helps
advantage of national or regional individuals by educating, coaching
advertising, receive bookkeeping and guiding them though franchise
support and training assistance ownership. They charge a flat
from the franchisor. Most fast food fee once you have identified the
franchises fall into this category. franchising opportunity to pursue.
The other type is Product and Trade Their initial services are provided at
Name franchising which involves no cost.
buying one product line for resale
and using the franchisor’s name. FranNet recommends franchise
Automobile dealerships and retail opportunities, educates you on
service stations fall under this anticipated cost, financing options
category. and training. FranNet offers their
information and services at no
Talk with other franchise owners. charge, as they are paid by the
They can provide invaluable insight franchisor.
into their particular business and
their view of franchisor support. Do Fran Choice guides you through
your research! There are several the franchise search process by
sources of information on more than gathering information about your
3,000 U.S. franchisors: Entrepreneur experiences and goals and develops
magazine and Inc. magazine are a personalized model for use in
a good place to start. The FTC evaluating franchise opportunities.
publishes, A Consumer’s Guide to There is no cost to use Fran Choice
Buying a Franchise (ftc.gov). services or for the information.

There are also franchise assistance

companies that help individuals
7
STARTING A NEW BUSINESS by producing goods or services.
They operate by selling those
The benefits of starting your own goods and services at a profit. They
business include flexible hours, make profits by controlling costs
being your own boss, getting away to produce goods and services
from a corporate setting and having at a lower cost than they sell
no limit to your income. The them. Does the business you are
time and energy needed to run thinking of starting require learning
a startup business as well as the new skills? It may be harder to
stress on family and finances are develop skills on your own than
a few concerns to consider before in a corporate setting that offers
starting a new company. The “20 training as well as colleagues to
Questions Before Starting” article help the learning process. There are
(sba.gov/starting-business/how- a variety of resources online or in
start-business/20-questions-starting) person.
can be used to determine if you are
ready to start your own business.

Will you be working full-time or

part-time? A part-time home-based
business can add income to increase
the household budget. Starting part-
time enables you to learn valuable
lessons in business management,
especially time management.
These lessons can function as a
stepping stone to running a full-time
business.

As you enter this endeavor,

recognize that the most important
ingredient is you. Know your
personality, interests, abilities, drive,
commitment, relationships, priorities
and dreams. In addition, you should
ask yourself a few questions: do
you have the required experience
in marketing, pricing, financial
projections and bookkeeping?
Remember, businesses, home-
based or otherwise, do not operate
8
CHAPTER NOTES

9
SETTING UP YOUR

BUSINESS
Choosing the right legal structure on a trade or business. Each person
for your business will require that contributes money, property, labor
you contact an attorney, CPA or or skill and expects to share in the
a business counselor. You need profits and losses of the business.
professional advice on the pros An example of a general partnership
and cons of each legal structure. is a husband and wife owned
Legal structures include: Sole business. This type of partnership
Proprietorships, Partnerships, is not a form of a corporation and
C Corporation, S Corporation (also carries the same personal liability as
called Subchapter S Corporation), a sole proprietorship.
PBCs, Limited Liability Company or
Limited Liability Partnership. A general partnership must file
an annual information return
SOLE PROPRIETORSHIPS to the IRS to report the income,
deductions, gains, losses, etc., from
The majority of small businesses its operations; however, it does not
start out as sole proprietorships. pay income tax. Instead, it “passes
One person, usually the individual through” any profits or losses to its
who has day-to-day responsibilities partners. Each partner includes his
for running the business, owns or her share of the partnership’s
the firm. Sole proprietors own all income or loss on his or her tax
the assets of the business and the return.
profits generated by it. They also
assume complete responsibility for All partnerships should execute
all of its liabilities. In the eyes of the a partnership agreement. The
law and the public, you are one in partnership agreement is a
the same with the business. Sole contract between the partners
proprietorships pay less in taxes of the business that details
than corporations. Net income from expectations, contributions and the
the business is regular income filed responsibilities of each partner.
on the owner’s personal income Discuss future expectations with
tax return. Sole proprietors need your partner(s). Do they want to
a business license from the county grow a company to operate or to
and/or municipality in which the sell short-term? How will profits be
business operates. distributed and what percentages?
Each partner should contribute value
PARTNERSHIPS to the business and each partner
must recognize the value of the
A general partnership is the others’ contributions. Determine
relationship existing between two ahead of time who will contribute
or more persons who join to carry cash, labor, industry experience
11
and knowledge, sales leads, loans agreements online at sos.tn.gov,
or guaranties. Responsibilities may sba.gov and score.org.
differ from contributions, so be sure
to define the partner’s individual CORPORATIONS
responsibilities as well as the group
responsibilities. Clearly spell out Incorporation gives the business a
who can sign debt instruments for legal existence separate from an
the partnership, who determines individual person. That is, it can own
compensation or profit sharing, assets and conduct business in its
who handles the record keeping, own name. A business assumes a
who oversees recruitment to the corporate identity when registered
partnership, who can make or “incorporated” with the Tennessee
amendments to the partnership Secretary of State. A corporation
agreement and also how the can shield you and the stockholders
partnership can be dissolved. In any from personal liability from any
case, the partnership agreement lawful activities. Corporations pay
should be a written, notarized federal taxes at a higher rate than
document. A lawyer can draw up the sole proprietors. The corporation
agreement and act as a facilitator to is liable for the state’s franchise
cover points not previously included. and excise tax. There are two basic
There are examples of partnership types of corporations, the C and S
Corporations.
BASIC REQUIREMENTS FOR S
CORPORATIONS INCLUDE: C Corporations are standard
corporations that are primarily
• The company must be a used by large groups of investors.
Domestic Corporation with A few of the requirements to be a
one class of stock corporation include having a board
of directors and corporate officers,
• Have no more than 100 having stockholders as owners,
citizens or legal resident holding regular board meetings,
shareholders maintaining board minutes and
approving corporate resolutions.
• All your shareholders must The corporation allows the board
consent to S Corporation to authorize certain actions such
status as borrowing money, entering into
contracts and allocating corporate
• Use a permitted tax year resources beyond routine business
transactions. If your business is an
• Company must file IRS eligible domestic corporation, you
Form 2553 can avoid double federal taxation
12
(paying taxes to the corporation
and again to the shareholders) by
creating a S Corporation under the
rules of Subchapter S of the Internal
Revenue Code. Under the laws of
Tennessee, an S Corporation is
incorporated; therefore, they are
subject to state franchise and excise
taxes. In this way, the S Corporation
passes its items of income, loss,
deduction and credits through to its
shareholders to be included on their
separate returns.

In January 2016, the public benefit LIMITED LIABILITY COMPANY

corporation (PBC) became an
option for Tennessee businesses. Limited Liability Company (LLC) is
The classification comes from the a relatively new business structure
social entrepreneurship movement allowed by state statute. An LLC
that combines running a profitable can be expensive to organize and
business with improving society. A requires more administrative work
PBC is similar to a standard for-profit than other legal forms of business.
corporation, but is managed in a LLCs are popular because, similar to
way that considers the public benefit a corporation, owners have limited
purpose(s) listed in its charter as personal liability for the debts and
well as the financial interests of its actions of the LLC. Other features
owners. of LLCs are more like a partnership,
providing management flexibility
If the company is incorporated and the benefit of passthrough
outside of Tennessee, you are taxation. Owners of an LLC are called
required to obtain a Certificate members. Since most states do not
of Evidence to conduct business restrict ownership, members may
operations within Tennessee. The include individuals, corporations,
Certificate of Evidence, TCA 48-11- other LLCs and foreign entities
309, is evidence that out-of-state (businesses outside of Tennessee).
corporations are in good standing There is no maximum number of
in their state and are authorized members. Most states also permit
to conduct business in the state of “single member” LLCs, those having
Tennessee. only one owner. A few types of
businesses generally cannot be
LLCs, such as banks and insurance
13
companies. There are special rules $600 fee and a $20 annual fee to
for foreign LLCs. the Tennessee Secretary of State.
You will need to fill out application
The Tennessee Bar Association (TBA) form ss-4429 for corporations and
will guide you to a legal referral application form ss-4236 for an LLC.
service and help you determine These forms can be found online at
if you would qualify for free legal tn.gov/sos. A letter of good standing
service. For more information, visit from your original state needs
tba.org/access-to-justice. to accompany your application.
Typically, remaining a foreign-
The Tennessee Society of Certified owned business is beneficial only if
Public Accountants (TSCPA) is the you plan to continue operations in
state professional organization your original state. A trusted CPA
for certified public accountants. can advise you on the specific tax
TSCPA can help businesses find a liabilities for your business.
Certified Public Accountant (CPA)
to assist with the startup and
running of the business. TSCPA
REQUIREMENTS FOR AN LLC
also has an online Small Business
INCLUDE:
Resource Center. The Small Business
Resource Center’s mission is to
• Membership fee is due
educate, provide information and
annually
resources that would assist small
business enterprises. This and more
• LLC fees range from $300-
information can be found online at
$3,000
tncpa.org.
• An annual report filed with
FOREIGN-OWNED (OUT-OF-STATE)
the Secretary of State
CORPORATIONS
• Financial records prepared
The state of Tennessee recognizes
for any member requesting
businesses incorporated outside
them
of Tennessee as foreign-owned (or
out-of-state) corporations. When
• Board minutes recorded and
you relocate your business to
maintained
Tennessee, you will need to decide
if you will operate your business
• Memberships sold only
as a foreign-owned business
when all the members agree
or establish your business as a
to the transaction
Tennessee corporation. Foreign-
owned businesses pay a one time
14
If you plan to cease operations in bank account, applying for business
the state you are moving from, you licenses and filing a tax return by
should register your business with mail.
the Tennessee Secretary of State
as a Tennessee corporation. You You can register for your FEIN online
can register your new corporation at irs.gov or by calling
at tnbear.tn.gov/Ecommerce. Certain 1-800-829-4933. All corporations
registrations can be filed and paid and partnerships are required to
for online, but others will require have an FEIN.
that documents be printed and
mailed. In addition to registering ADVANTAGES OF TENNESSEE
your corporation with the Tennessee
Secretary of State, you will also There are many benefits to
need to register with the Tennessee relocating your business to
departments of Revenue and Labor Tennessee. Tennessee fosters a pro-
and Workforce Development. business climate that gives access
to vital economic components, such
You will most likely need to obtain as a right-to-work environment, a
local business licenses through dependable and educated workforce
the county clerk office where and a wealth of technology
the business will be located in resources that provide opportunity
Tennessee. If you are in a regulated for business growth and profitability.
industry such as general contracting, In addition, Tennessee offers a
that requires specific licenses, reasonable cost of living and does
check with the regulatory agency not impose a personal state income
who licenses you to see if they have tax or a state property tax.
a reciprocal agreement with the
state of Tennessee to transfer your
license.

FEIN

If you do not want to use your

social security number to identify
your business, you are required
to obtain a Federal Employer
Identification Number (FEIN) from
the IRS. The FEIN is your business’s
permanent identification number
and can be used for most of your
business needs such as opening a
15
Tennessee compares favorably with
the cost of living in other states. In
fact, its eleven largest cities rank
below the national average for
cost of living and housing costs are
among the lowest in the nation.
Tennessee enjoys a generally
mild climate, providing favorable
conditions and a minimum of
weather related disruptions.
Tennessee borders eight states and
is within a day’s drive of 75 percent
of the U.S. population.

Tennessee has a strong

entrepreneurial climate. Recently,
a national study ranked Tennessee
as having the fourth highest
entrepreneurial activity rate in the
nation. The state of Tennessee
supports small businesses and
entrepreneurs with a low business
tax burden, lower cost of living, an
online business registration system,
access to nontraditional financing
and a diverse, robust economy with
close proximity to three-quarters of
the U.S. population.

RELOCATING YOUR FAMILY

The state of Tennessee provides

information at tn.gov with helpful
links and information on becoming
a legal resident in Tennessee. There
are also resources to help you
familiarize yourself with Tennessee’s
communities, neighborhoods and
education systems.

16
CHAPTER NOTES

17
A key ingredient in every business Look at the business plan as a
is a plan. If you have a new idea living entity that changes as the
and don’t need to have a traditional company grows and reaches certain
business plan for securing funding, milestones.
you could use a business model
canvas. The business plan usually contains
an executive summary, introduction,
What’s the difference? Detail. It’s also financial projections, personal
a dynamic versus static approach. financials, marketing plan, and the
resumes of the management team.
The traditional plan tends to use
more static information, whereas As part of its training program,
the business model canvas gives you CO.STARTERS uses its own visual
a dynamic, visual structure that you canvas model. It asks clear questions
can be adjust. Both versions serve a to move you through the step by-
purpose. step of the why and how the
business will work
If your business is in a well-defined (costarters.co).
industry and your landlord asked for
one before signing the lease then a
traditional plan is the better option.
If your business is creative field or THE BUSINESS PLAN
in a quickly shifting arena then the CONTAINS:
business canvas model may serve to
get started quicker. • Executive Summary
• Introduction
The traditional business plan may • Marketing Plan
be needed when you look for • Management Team Resumes
financing. It also helps establish • Financial Projections
a clear direction for your business. • Personal Financials
This document is not meant to be
written and then stashed in a file Business plan templates, including
cabinet. Most experts say the financial projections, are available
business plan should be reviewed online at:
annually and revised to account for
the economic environment. The tsbdc.org
time frame depends on how fast score.org
or slow your business grows and is sba.gov
completely up to you.

Next page: Canvas model credit: Co.Starters

19
 CUSTOMER PROBLEM
WHO DO YOU SERVE? WHAT IS THE PROBLEM YOUR
CUSTOMER HAS?

ALTERNATIVES
HOW IS YOUR CUSTOMER
CURRENTLY SOLVING THE PROBLEM?
WHAT ARE THE ALTERNATIVE SOLUTIONS
TO THE PROBLEM? WHAT’S THE
COMPETITION?

SOLUTION
WHAT DO YOU OFFER YOUR CUSTOMER?
WHAT DOES YOUR CUSTOMER GET?

STARTUP NEEDS
WHAT ARE YOUR ONE-TIME NEEDS TO GET STARTED (MONEY,
PEOPLE, THINGS, TECHNOLOGY, ACTIVITIES) ?

20
 MESSAGE REVENUE
WHAT IS YOUR STORY? HOW DO YOU MAKE MONEY FROM
HOW DOES YOUR CUSTOMER HEAR IT? YOUR CUSTOMER?

DISTRIBUTION
HOW DOES YOUR PRODUCT OR
SERVICE
GET TO YOUR CUSTOMER?

BENEFIT
WHY DOES YOUR CUSTOMER WANT
YOUR PRODUCT OR
SERVICE? HOW DO YOU SOLVE THE
PROBLEM?

ADVANTAGE
WHAT GIVES YOU THE EDGE OVER THE ALTERNATIVES?
WHY ARE YOU THE BEST PERSON TO DO THIS?

COSTS
WHAT ONGOING NEEDS ARE ESSENTIAL TO
KEEP YOU GOING (MONEY, PEOPLE, THINGS,
TECHNOLOGY, ACTIVITIES) ?

21
 THE MARKETING PLAN

This is one of the crucial aspects

of your business plan. In this
section, you’ll include a market
analysis, identify competitors,
your target market and a
marketing plan. You want to provide
information on the economic
environment to tell how well the
industry is performing versus the
economy as a whole. In addition,
THE BUSINESS PLAN it should review business practices
that may be unique to the industry.
EXECUTIVE SUMMARY It describes competitors who may
affect the success of your business
The executive summary is the first and identifies pricing or technical
page of the business plan. Write innovation strategies that give
it last. This summary is your it a competitive advantage.
first selling point followed by your Include anyone that makes or
financial projections when trying to offers a product or service that is
get financing. If you’re looking for comparable to yours. You’ll define
a loan, include the amount you’re the specific customer you target, and
asking for, purpose and how the this section contains valuable data
loan will be paid back. about their expectations. In addition,
you will include data on purchasing
INTRODUCTION dollars spent, road and foot traffic
around the business location and
In this section, you include the expected gain in market share.
details of your business:
a description of the company’s The marketing plan also details the
operations, primary market, how, when and where of your
background and eventual goals. advertisements. This is important
Explain the company structure, to show how you’ll inform customers
legal structure (sole ownership, about your product and/or service.
partnership, corporation or limited
liability) and business location. MANAGEMENT TEAM
Include product and/or service
and identify your company or This section should include the
entrepreneur name. This section name, physical and email addresses,
should be two to three sentences. phone number, and relevant work
22
or industry experience for each Entrepreneurs say the most
member. The purpose of this section common mistake in starting a
is to acquaint loan officers with the business is underestimating startup
team’s industry experience and costs and the time required to
demonstrate their ability to operate generate positive cash flow. Startup
a company. The resumes should costs are ether fixed or variable
outline skills and experiences costs. Examples, sometimes
that facilitate the operation of a referred to as overhead, are the
company, and answer several key purchase or lease of equipment,
questions: Who is going to run the supplies, utility deposits, furniture,
daily operations? And balance the fixtures and vehicles, real estate
books? And market and sell? Who rent or mortgage. They will be the
is your attorney? Having the team’s same regardless of the volume
roles and responsibilities on paper of business generated. Variable
benefits everyone because they costs such as payroll, inventory,
know their duties. In this section you utility bills, production waste costs,
may include an advisory board that unanticipated production costs
supports your company in an area(s) and underestimated job quotes
where your team lacks experience. are associated with the volume of
operations. It’s usually a good idea
FINANCIAL PROJECTIONS to add 10-20 percent of variable
costs as unanticipated expenses.
The financial portion of the business List fixed and variable costs on the
plan consists of documents that operating expense report.
support loan requests and indicate
the expected financial position of The cash flow statement is one of
the company at different periods. the fundamental projections in
This is the area where you should be securing outside financing by
realistic and conservative. List showing the source and use of cash.
the amount of money the company Cash flow projections demonstrate
has spent or is prepared to spend on the inflow and outflow of cash over
the business venture. This document an interval of time and projects the
should include all funds raised, their accounts increases and decreases.
sources (owner’s cash, As a result, the cashflow statement
loans from friends or investors) projects your firm’s ability to pay
and how they’ll be used. bills, cover payrolls and service bank
Common documents found debt from one period to the next
in financial projections include an (usually per month).
operating expense report, cash
flow statement, balance sheet and The balance sheet describes the
income statement. condition of the company on a
23
particular day (usually the last day any assets owned and debt owed to
of the month, quarter or year) and creditors. Knowing the credit score
balances the assets and of all owners is very important when
liabilities of the company. submitting the business plan to
This makes it different from other lenders.
financial statements, most of
which cover a time period. An asset
is anything the business owns of
monetary value. Small business
assets commonly include cash,
notes receivable, accounts
receivable, inventories, land,
buildings, machinery, equipment
and other investments. A liability
is the claims of creditors against
the assets of the business which are
the debts owed by the business.
A new business should prepare
projected annual balance sheets for
three years. An existing firm should
include historical balance sheets
from the three previous years (or for
however long it has been in
existence), as well as three years
of annual projections. You will also
need to calculate a break-even
analysis that determines the volume
of sales necessary to reach that
minimum point where you can cover
both fixed and variable costs. The
point of no loss and no profit is the
break-even point.

PERSONAL FINANCIALS

If you’re going to use the business

plan to support a loan request,
include personal financial
statements for every owner no
matter how small the percentage
of ownership. Owners should list
24
CHAPTER NOTES

25
Financing is probably the first FAMILY, FRIENDS AND
thing on many entrepreneurs’ COLLEAGUES
minds when it comes to starting a
small business. One of the biggest Often a preliminary source of
challenges in starting your own funding is family, friends and
business is identifying the amount colleagues. They often loan funds
and source of funding necessary and take a promissory note or settle
to carry out your plan. There are for stock options with a formalized
many forms of financing for small agreement to ensure smooth
business owners, including a variety business dealings. A small business
of state and federal programs. Not can issue stock without the formal
every source of financing is right for registration process if fewer than
every small business. You need to 15 people purchase the stock and
find the one that fits your business. stock is not offered for sale to the
Financing options explained in this public. The investors must hold the
section will be brief, and it is highly stock for their own portfolios. More
recommended that you contact a information on limited stock issue
small business counselor. can be obtained from the Tennessee
Department of Commerce and
There are several financing sources Insurance website at
for your business. A business can tn.gov/commerce.
utilize personal assets, family,
friends and colleagues, commercial CREDIT CARDS
credit, credit cards and government
financing. If the business is a startup, Credit cards are a common source of
you will be expected to provide 20- financing, especially for small items
30 percent of your own financing, and equipment your business might
utilizing your own assets. Most need. As credit cards carry a higher
government and commercial lenders rate of interest than conventional
generally require this level of owner loans, their use should be planned
investment. You should know your carefully. Maintaining a good credit
credit score before you request history is important as the business
outside funding. You can obtain a grows and evolves.
free report annually from
annualcreditreport.com COMMERCIAL CREDIT

You can receive free credit Lenders usually offer two types
history once per year from the of commercial loans to small
three reporting agencies from businesses: term loans and seasonal
annualcreditreport.com or call lines of credit. For most bank loans,
1-877-322-8228. lenders ask you to pledge personal
27
 and pay off seasonal lines of credit
several times a year. Other lines
of credit include: business lines
of credit and home equity lines
of credit. A business line of credit
typically has a variable interest rate
at or near the prime rate and does
not need to be repaid annually. A
home equity line of credit (HELOC)
authorizes you to spend up to the
amount of equity (present value of
home minus existing mortgage debt
you have in your home). Interest
assets (including your house) rates are typically variable and do
as collateral and furnish signed not need to be repaid annually. Be
guaranties from all principles. sure to read all documents prior to
signing and don’t hesitate to consult
Term loans are generally for fixed your attorney.
assets; that is, they are used to
purchase real estate and equipment. FEDERAL GOVERNMENT LOAN
You collateralize the loan with the PROGRAMS
assets purchased. As such, lenders
generally extend a loan for a The Small Business Administration
percentage of the value rather than (SBA) is a federal agency that
full value for the goods. Such loans provides small businesses with
usually take the form of installment loan guarantees, counseling and
loans with monthly payments. training. SBA works primarily with
banks to help reduce their risk
Seasonal lines of credit are extended in lending to small businesses.
to satisfy the working capital needs If you are interested in an SBA-
of a firm. Proceeds are used to guaranteed loan, you do not go
purchase inventory, take purchase to the SBA; you meet with an SBA
discounts and make payrolls. banker at a traditional bank. The
While some lenders may take SBA’s largest loan program is the
accounts receivable and inventory 7(a) loan guarantee program. Loan
as collateral, be prepared to use all guarantees help reduce the risk for
assets of the company to secure banks making loans to new, small
these loans. Borrowers are expected businesses. Guarantees range from
to pay off seasonal lines of credit 50-85 percent depending on the loan
at least once a year. Small business amount.
borrowers generally draw down
28
The SBA Microloan assists small The Tennessee Valley Authority
businesses that need small amounts (TVA) also has loan opportunities
of financial assistance. Under this within their power service area.
program, SBA makes direct and Financing is available for companies
guaranteed loans to nonprofit through the TVA Loan Fund to
lenders who use the proceeds stimulate job growth and leverage
to make microloans to eligible capital investment. TVA seeks to
borrowers. fill a funding gap or lower interest
costs of project funding, thereby
Another loan offered by the SBA is enhancing the opportunity for
the Certified Development Company success. The maximum loan amount
(CDC) 504 loan. The 504 Program is $3 million and is determined
provides expanding businesses primarily by jobs and capital
with long-term, fixed rate financing investment. Loan terms may be from
for major fixed assets, such as five to 20 years based on collateral.
land and buildings. The 504 loan The TVA Special Opportunities
program allows small businesses to Counties (SOC) fund is a revolving
take advantage of the open capital loan fund that is available for
markets, but avoid much of the costs rural and distressed communities
associated with entry into these that can be used for building
financial markets. More SBA Loan purchase or renovation, machinery
information is online at sba.gov and and equipment, real estate, and
you can access SBA certified lenders other industrial or small business
by visiting sba.gov/tools/linc. needs. Loan terms and amounts
are flexible to meet each project’s
The U.S. Department of Agriculture or community’s unique needs.
(USDA) Rural Development Division More information is accessible
has Business-Cooperative Programs by contacting your regional TVA
that provide business and industry field representative or by going to
loans in rural areas across tvasites.com.
Tennessee. Generally, the
USDA defines a rural area as a STATE GOVERNMENT LOAN
nonurbanized area with less than PROGRAMS
50,000 in population. The USDA loan
programs are administered through The Tennessee Energy Efficiency
its regional offices and focus on Loan Program provides low interest
assisting businesses that create jobs loans to qualified commercial,
for rural citizens. Contact your local industrial or nonprofit Tennessee-
USDA Rural Development Office based businesses. The program
for more information or visit them allows 100 percent financing for
online at rurdev.usda.gov/tn. energy efficient technology, energy
29
retrofits and renewable energy Tennessee Bankers Association and
systems. It was launched in 2010 and Pathway Lending (changed from
is a collaborative effort among the Southeast Community Capital in
state of Tennessee, TVA, Pinnacle 2010). Visit pathwaylending.org or
National Bank and Pathway Lending. call 1-888-533-PATH (7284) to learn
To learn how energy efficiency is more.
a tool that can save your business
money and how government loans NON-TRADITIONAL FINANCING
strengthen your bottom line go to
pathwaylending.org. Certified Development Financial
Institutions (CDFI) — as certified
The Tennessee Rural Opportunity by the CDFI Fund, a division of the
Fund (ROF) provides much needed U.S. Treasury Department — may
access to capital for small businesses provide loans to disadvantaged
in rural Tennessee. The Small small businesses lacking access to
Business Jobs Opportunity Fund traditional financing options in both
(SBJOF) builds on the success of urban and rural areas. Pathway
the ROF to create a sustainable Lending manages multiple loan
funding source for urban and funds throughout the state and
rural businesses to expand and northern Alabama. The LiftFund
create jobs. Both the ROF and (previously Accion Delta) lends
the SBJOF, launched in 2008 and throughout the southeast (liftfund.
2010 respectively, are joint funds com).
among the state of Tennessee, the

LOAN MAX LOAN WEBSITE

AMOUNT
CDC/504 $5,000,000
Basic 7(a) Loan $5,000,000
International Trade $5,000,000
sba.gov
SBA Microloan $50,000
Disaster Loans $2,000,000
USDA RED Loan and Grant $450,000 rurdev.usda.gov
TVA Economic Development $3,000,000 tvasites.com
Tennessee Rural Opportunity Fund $600,000
Small Business Jobs Opportunity $500,000 pathwaylending.org
Energy Efficiency Loan Program $125,000
30
DEVELOPMENT DISTRICTS sba.gov/tn to find more information
about local SBICs.
Development Districts are
regional planning and economic EQUITY FINANCING
organizations owned and operated
by the cities and counties of Equity capital is money raised by a
Tennessee. Each district operates business in exchange for a share
a business and industry loan of ownership in the company.
program and can provide small Ownership is represented by owning
business loans, typically focusing on shares of stock outright or having
businesses that create jobs within the right to convert other financial
its district. The nine development instruments into stock of that
districts include: Northwest private company. A key source of
Tennessee, Greater Nashville equity capital for new and emerging
Region, Upper Cumberland, businesses is venture capital firms.
First Tennessee, East Tennessee,
Southeast Tennessee, South INCITE CO-INVESTMENT FUND
Central Tennessee, Southwest
Tennessee and Memphis Area The INCITE Co-Investment Fund
(tennesseedevelopmentdistricts. is a venture capital program
org). designed to stimulate the growth
and development of innovative
ELECTRIC COOPERATIVES small businesses in Tennessee and
increase the number of better-
Most of the electric cooperatives in paying, high-quality jobs in our
the state manage a revolving loan state. Developed by TNECD and
fund for businesses within their administered by Launch Tennessee,
service area. Contact your local the Fund is backed entirely by a
electric cooperative for additional $29.7 million award through the
information. You can find your U.S. Department of Treasury’s State
local electric cooperative online at Small Business Credit Initiative.
tnelectric.org. The Fund is a key component of
Gov. Haslam’s $50 million INCITE
SMALL BUSINESS INVESTMENT initiative to raise Tennessee’s profile
COMPANIES (SBIC) in innovation-based economic
development and increase the
SBIC’s are private investment and number of knowledge-based jobs
loan companies established to serve by assisting companies with access
the small business market. They to early-stage capital. The INCITE
are funded with a combination of Co-Investment Fund provides equity
private and federal investment. Visit funding to supplement investments
31
 the state provides oversight of the
program. For a business to qualify
to receive investment funds from
a TNInvestco, the business must
have its headquarters and principal
business operations located in
Tennessee, employ no more than
100 employees, and at least 60
percent of its employees must be
located in Tennessee. To apply for
funding from a TNInvestco, visit
tn.gov/tninvestco.
in Tennessee companies made by
venture capital funds and investors Venture capital is a type of private
from across Tennessee and around equity capital typically provided
the country. For more information by professional, outside investors
visit launchtn.org. to new, high-potential-growth
companies in the interest of taking
TNINVESTCO the company to an IPO or trade
sale of the business. Venture capital
TNInvestco is a state-sponsored, investments are generally made as
venture capital type program created cash in exchange for shares in the
by the Tennessee Small Business invested company.
Investment Company Credit Act. The
state, using a competitive process, GOVERNMENT GRANTS
has picked ten different entities
to provide capital to potential The truth is that federal and state
high-growth, transformational governments do not provide
businesses in Tennessee. The grants directly to individuals to
ten TNInvestco entities were start or expand typical small
awarded $200 million in premium businesses. Most grants offered by
insurance tax credits which were the government are designed to
sold generating approximately expand and enhance organizations
$146 millionof investable capital. that provide small business
The TNInvestcos are authorized management, technical or financial
to invest funds in qualifying assistance. These grants generally
Tennessee small and startup support non-profit organizations,
businesses; the program assists in intermediary lending institutions,
bringing additional capital into the and state and local governments;
state, strengthening Tennessee’s however, the U.S. government
entrepreneurial network, while does offer a wide variety of loans
32
and training programs to help CHAPTER NOTES
entrepreneurs start and grow their
businesses.

Some federal and state agencies

award a limited number of grants
for very specialized business
activities such as scientific research
and development. These R&D, or
research and development, grant
programs include the Small Business
Innovation Research (SBIR) and
Small Business Technology Transfer
(STTR) programs. The STTR and SBIR
are competitive, nationwide grant
programs designed to stimulate
innovation and development in high
technology industries. In Tennessee,
businesses can get assistance
with applying for SBIR and STTR
opportunities through the University
of Tennessee, Center for Industrial
Services. Visit them online at
cis.tennessee.edu or call
(865) 974-8464.

Persons receiving disability benefits

from the Department of Human
Services, Vocational Rehabilitation
Services, may apply for a self-
employment services to start a small
business. In addition, farmers can
compete for cost reimbursement
grants from the Department of
Agriculture for specific activities.
More information is provided in the
“Targeted Businesses and Topics”
section of the guide.

33
BUSINESS
You can find assistance for your tn.gov/ecd/bero.
small business during each stage
of the business cycle. Resources TENNESSEE SMALL BUSINESS
include: startup assistance, licensing DEVELOPMENT CENTERS (TSBDC)
requirements, business relocation,
identifying capital, government The Tennessee Small Business
procurement, exporting, agriculture Development Centers (TSBDC) offers
and business expansion, among assistance to help business owners
others. grow and develop successful,
thriving businesses at little or no
BUSINESS ENTERPRISE cost. The TSBDC is a network of
RESOURCE OFFICE professional business consultants
(BERO) with 20 various locations including
14 service centers, 5 satellite offices
The Office of Business Enterprise, and 1 affiliate office throughout
otherwise known and referred to as the state of Tennessee. The TSBDC
the Business Enterprise Resource prides itself on providing expert
Office (BERO), was created in the business advice to all types of
Department of Economic and businesses whether you are a
Community Development (TNECD) manufacturer, retailer, service
by Chapter 135 of the Public Acts of provider or a professional.
1977, codified as Section §4-26-101
et seq. SCORE

BERO serves as a voice for and The SCORE Association is a

advocate of disadvantaged nonprofit organization dedicated
businesses (DBE) statewide. For to the education and mentoring
the purposes of BERO, DBE refers of entrepreneurs, helping small
to businesses owned by women, businesses start, grow and succeed.
minorities, veterans and persons SCORE is a resource partner with the
with disabilities; as well as those in U.S. Small Business Administration
areas of chronic high unemployment (SBA). SCORE employs volunteers
and low income. BERO is also tasked that are working or retired business
to analyze, disseminate and promote owners, executives and corporate
best practices and access to capital leaders who share their wisdom and
to service providers as well as report lessons learned in business. At the
on the status of DBEs across the time of this publication, active
state. The most recent report on the
progress of DBEs is online. BERO
provides a variety of information on
its website, including this guide at
35
 regulatory compliance and a host of
other topics. TMEP is a branch of the
University of Tennessee Center for
Industrial Services (UT-CIS).
(cis.tennessee.edu)

BUSINESS INCUBATORS AND

ACCELERATORS

Business incubators offer programs

that nurture the successful
development of companies
through an array of business
support resources and services.
SCORE chapters can be found in Business accelerators, similar to
Bristol, Chattanooga, Knoxville, incubators, provide services but on a
Johnson City, Memphis and compressed timeline, bringing their
Nashville. products and services to market
in matter of months. You can visit
SBA LEARNING CENTER the National Business Incubation
Association online at nbia.org to
SBA’s offers a wide variety of free find a local incubation center. There
online tools including training are regional accelerators, referred
courses, videos, web chats and to as entrepreneur centers, located
more. The SBA website covers across the state. To find the regional
topics like financing, government entrepreneur center closest to you
contracting, managing, marketing go to launchtn.org.
and starting a business.
(sba.gov/tools)

TENNESSEE MANUFACTURING
EXTENSION PROGRAM

The Tennessee Manufacturing

Extension Program (TMEP) helps
Tennessee’s manufacturers
become more productive, more
profitable and more competitive.
TTMEP assists businesses with new
production techniques, business
practices, market expansion,
36
CHAPTER NOTES

37
 TAXES AND
INSURANCE
When you start or expand a business business has a physical location in
in Tennessee, it is important to several different cities or counties,
understand the potential tax liability. the business is liable to each city or
This section will provide you with county based on sales or receipts
a basic understanding of standard accumulated in each location. All
taxes that may affect you while businesses generally are subject to
doing business in Tennessee. The this tax.
information provided in this section
will assist you in estimating tax Exempt businesses include
payments in your business plan’s manufacturers, businesses with
cash flow projections. You should less than $3,000 in annual sales,
also consider local property taxes and professionals such as doctors
and special excise taxes that may and lawyers. The U.S. Treasury
be applicable. The main areas of tax collects federal taxes through the
for small businesses are local, state, Internal Revenue Service (IRS). The
federal, franchise and excise taxes, legal structure of your business
and sales and use taxes. determines what federal taxes are
due and payable. There are four
general kinds of federal business
REGISTERING YOUR BUSINESS: tax: federal income tax, self-
employment tax, employment tax
You can register your business and excise tax. Every business must
with the Tennessee Department file an annual income tax return to
of Revenue online at: the federal government. Publication
583, updated December 2011 is a
apps.tn.gov/bizreg good starting point for information
about federal taxes. This and many
more relevant IRS publications can
LOCAL, STATE AND FEDERAL TAXES be found online at irs.gov.

The Tennessee General Assembly The Tennessee Department of

authorizes counties and Revenue is the state’s chief tax
municipalities to levy a privilege collector and is responsible for
tax. That is, a tax for the privilege collecting approximately 92 percent
of operating a business in their of total state tax revenue. The most
jurisdictions. All counties levy common business taxes it collects
the tax as a business license tax. are franchise and excise taxes and
Incorporated cities can also impose sales and use tax. The department
the privilege tax. This tax is based publishes a startup guide specific
on a percentage of sales or gross to tax liabilities. You can access the
receipts in succeeding years. If the guide online at tn.gov/revenue.
39
FRANCHISE AND EXCISE TAX to the state’s franchise tax. Out-of-
state companies doing business in
Tennessee’s franchise and excise Tennessee are liable, even if they
taxes are corporate taxes. The are not based in Tennessee, but they
franchise tax is based upon either may apportion their tax base. If you
the corporation’s net worth or the have a question concerning whether
book value of real and tangible or not your business is exempt
property owned or used in the from this tax, please contact the
state, plus rental values, whichever Tennessee Department of Revenue.
figure is higher. Most businesses
(except general partnerships, The excise tax is based upon the
sole proprietorships and those net earnings of taxable entities
businesses exempt in T.C.A. 67-4- conducted within Tennessee.
2008) organized for profit and doing Most businesses (except general
business in Tennessee are subject partnerships, sole proprietorships
and those businesses exempt in
FRANCHISE TAX: T.C.A. 67-4-2008) organized for profit
and doing business in Tennessee are
• Tax on the greater of net subject to the state’s excise tax. Out-
worth or book value of of-state companies doing business
property owned or used in in Tennessee are liable even if they
Tennessee are not based in Tennessee, but they
• Tax rate is 25 cents per $100 may apportion their tax base. If you
• Certified Pollution control is have a question concerning whether
exempt. Property rented from or not your business is exempt
the industrial development from this tax, please contact the
corporation may be valued by Tennessee Department of Revenue
capitalizing it on the books at tn.gov/revenue.

EXCISE TAX: SALES AND USE TAX

• Tax is based on the net The sales and use tax is a consumer-
earning of the company oriented tax imposed on the
derived from doing business manufacture, distribution or retail
in Tennessee sale of tangible personal property
• Tax Rate is 6.5% within the state. It also is imposed
• Sales outside of Tennessee on many forms of services. Any
are not taxed. All capital business that sells, leases or rents
losses are claimed in the year tangible personal property or
incurred services (unless the business is
specifically exempt) is liable.
40
ASSISTANCE WITH TAXES over a 36-month investment period.
Credits include distribution and
The IRS and Tennessee Department warehouses, call and data centers,
of Revenue provide assistance to headquarters, manufacturing,
new and existing businesses to industrial machinery, emerging
understand and comply with their industry and pollution control
tax burdens. The IRS sponsors
educational workshops that are NET OPERATING LOSSES CAN
delivered through Small Business BE CARRIED FORWARD FOR 15
Development Centers throughout YEARS SALES AND USE TAX:
the state.
• 7% state sales tax plus the
You can find contact applicable local rate
information for the centers in the (1.50% -2.75%) on any
Resources section of this guide. The person or company who
IRS also publishes online video manufactures, distributes
instructions for small or sells tangible personal
business at irs.gov/Businesses/ property within the state
Small-Businesses-&-Self-Employed. • No Sales Tax is levied on:
The Tennessee Department of purchases, installation, and
Revenue publishes a tax guide for repairs of qualified industrial
new businesses. You can find machinery
additional information or submit a
request for support at RAW MATERIALS FOR
tn.gov/revenue/article/tax- PROCESSING:
workshops.
• Pollution control equipment
TAX-BASED INCENTIVES for manufacturers
• Reduced sales tax rates for
Tennessee allows businesses a manufactures’ use of energy
franchise and excise tax credit fuel and water (1.5% vs. 7%)
based on a minimum level of • Qualified industrial supplies
capital investment and number of items purchased for resale
jobs created. The amount of tax containers, packaging, and
credits and the period of time the wrapping materials
credits may be used are determined • Additional exemptions of
by the size of the business credits may be available
investment. Typically, the minimum tnecd.com/advantages/
requirements are $500,000 in capital incentives-grants
investment and creation of 25 net
new full-time jobs with benefits TNECD.com
41
equipment. Tennessee also allows a There is also a maximum tax credit
research and development credit on that you can earn. The tax credit
sales and use tax credit for qualified depends on the target group of the
equipment. Tax incentives are based individual. The new employee may
on Tennessee statutes that are set be required to work a minimum of
forth by the Tennessee State General 120 to 400 hours in order to claim a
Assembly. Detailed information on tax credit of anywhere between 25%
all of the tax credits listed above can and 50%.
be found online at TNECD.com.
The target groups are veterans,
WORK OPPORTUNITY TAX CREDIT TANF Recipients, SNAP (Food Stamp)
Recipients, Vocational Rehabilitation
The Work Opportunity Tax Credit Referral, ex-felons, SSI recipients,
(WOTC) is a Federal tax credit long term unemployed, among a few
available to employers who hire others. To learn more visit tn.gov/
and retain veterans and individuals workforce.
who face barriers moving into
gainful employment. The program TENNESSEE JOBS TAX CREDIT
encourages employers in the private FOR EMPLOYING PERSONS WITH
sector to hire job seekers from DISABILITIES
designated target groups.
Employers may be eligible for a
As an employer, the tax credit tax credit if they hire employees
you can claim depends upon the with disabilities who have received
individual you hire, the wages you vocational rehabilitation services
pay in the first year, and the number through the state’s Division of
of hours that individual worked. Rehabilitation Services. Entities

ONLINE OR WEB-BASED BUSINESSES:

The state of Tennessee recognizes online or web-based businesses

as Tennessee businesses. Tennessee web-based businesses are
liable for the same taxes and regulations as businesses with a
storefront. Tennessee web-based businesses that sell products
or taxable services are required to collect sales tax from their
Tennessee consumers. If they sell to consumers outside Tennessee,
they are not required to collect sales tax because those consumers
are required to pay a use tax to their domestic departments of
revenue. More information on this topic can be found online at:

tn.gov/revenue
42
doing business in the state of The Jobs Tax Credit Business Plan
Tennessee that create new jobs, form can be found at
either full time or part time, that are tn.gov/revenue/article/forms-
filled by individuals with disabilities franchise-excise-tax.
may be entitled to a one-time job
tax credit. WORKERS’ COMPENSATION

T.C.A. § 67-4-2109(f) provides a Required in every state except

job tax credit for $5,000 for each Texas, workers’ compensation
net new full-time employee and insurance pays for employees’
one for $2,000 for each net new medical expenses and missed
part-time employee. These tax wages if injured while working. In
credits are for the employment of Tennessee, workers’ compensation
persons with disabilities who receive coverage is required for employers
state services. Employment of the that employ five or more persons
person with a disability must create for pay (construction businesses
a net increase in the number of have stricter requirements).
persons with disabilities employed Workers’ compensation is acquired
by the taxpayer within the 90-day through insurance agents who
period immediately preceding the obtain the actual coverage through
employment. The taxpayer must licensed insurance companies.
provide the qualifying employment Due to rating deregulation, rates
for at least 12 consecutive months and premium amounts will vary
for no less than the minimal hours between insurance companies. If
per week as described in the an employer is unable to obtain
enacting legislation. this coverage, they may submit

To claim the tax credit, the taxpayer

must file a plan with the Tennessee
Department of Revenue, Taxpayer
and Vehicle Services Division on or
before the last day of the fiscal year
in which the employment begins
and must state the number of
persons with disabilities newly
employed. Information about the
job tax credit can be found in the
Franchise and Excise Tax Guide
on the Department of Revenue’s
website at tn.gov/assets/entities/
revenue/attachments/feguide.pdf.
43
an application to the Tennessee bonds or judgments required during
Workers’ Compensation Insurance an appeal procedure.
Plan to get workers’ compensation.
You should visit tn.gov/workforce/ INSURANCE AND BONDING
article/wc-who-must-carry-insurance
to find forms and more information Insurance is considered a cost
about the Tennessee Workers’ of doing business and nearly all
Compensation Insurance Plan. businesses need to carry some
form of business insurance. Some
UNEMPLOYMENT INSURANCE forms of insurance, such as worker’s
compensation and unemployment
Unemployment insurance provides insurance, may be required by the
benefits to unemployed workers state of Tennessee. Other forms
who have lost their jobs through no of insurance, like general liability
fault of their own. Most employers and health insurance, are optional
who have workers in Tennessee are policies that protect your business’s
liable to pay state unemployment physical and human assets. Below
insurance (SUTA) premiums. The is a description of the various types
Tennessee Department of Labor and of insurance which can be obtained
Workforce Development (TDLWD), from a licensed insurance agent.
Employment Security division,
administers the unemployment PRODUCT LIABILITY
insurance program in Tennessee.
You can find employer registration Every product is capable of
forms for the TDLWD online at personal injury or property damage.
tn.gov/workforce/topic/forms and Companies that manufacture,
the TDLWD may also be reached at wholesale, distribute and retail a
1-844-224-5818. Once registered, product may be liable for its safety.
SUSTA reports are filed online at Additionally, every service rendered
tdlwd.tn.gov/tnpaws. may be capable of personal injury
or property damage. Businesses
GENERAL LIABILITY INSURANCE are considered liable for negligence,
breach of an express or implied
Many business owners buy warranty, defective products and
general liability or umbrella liability defective warnings or instructions.
insurance to cover legal hassles due
to claims of negligence. These help HOME-BASED BUSINESS
protect against payments as a result INSURANCE
of bodily injury or property damage,
medical expenses, the cost of Contrary to popular belief,
defending lawsuits, and settlement homeowners’ insurance policies
44
do not generally cover home- during natural disasters, fires and
based business losses. Commonly other catastrophes that may cause
needed insurance areas for the operation to shut down for a
home-based businesses include significant amount of time.
business property, crime and theft,
professional liability, personal and KEY PERSON INSURANCE
advertising injury, loss of business
data and disability. In addition to a business
continuation plan that outlines
INTERNET BUSINESS INSURANCE how the company will maintain
operations if a key person dies, falls
Web-based businesses may wish to ill, or leaves, some companies may
look into specialized insurance that wish to buy key person insurance.
covers liability for damage done by This type of coverage is usually
hackers and viruses. In addition, life insurance that names the
e-insurance often covers specialized corporation as a beneficiary if an
online activities, including lawsuits essential person dies or is disabled.
resulting from meta tag abuse,
banner advertising or electronic MALPRACTICE INSURANCE
copyright infringement.
Some licensed professionals need
CRIMINAL INSURANCE protection against payments as a
result of bodily injury or property
No matter how tight security is in damage, medical expenses, the cost
your workplace, theft and malicious of defending lawsuits, investigations
damage are always possibilities. and settlements, and bonds or
While the dangers associated with judgments required during an
hacking, vandalism and general appeal procedure.
theft are obvious, employee
embezzlement is more common
than most business owners think.
Criminal insurance and employee
bonds can provide protection
against losses in most criminal
areas.

BUSINESS INTERRUPTION
INSURANCE

Some businesses may wish to

acquire insurance that covers losses
45
 of bonds: license, performance,
bid and payment bonds. A
performance bond is a guarantee
that you will perform work in
accordance with the terms of a
contract. A bid bond is a guarantee
that you will perform work if the
bid is won by you. An indemnity
bond promises to reimburse loss
incurred if you fail to perform or
if you fail to pay other vendors in
the performance of the contract. A
license bond is required by some
BUSINESS PROPERTY INSURANCE states for specific businesses.
In some cases you pay the state
Business property insurance directly rather than obtaining a
protects your building and bond. A payment bond promises
equipment investments against you will pay all subcontractors and
natural disasters such as tornadoes, material providers utilized in the
floods and earthquakes. You may performance of a contract. Contact
also want to get a fire insurance your insurance agent to obtain a
policy included in your property bond and/or ask the SBA about their
insurance policy, especially if your surety bond program.
building is physically attached to
other businesses. THE AFFORDABLE CARE ACT

BONDING The Affordable Care Act (ACA)

includes a variety of measures
Some small businesses, especially specifically for small businesses that
those that perform contracting help lower premium cost growth and
services, will be asked to bond increase access to quality, affordable
its work in advance. A bond is a health insurance. Depending on
financial guarantee that you will whether you are self-employed,
honor a business contract. In some an employer with fewer than 25
states certain types of contractors employees, an employer with fewer
are required to be bonded. A bond than 50 employees, or an employer
(sometimes referred to as a surety with 50 or more employees,
bond) is a third party obligation different provisions of the ACA may
promising to pay if a vendor does apply to you. To learn about the key
not fulfill its valid obligations under provisions of the ACA visit sba.gov/
a contract. There are various types healthcare.
46
CHAPTER NOTES

47
RESONSIBILITIES AND
REGULATIONS
If a company employs people to job-protected leave to eligible
work in the business, it is considered employees for the birth or adoption
an employer by Tennessee’s of a child or for the serious illness of
definition. As an employer, the the employee or a spouse, child or
company has certain responsibilities parent.
under various state and federal laws
as well as certain regulations that it The company is also required
must follow. to follow federal Occupational
Safety and Health (OSHA) rules.
RESPONSIBILITIES Standards vary with the three
broad classifications of businesses:
Employer responsibilities fall agricultural, construction and
primarily in the areas of wages, general industry. If the organization
unemployment compensation, has 11 or more employees, you must
taxes, and labor practices and maintain records in accordance
standards. The Fair Labor Standards with OSHA rules. You can find a list
Act (FLSA) establishes minimum of all of OSHA rules at osha.gov.
wage, overtime pay, record keeping The state of Tennessee provides
and child labor standards affecting employers, especially smaller
your full- and part-time workers. employers, assistance to help
The FLSA allows the company to set them achieve a safe and healthful
rules on vacation time, holiday days workplace for their employees.
off, severance pay, premium pay for The Tennessee Occupational
holidays or weekends, pay raises Safety and Health Administration
and sick pay. (TOSHA), Consultative Services
offers both occupational safety
The U.S. Department of Labor and industrial hygiene services
provides the publication “Handy to manufacturing, construction,
Reference Guide to the Fair Labor and other types of businesses in
Standards Act” for employers. Tennessee. This no-cost service
Regulations for implementing the is designed to assist employers in
FLSA among other references and developing or enhancing safety and
resources can be found at health management systems. The
ddol.gov/whd. The Family and industrial hygienist and occupational
Medical Leave Act (FMLA) is designed safety specialist will identify safety
to help employees balance work and and health hazards and help you
family responsibilities by allowing implement cost-effective hazard
unpaid leave for certain family and control solutions. Contact TOSHA by
medical reasons. The law requires phone at (615) 741-2793 or
employers of 50 or more employees 1-800-249-8510.
to give up to 12 weeks of unpaid,
49
REGULATIONS
REGULATORY BOARDS:
Different types of business activities
are regulated at the state and • Accountancy
federal level. These regulations deal • Alarm Systems Contractors
with licensing of certain jobs, as well
Board
as protecting the public welfare in
such areas as business practices, • Architectural & Engineering
standard weights and measures, and Examiners
pollution control. • Auctioneer Commission
• Barber Examiners
Municipalities generally regulate or • Collection Service
zone the location of different types • Contractors/Home
of businesses. Entrepreneurs are
Improvement License
encouraged to contact their local
zoning boards and/or county clerk’s • Cosmetology
offices for this information. • Employee Leasing
• Funeral Directors,
Different types of professions are Embalmers, Burial &
regulated at the state and federal Cemetery Services Advisory
level. The Tennessee Department of
• Home Inspector Licensing
Commerce and Insurance licenses
and regulates certain non-medical Advisory
professions in order to insure a • Land Surveyors
standard level of skills and business • Locksmith Licensing Program
practices for public safety. Visit Advisory
the Tennessee Department of • Motor Vehicle Commission
Commerce and Insurance online • Private Investigation &
at tn.gov/commerce for more
Polygraph Commission
information.
• Private Protection Services
Department of Intellectual and Advisory
Developmental Disabilities (DIDD) • Race Track Licensing Program
supports Tennesseans with • Real Estate Appraisers
intellectual and developmental • Real Estate Commission
disabilities, and is tasked with • Scrap Metals Registration
licensure for personal support
Program
services (tn.gov/didd/topic/officeof-
licensure). The Department
of Mental Health and Substance tn.gov/commerce/section/
Abuse Services (MHSAS) Office of regulatory-boards
50
Licensure, Review and Investigation HIRING EMPLOYEES
is responsible for protecting
Tennesseans who need mental Understanding your regulatory
health, developmental disability, requirements as an employer
alcohol and drug abuse, and is crucial to the success of your
personal support services by business. Before hiring employees,
applying the department’s licensure you need to get an Employment
rules (tn.gov/behavioral-health/ Identification Number (EIN) from
topic/licensing). A facility or agency the U.S. Internal Revenue Service
thatserves both populations, MH (IRS). The IRS requires you to
and ID/DD, needs to be licensed. keep all records of employment
The DIDD Office of Risk Management taxes for at least four years. These
and Licensure functions to protect records include Federal Income Tax
the interest of tax-paying citizens Withholding (Form W-4) and Federal
against unlicensed service providers, Wage and Tax Statement (Form
unsafe environments, inadequate W-2). Form W-4 must be signed by
education and training of personnel, the employee on or before the date
physical and mental abuse and of employment. The employer must
any unscrupulous acts deemed then submit the form to the IRS and
detrimental to the treatment and maintain a copy for their records.
general welfare of persons with Visit irs.gov to obtain an EIN and
intellectual and developmental find Form W-4. Form W-2 reports
disabilities. This also includes those wages paid and taxes withheld for
in need of Personal Support Services each employee. This form must be
Agency (PSSA). submitted to the Social Security
Administration by the last day of
The Tennessee Department of February for employees who worked
Environment and Conservation the previous calendar year. Copies
(TDEC) regulates environmental of Form W-2 should be sent to
output of businesses. TDEC issues employees by January 31 following
air, water, waste, radiological and the previous calendar year. To find
natural resource permits. TDEC is Form W-4 visit socialsecurity.gov.
online at tn.gov/environment.
In addition to Forms W-4 and W-2,
If you are not sure if your business is federal law requires employers to
regulated by the state of Tennessee, verify an employee’s eligibility to
contact the Division of Regulatory work in the United States. Within
Board Board at (615) 741-3449 three days of hire, employers
or visit them online at tn.gov/ must complete an Employment
commerce/section/regulatory- Eligibility Verification Form (Form
boards. I-9) and keep the form on file for
51
three years after the date of hire.
The U.S. Immigration and Customs
Enforcement (ICE) agency conducts
routine audits to ensure employers
are following the law. You can find
Form I-9 at uscis.gov.

The Personal Responsibility and

Work Opportunity Reconciliation Act
of 1996 require employers to report
newly hired and re-hired employees
to a state directory within 20 days
of their hire date. You can access
Tennessee’s New Hire Reporting
system at tnnewhire.com.

52
CHAPTER NOTES

53
This section contains information on Tennessee does not require
a variety of topics an entrepreneur businesses to collect sales tax from
or small business owner may find non-citizens of Tennessee. Other
helpful. The topics include home states may require you to pay tax for
and internet based businesses, sales in their state. Visit
inventors, patent, copyright and tn.gov/revenue to find more
trademark, government contracting, information about Tennessee taxes.
disabled business owners, export
and regualtory assistance. Original writings, artwork,
photographs and other forms
HOME AND INTERNET-BASED of authorship may be protected by
BUSINESS copyright. Visit the U.S. Copyright
Office online to find the procedures
If you are considering a home- for copyright registration for online
based business, you should contact works (Circular 66) at copyright.gov.
your local zoning and building
codes office or commission to find The Internet Corporation for
out if you need special targeted Assigned Names and Numbers
businesses and topics permits. In (ICANN) has accredited over 860
addition to a local zoning permit, registrars that offer domain name
you may need to obtain a business (website address) registration. The
license from your county clerk ICANN registrars allow business
office to run your home-based owners to purchase a domain name,
or internet-based business. This or purchase a domain name and
requirement depends on how much package of services such as web
income you earn and varies by hosting services. Visit icann.org for a
county in Tennessee. In addition, list of accredited registrars. Internet-
you may need to look at business based businesses should look
insurance, because homeowners’ into insurance that covers liability
insurance policies do not generally for damage done by hackers and
cover home-based business losses. viruses, lawsuits, banner advertising
Common insurance areas for home- or electronic copyright infringement.
based businesses include business
property, professional liability, INVENTORS
personal and advertising injury,
loss of business data and crime The first step for applying for a
insurance. patent is to conduct a patent search
online at the United States Patent
Internet and catalog businesses are and Trademark Office (USPTO) to
required to collect sales tax from see if any current patents that match
customers living in Tennessee. your idea. Once you have searched
55
 manufactured and your marketing
plan for the product.

The Inventors Assistance Center (IAC)

within the USPTO provides patent
information and services to the
public. The IAC can answer general
patent examination questions,
direct calls to appropriate USPTO
personnel, assist you with forms
and provide general information
concerning rules, procedures and
fees. The IAC is online at uspto.gov
for existing patents, you can then or call 1-800-786-9199.
start the process of applying for a
patent with the USPTO. The type of The Tennessee Inventors Association
patent you apply for depends on (TIA) is an organization of inventors.
your product. The most common The TIA has members all across
patent filed is the non-provisional Tennessee and as far away as Ohio
utility patent, according to the and Virginia. The TIA is a great
USPTO. resource for inventors, innovators
and entrepreneurs. The TIA provides
An important note is that the “poor seminars, information and guidance
man’s patent” will not protect your to those involved in innovation.
invention. This idea that by writing The TIA has produced an inventor’s
a description of your invention and guide that provides step-by-step
mailing it to yourself or someone instruction on how to take your
else by mail or certified mail will idea to a functioning product. The
protect your invention is not true guide includes information about
and may hurt your later patent establishing a date of originality,
rights. You can build the prototype patent protection, licensing,
before or after receiving your patent prototypes and the inventor’s log.
from the USPTO. The prototype is a This guide is free to all members
working model of the product that of the TIA. You can join the TIA by
you intend to bring to market. It is visiting their website at
often used to obtain financing for tninventors.org.
the mass production of the product.
You will also need a business plan
to obtain financing from banks
and other lenders. You want to
highlight how the product will be
56
PATENTS, COPYRIGHTS AND provided to the authors of ‘original
TRADEMARKS works of authorship’ including
literary, dramatic, musical, artistic
A patent for an invention is the grant and certain other intellectual works,
of a property right to the inventor both published and unpublished.” A
issued by the United States Patent copyright is the protection of the
and Trademark Office. According creative expression of an idea. You
to the United States Patent and can copyright the actual steps or
Trademark Office, there are three methods of creating an object but
types of non-provisional patents: not a list of items used to create the
utility, design and plant patents. A object.
utility patent is granted to anyone
who invents or discovers a new and You may wish to protect your
useful process, machine, article of company name and/or service
manufacture, or composition of mark in the state of Tennessee by
matter, or an improvement of the obtaining a state trademark. As a
before mentioned. Design patents business owner, you can obtain a
may be granted to anyone who state trademark, which will protect
invents an original and decorative your business name and/or service
design for an article of manufacture. mark within Tennessee for five
Plant patents are granted to anyone years. You may also wish to protect
who invents, discovers or produces your company name and/or symbol
a distinct and new variety of plant. in the U.S. by obtaining a federal
There are two types of utility trademark. As a business owner,
and plant patents, which are the you can obtain a federal trademark,
provisional and non-provisional which will protect your business
patent. The provisional patent was name and/or symbol within the
designed to provide a lower-cost first United States for 10 years.
patent filing in the United States. The
provisional patent is granted for a You may want a combination of
term of 12 months with no official copyright, patent and trademark
patent claim, oath or declaration, protection for your work. More
or any information disclosure detailed information on patents,
statement. The non-provisional copyrights and trademarks can
patent is a complex legal document, be found online at uspto.gov.
best prepared by a patent lawyer or You should consult an attorney
a trained professional. to determine which form(s) of
intellectual property protection
As stated by the Library of Congress’ best corresponds to your individual
Copyright Office (copyright.gov), “A situation.
Copyright is a form of protection
57
TECHNOLOGY-BASED BUSINESS program to award subcontracts to
American small businesses.
Launch Tennessee (LaunchTN)
is a public-private partnership Life Science Tennessee is a statewide
with the Tennessee Department member organization of scientists,
of Economic and Community researchers, academicians and
Development focused on supporting business professionals working
the development of high-growth to advance and grow the life
companies with the ultimate goal of science industry through advocacy,
fostering job creation and economic partnerships and alignment
growth through developing with economic and workforce
new and expanding existing development. The organization
programs in entrepreneurship is involved in the discovery and
and commercialization, capital application of life sciences products
networks and outreach. Information and related services that improve
on LaunchTN (formerly the the health and well-being of
Tennessee Technology Development people throughout the world.
Corporation) is online at Visit lifesciencetn.org for more
launchtn.org. information.

Oak Ridge National Laboratory VETERAN-OWNED BUSINESSES

(ORNL) is a multi-program science
and technology laboratory managed The Tennessee Small Business
for the U.S. Department of Energy Development Center (TSBDC)
by UT-Battelle, LLC. ORNL offers published Tennessee Veterans
a variety of services to small Business and Resource Planning
businesses focused on science and Guide, a comprehensive startup
technology. The Small Business guild for veterans. You can find the
University offers online training or guide online at tsbdc.org.
training slides of various subjects to
help develop critical areas of small The University of Tennessee
businesses. The ORNL Mentor- Center for Industrial Services
Protégé Program is designed to Procurement Technical Assistance
assist energy-related firms in an Center (UT PTAC) partners to host
effort to enhance their capability to various annual veterans’ business
perform contracts and subcontracts conferences. The conferences
for Oak Ridge National Laboratory. feature workshops, networking
opportunities and sessions that
ORNL purchases supercomputers, focus on doing business with local,
office supplies, office buildings and state and federal governments. Visit
other items through their extensive cis.tennessee.edu/connecting/ptac
58
for more information. techniques or business practices.
UT-CIS also provides the service
Veterans, service-disabled veterans of the Procurement Technical
and their dependents or survivors Assistance Center (PTAC). PTAC
can receive business assistance with is a local resource available at no
the SBA Tennessee District Office or nominal cost that can provide
of the Office of Veterans Business assistance to business firms in
Development located in Nashville marketing products and services
by calling (615) 736-7176. The to the federal government and its
SBA offers special terms on loan prime contractors. PTAC is an arm
programs as well as other resources of the U.S. Department of Defense
to veterans and members of the National Procurement Technical
military community. Assistance Program (PTAP). UT-CIS is
To learn more visit online at cis.tennessee.edu.
sba.gov/offices/headquarters/ovbd.
STATE GOVERNMENT
The U.S. Department of Veterans CONTRACTING
Affairs Center for Veterans
Enterprise (CVE) maintains the The Governor’s Office of Diversity
only federally controlled database Business Enterprise (Go-DBE)
registry for veteran-owned small focuses on ensuring that minority,
business VetBiz Vendor Information women, service-disabled veterans
Pages (VIP). It can be accessed online and small businesses are afforded
at vetbiz.gov. The Department of a fair and equal opportunity to
Defense (DoD) has undertaken participate in state procurement
an aggressive outreach effort to activities and contract awards.
identify veteran and service-disabled
veteran-owned small businesses
for prime and subcontracting
opportunities. To learn more visit
acq.osd.mil/osbp.

FEDERAL GOVERNMENT
CONTRACTING

The Center for Industrial Services

(CIS) is an agency of the University
of Tennessee (UT) Institute of Public
Service. UT-CIS helps Tennessee’s
manufacturers become more
productive by new production
59
 LOCAL GOVERNMENT
CONTRACTING

If you are new to government

contracting, a first step is to
do business with your local
government. Generally, local
government processes are easier to
understand. It can take less time to
get accustomed to how government
contracting operates, making
you more likely to win bids. Many
of the larger municipalities have
Minority, women, service-disabled formal vendor programs with staff
veteran and small businesses that provide assistance to small,
interested in doing business with veteran, minority and women-owned
the state are required to register businesses. Memphis, Nashville,
with the office. Businesses will Chattanooga and Knoxville have
be interviewed and assessed for formal vendor programs. For more
a determination of procurement information,visit your municipality’s
interests and qualifications such as web site or contact its finance or
licensing, bonding and certification. procurement office (tn.gov/local).
To register, certify and review the list
of certified diversity companies, visit BUSINESS OWNERSHIP
Go-DBE at tn.gov/generalservices/ CERTIFICATIONS
topic/governors-office-of-diversity-
business-enterprise-godbe. Often times, larger entities such
as corporations or government
The Tennessee Department of agencies will request that small,
Transportation provides assistance veteran, minority- or women-owned
to disadvantaged business businesses become certified.
enterprises through their Civil Certifications provide third-party
Rights Office Small Business verification to help entities make
Development Program. The decisions about a potential vendor.
program assists with program Information includes: owner(s)
management and development, involvement and control of the
government compliance, daily operations of their business;
community development, workforce business operational capabilities;
development and human resource and ethnic and gender information
management. To learn more go to about the owner(s). Because the
tn.gov/tdot/topic/small-business. information collected during
60
the certification process can be their Self-Employment Program.
specific to a particular corporation Individuals approved for the
or industry, there is not one program must create and present a
universal certification used by business plan to a panel of advisors.
all organizations. In Tennessee, Approved individuals can receive up
certification programs are offered to $5,000 in business services for the
by the Governor’s Office of Diversity business; 50/50 match funds may be
Business Enterprise, Tennessee available up to $10,000. However, SSI
Department of Transportation, and SSDI recipients are exempt from
U.S. Small Business Administration, the match requirement. To learn
TriState Minority Supplier more about the Self-Employment
Development Council, Women’s program, contact your regional VR
Business Enterprise South Council Office or call (615) 313-4891. The
and National Women Business website for Vocational Rehabilitation
Owners Corporation. The first step in is tennessee.gov/humanserv/rehab/
deciding if you need a certification is vrs.html.
to evaluate whether the companies
you do business with (or want to do AGRI-TOURISM AND PICK
business with) require vendors to TENNESSEE PRODUCTS
have a particular certification. If you
are pursuing federal government The Tennessee Department of
work, you should consider an SBA Agriculture provides assistance to
certification; state government farmers, agribusinesses, commodity
work, then Go-DBE; TDOT and organizations and consumers.
airport work, then TDOT; private Services are delivered through the
corporations only, then minority Pick Tennessee Products marketing
supplier development council or one
of the national women’s certification
groups.

BUSINESS OWNERS WITH

DISABILITIES

The Tennessee Department

of Human Services Vocational
Rehabilitation (VR) is a federal and
state-funded program providing
services to help individuals with
disabilities enter or return to
employment. Individuals who qualify
for their services can participate in
61
campaign and include: direct sales Commerce under the International
contacts; media activities and Trade Administration (ITA) and
promotions; regular press releases has offices in more than 100 cities
and seasonal features; compilation throughout the United States and
of directories of producers; support in U.S. Embassies and Consulates
of commodity group activities; agri- in nearly 80 countries worldwide
industry recruitment; expansion (trade.gov). Its global network
of existing businesses; one-on-one of trade professionals connects
counseling; partnership with other U.S. companies with international
agencies. Visit picktnproducts.org for buyers. Get a free “Basic Guide to
more information. Exporting” export.gov.

The Center for Profitable Agriculture The Southern United States Trade
(CPA) is a partnership between Association (SUSTA) is a non-
the Tennessee Farm Bureau
Federation and the University of EXPORT CONTACT LIST:
Tennessee Institute of Agriculture.
CPA works to increase the value of • EXIM: Export-Import Bank
Tennessee’s economy through new, • of the U.S
expanded and improved processing exim.gov
and marketing of agricultural,
aquacultural and forestry products. • OPIC: Overseas Private
Find more information about CPA at Investment Corporation
ag.tennessee.edu/cpa. opic.gov
EXPORTING • SBA: Office of International
Trade
A number of companies and sba.gov
agencies are available to help
expand small business into the • SUSTA: Southern U.S. Trade
worldwide marketplace. Services Association
may include hosting foreign buyer susta.org
visits, participating in trade shows
and sales missions, identifying • TNECD: Export
foreign import requirements export.tnecd.com
and identifying foreign import
requirements and other trade • USCS: U.S. Commercial
information. Service
• export.gov
The U.S. Commercial Service (USCS) trade.gov
is a part of the U.S. Department of
62
profit agricultural export trade TREN was developed to provided
development association comprised on-on-one counseling to assure a
of the Departments of Agriculture successful and efficient process. This
of the 15 southern states. U.S. free export assistance is provided
Department of Agriculture’s for all markets, and includes
Foreign Agricultural Service or strategic planning, market research,
FAS, administers and executes education, trade mission support
many foreign market development and networking. TREN Coordinators
activities. (susta.org) are located across the state and
work closely with federal partners at
There are a few sources of capital the TSBDCs and Commercial Service
specifically targeted for those offices. To learn more about the
exporting. EXIM Bank or the export opportunities available to
Export-Import Bank of the U.S. Tennessee companies, visit export.
provides export credit insurance, tn.gov.
export working capital and loan
guarantees. The SBA’s Office of REGULATORY ASSISTANCE
International Trade provides a
number of export loan programs Housed within the SBA, the
designed to help develop or expand National Ombudsman assists small
export activities. The Overseas businesses when they experience
Private Investment Corporation excessive or unfair federal
(OPIC) is the U.S. Government’s regulatory enforcement actions.
development finance institution. The National Ombudsman acts as
OPIC works, with the U.S. private a liaison between small business
sector to help American businesses owners and federal agencies. The
gain footholds in emerging markets, National Ombudsman receives
catalyzing revenues, jobs and growth comments from small business
opportunities both at home and concerns and acts as a liaison
abroad. between them and federal agencies.
Comments received from small
TENNESSEE REGIONAL EXPORT businesses are forwarded to federal
NETWORK agencies for a high-level review
and federal agencies are requested
The Tennessee Regional Export to consider the fairness of their
Network (TREN) is a statewide enforcement action. A copy of the
initiative designed to boost exports agency’s response is sent to the
among the state’s small- and small business owner by the Office
medium-sized enterprises. It’s not of the National Ombudsman. In
always easy to navigate the steps to some cases, fines have been lowered
new markets on your won, and the or eliminated and decisions changed
63
in favor of the small business owner.
The ombudsman can be contacted
by email at ombudsman@sba.gov
or phone at (888) 734-3247. The
website is sba.gov. The Office of
Small Business Advocate, housed
within Tennessee’s Comptroller
of the Treasury, serves as a point
of contact to state government
for owners of businesses with 50
or fewer employees. The office
assists in the resolution of issues
concerning small businesses and
state departments and agencies. For
more information call
1-866-831-3750 or visit
comptroller.tn.gov/OSBA.

The Tennessee Department of

Environment and Conservation,
(TDEC) Office of Environmental
Assistance (OEA) program, provides
information and non-regulatory
support to businesses. The OEA has
a Small Business Environmental
Assistance Program (SBEAP) that
provides technical, administrative,
and regulatory support for small
businesses. The SBEAP works as
a liaison between the regulatory
agencies and small business. Reach
the SBEAP by phone at
1-800-734-3619 or by email
bgsbeap@tn.gov.

64
CHAPTER NOTES

65
RESOURCES
ALCOHOLIC BEVERAGE resources, water use, work in or
COMMISSION - near water (manufacturers) - Permit
tn.gov/abc/section/licensing Requirements Guide at

Who: On and off-premises alcoholic DEPT. OF FINANCIAL

consumption, wholesalers, winery, INSTITUTIONS -
distillery, high gravity beer brewery tennessee.gov/tdfi/article/apply-for-
license
DEPT. OF AGRICULTURE,
CONSUMER AND INDUSTRY Who: Banks, check cashers, credit
SERVICES - unions, development corporations,
tn.gov/agriculture/topic/cis mortgage companies, ATM services,
et. al.
Who: Feed, seed fertilizer, pesticides,
weights and measures, retail and DEPT. OF HEALTH -
food service establishments, dairy, tn.gov/health/section/health-
plant and animal professional-boards

DEPT. OF COMMERCE AND Who: Acupuncture, athletic trainer,

INSURANCE - body piercing, counselor, EMS, food
tn.gov/commerce/section/licensing- service establishments, hotels,
regulations massage therapists, professional
and facility licensing, swimming
Who: (A lot! When in doubt, try here pools, tattoo artists, vet techs
first.) Accountancy, architecture and (and quite a few others, especially
engineering examiners, auctioneers, medical related)
barbers, contractors/home
improvement license, cosmetology, DEPT. OF HUMAN SERVICES -
funeral directors, insurance tn.gov/humanservices/article/child-
companies, plumbers, private care-rules-and-regulations
protective services, surveyors and
appraisers, et.al. Who: Adult daycare, childcare

DEPT. OF ENVIRONMENT & DEPT. OF INTELLECTUAL AND

CONSERVATION - DEVELOPMENTAL DISABILITIES -
tn.gov/environment/permits/whoami. tn.gov/didd/topic/office-of-licensure
shtml
Who: Long-term care facilities and
Who: Businesses that effect air personal support services for those
(dry cleaners, gas stations), land with disabilities
resources (drilling, grading), natural
67
 This list is not comprehensive,
and some licensing agencies may
be federal (ATF, EPA , FDA, etc.). A
comprehensive list of Tennessee
departments and agencies can be
found at tn.gov/directory.

Additional information on laws,

appointments to boards and
commissions, hearings and public
meetings can be found on the
respective websites. Pending and
DEPT. OF LABOR AND WORKFORCE effective rules and hearing notices
DEVELOPMENT - can be found at sos.tn.gov/division-
tn.gov/workforce/topic/hiring- publications/rules-and-regulations
regulations

Who: In addition to the employers/

employee aspect, they handle
licensing and permitting for mine
safety and amusements parks and
fairs.

DEPT. OF MENTAL HEALTH AND

SUBSTANCE ABUSE SERVICES -
tn.gov/behavioral-health/topic/
licensing

Who: alcohol and drug abuse,

developmental disability and
mental health facilities/services and
personal support services

68
CHAPTER NOTES

69
RESOURCES CONTACTS Southeast TN Dev. District
P.O. Box 4757
Chattanooga, TN 37405
BERO Ph. (423) 266-5781

312 Rosa L. Parks Ave., 27th Floor South Central TN Dev. District
Nashville, TN 37243 101 Sam Watkins Blvd.
Ph. (615) 741-2626 Mount Pleasant, TN 38474
Ph. (931) 379-2929
ENTREPRENEUR CENTERS
Southwest TN Dev. District
Launch Tennessee 102 E. College St.
LaunchTN.org Jackson, TN 38301
Ph. (731) 668-7112
DEVELOPMENTS DISTRICTS
Upper Cumberland Dev. District
East TN Dev. District 1225 S. Willow Ave.
P.O. Box 249 Cookeville, TN 38501
Alcoa, TN 37701 Ph. (931) 432-4111
Ph. (865) 273-6003
GO-DBE
First TN Dev. District
3211 N. Roan St. Go-DBE
Johnson City, TN 37601 312 Rosa L. Parks Ave., 3rd Floor
Ph. (423) 928-0224 Nashville, TN 37243
Ph. (615) 253-4657
Greater Nashville Regional Council
501 Union St., 6th Floor INCUBATORS
Nashville, TN 37219
Ph. (615) 862-8828 CEED
158 Madison Ave., Suite 101
Memphis Area Assoc. of Govt. Memphis, TN 38103
8289 Cordova Rd., Suite 103 Ph. (901) 525-6512
Cordova, TN 38016
Ph. (901) 729-2871 CET Life Sciences Center
111 10th Ave. S., Suite 110
Northwest TN Dev. District Nashville, TN 37203
124 Weldon Dr. Ph. (615) 255-6270
Martin, TN 38237
Ph. (731) 587-4213

70
Cleveland-Bradley Business The INCubator
Incubator 811 Broad St.
3505 Adkisson Dr., Suite 102 Chattanooga, TN 37402
Cleveland, TN 37312 Ph. (423) 756-2121
Ph. (423) 478-6476
Memphis BioWorks
Cumberland Business Incubator 20 S. Dudley, Suite 900
2569 Cook Rd. Memphis, TN 38103
Crossville, TN 38571 Ph. (901) 866-1400
Ph. (931) 456-4910
Nashville Business Incubation Center
Cumberland Univ. Culinary Center 315 10th Ave. N., Suite 108
One Cumberland Square Nashville, TN 37203
Lebanon, TN 37087 Ph. (615) 963-7184
Ph. (615) 547-1290
UM Center for Entrepreneurship
Entrepreneur Center and Innovation
41 Peabody St. 365 Innovation Dr., Room 326
Nashville, TN 37210 Memphis, TN 38152
Ph. (615) 873-1257 Ph. (901) 678-5266

Emerge Memphis UT Technology Incubator

516 Tennessee St. 2450 E.J. Chapman Dr.
Memphis, TN 38103 Knoxville, TN 37996-0001
Ph. (901) 312-7700 Ph. (865) 974-460

ETSU Innovation Laboratory

2109 W. Market St., Suite 120 MBDA
Johnson City, TN 37604
Ph. (423) 439-8500 Minority Business Dev. Agency
158 Madison Ave., Suite 101
Fairview Technology Center Memphis, TN 38103
17 Market Square, #201 (901) 528-1432
Knoxville, TN 37902
Ph. (865) 546-5887

Holston Business Dev. Center

2005 Venture Park
Kingsport, TN 37660
Ph. (423) 578-6235

71
NONPROFITS SCORE

Alliance for Better Nonprofits Bristol SCORE

318 N. Gay St., Suite 203 30 Sixth St., 2nd Floor
Knoxville, TN 37917 Bristol, TN 37620
Ph.: (865) 313-2077 Ph. (423) 989-4866
betternonprofits.org
Chattanooga SCORE
Alliance for Nonprofit Excellence Franklin Bldg.
1919 Lynnfield Rd., Suite 200 5726 Marlin Rd., Suite 515
Memphis, TN 38119 Chattanooga, TN 37411
Ph. (901) 684-6605 Ph. (423) 553-1722
npexcellence.org
Greater Knoxville SCORE
Center for Nonprofit Management 412 N. Cedar Bluff Rd., Suite 450
37 Peabody St., Suite 201 Knoxville, TN 37923
Nashville, TN 37210 Ph. (865) 692-0716
Ph. (615) 259-0100
cnm.org Memphis SCORE
Clark Tower
PATHWAY LENDING 5100 Poplar Ave., Suite 1701
Memphis, TN 38137
201 Venture Circle Ph. (901) 544-3588
Nashville, TN 37228
Ph. (615) 425-7171 Northeast Tennessee SCORE
112 E. Myrtle Ave.
SBA Professional Bldg., Suite 408
Johnson City, TN 37604
SBA - Memphis Ph. (423) 461-8051
555 Beale St.
Memphis, TN 38103 SCORE Nashville
Ph. (901) 526-9300 2 International Dr., Suite 500
Nashville, TN 37217
SBA - Nashville Ph. (615) 736-7621
2 International Plaza Dr., Suite 500
Nashville, TN 37217
Ph. (615) 736-5881 TN MAIN STREET

312 Rosa L. Parks Ave., 26th Floor

Nashville, TN 37243
Ph. (615) 253-1894
72
TSBDC MTSU Rutherford Co.
Chamber of Commerce
Austin Peay State University 3050 Medical Center Pkwy.
601 College St. Murfreesboro, TN 37129
McReynolds Bldg., Office 11 Ph. (615) 898-2745
Clarksville, TN 37040
Ph. (931) 221-1370 MTSU - Columbia Satellite Office
Maury Alliance
Chattanooga State Comm. College 106 W. 6th St.
Business Dev. Center Columbia, TN 38402
100 Cherokee Blvd., Suite 202 Ph. (931) 388-2155
Chattanooga, TN 37405
Ph. (423) 756-8668 Pellissippi State Comm. College
Knoxville Area Chamber Partnership
Cleveland State Comm. College 17 Market Square #201
Technology Bldg., Room 126 Knoxville, TN 37902
3535 Adkisson Dr. NW Ph. (865) 246-2663
Cleveland, TN 37320
Ph. (423) 614-8707 PSTCC – Maryville Satellite Office
Blount County Chamber
Dyersburg State Comm. College 201 S. Washington St.
1510 Lake Rd. Maryville, TN 37804
Dyersburg, TN 38024 Ph. (865) 983-2241
Ph. (731) 286-3201
Roanne State Comm. College
ETSU Innovation Laboratory Oak Ridge Chamber of Commerce
2109 W. Market St. 1400 Oak Ridge Turnpike
Johnson City, TN 37604 Oak Ridge, TN 37830
Ph. (423) 439-8505 Ph. (865) 483-2668

JSCC - Jackson Area Southwest TN Comm. College

Chamber of Commerce Maxine A. Smith Center
197 Auditorium St. 8800 E. Shelby Dr.
Jackson, TN 38301 Memphis, TN 38125
Ph. (731) 424-5389 Ph. (901) 333-5085

KOSBE Office (ETSU Satellite) STCC – Memphis Satellite Office

400 Clinchfield St., Suite 100 Memphis Renaissance Center
Kingsport TN 37660 555 Beale St.
Ph. (423) 392-8825 Memphis, TN 3813
Ph. (901) 526-9300
73
Tennessee State University Jackson Area Office
Avon Williams Campus West Towne Commons
330 10th Ave. N. 85G Stonebrook Place
Nashville, TN 37203 Jackson, TN 38305
Ph. (615) 963-7179 Ph. (731) 668-2091 ext. 2

Tennessee Tech University Knoxville Area Office

College of Business Administration 4730 New Harvest Ln., Suite 300
1105 N. Peachtree Knoxville, TN 37918
Cookeville, TN 38505 Ph. (865) 523-3338 ext. 4
Ph. (931) 372-3670
Lawrenceburg Area Office
UT Martin REED Center 237 Waterloo St.
406 S. Lindell St. Lawrenceburg, TN 38464
Martin, TN 38237 Ph. (931) 762-6913 ext. 4
Ph. (731) 587-7333
Nashville Area Office
Volunteer State Comm. College 3322 West End Ave., Suite 302
Betty Gibson Hall Nashville, TN 37203
1480 Nashville Pike Ph. (615) 783-1359
Gallatin, TN 37066
Ph. (615) 230-4780 Union City Area Office
1216 Stad Ave., Suite 3
USDA Union City, TN 38261
Ph. (731) 885-6480 ext. 4
Chattanooga Area Office
103 Cherokee Blvd., Suite 2A USCS-ITA
P.O. Box 4941
Chattanooga, TN 37405 East TN Office
Ph. (423) 756-2239 ext. 2 17 Market Square, #201
Knoxville, TN 37902
Cookeville Area Office Ph. (865) 545-4637
Fountain Court, Suite K
390 S. Lowe Ave. Middle TN Office
Cookeville, TN 38501 801 Broadway, Suite C372
Ph. (931) 528-6539 ext. 2 Nashville, TN 37203
Ph. (615) 736-2222
Greeneville Area Office
214 N. College St., Suite 300
Greeneville, TN 37745
Ph. (423) 638-4771 ext. 4
74
West TN Office
22 N. Front St., Suite 200
Memphis, TN 38103
Ph: (901) 544-0930

UT-CENTER FOR INDUSTRIAL

SERVICES

UT-CIS – Chattanooga
744 McCallie Ave.
Doctors Bldg., Suite 502
Chattanooga, TN 37403
Ph. (423) 634-0850

UT-CIS – Jackson
605 Airways Blvd., Suite 109
Jackson, TN 38301
Ph. (731) 425-4779

UT-CIS – Johnson City

2112 Roan St., Suite 604
Johnson City, TN 37601
Ph. (423) 926-8282

UT-CIS – Knoxville
Institute for Public Service
105 Student Services Bldg.
Knoxville, TN 37996
Ph. (865) 974-2249
UT-CIS – Memphis

Agricenter International
7777 Walnut Grove Rd., Suite A-1
Memphis, TN 38120
Ph. (901) 378-0885

UT-CIS – Nashville
193 Polk Ave., Suite C
Nashville, TN 37210
Ph. (615) 532-4590

75
 CHAPTER NOTES

76
 RESOURCE MAP
VIRGINIA
KENTUCKY

PICKETT HANCOCK
ROBERTSON MACON CLAY
STEWART CLAIBORNE SULLIVAN
LAKE MONTGOMERY HAWKINS JOHNSON
SUMNER SCOTT CAMPBELL
FENTRESS WASHINGTON
OBION CHEATHAM TROUSDALE JACKSON
WEAKLEY HENRY OVERTON UNION GRAINGER CARTER
HOUSTON
SMITH HAMBLEN
GREENE
BENTON WILSON UNICOI
DICKSON MORGAN
DAVIDSON PUTNAM ANDERSON
DYER JEFFERSON
GIBSON HUMPHREYS CUMBERLAND
CARROLL DE KALB KNOX
ARKANSAS COCKE
WHITE
WILLIAMSON
CROCKETT ROANE
HICKMAN SEVIER
LAUDERDALE RUTHERFORD CANNON
LOUDON BLOUNT
VAN BUREN
HENDERSON WARREN
PERRY
BLEDSOE RHEA
TIPTON LEWIS MAURY
HAYWOOD MADISON DECATUR
BEDFORD COFFEE
CHESTER MONROE
MARSHALL MEIGS NORTH
GRUNDY McMINN CAROLINA
LAWRENCE SEQUATCHIE
MOORE
WAYNE
SHELBY FAYETTE HARDEMAN
HARDIN GILES
McNAIRY MARION
LINCOLN FRANKLIN BRADLEY POLK
HAMILTON

MISSISSIPPI ALABAMA GEORGIA

BERO GO-DBE SBA TSBDC

tn.gov/ecd/bero tn.gov/generalservices/topic/ sba.gov tsbdc.org
governors-office-of-diversity-
Development Districts business-enterprise-godbe SCORE USCS-ITA
tennesseedevelopmentdistricts.org score.org export.gov/tennessee

Entrepreneur Centers MBDA TN Export Network USDA

launchtn.org mbda.gov export.tnecd.com rurdev.usda.gov/tn

Incubators Pathway Lending TN Main Street

nbia.org
UT-CIS
pathwaylending.org tennesseemainstreet.org cis.tennessee.edu
 TENNESSEE

Welcomes You

1 CHOOSE A NAME 2 CHOOSE A LEGAL 3 TAXPAYER ID 4 REGISTER THE

STRUCTURE NUMBER BUSINESS
Search: TN Secretary of State Recommendation: Consult an SSN or FEIN: Sole Proprietor/General Sole Proprietor/General
attorney, CPA, business counselor Partnership Partnership
(Social Security Administration or IRS) (Municipal/County Clerk)
FEIN: Corporation, LLC, LLP, LP (IRS) Corporation, LLC, LLP, LP
(TN Secretary of State and
Municipal/ County Clerk)

8 OPEN FOR BUSINESS 7 REGULATIONS/ 6 EMPLOYEES 5 TAXES

LICENSES?
There are Resources available Based on business: ABC, Ag, Yes/No: TN Dept. of Labor and Register: TN Dept. of Revenue
to help you! Commerce and Insurance, TDEC, Workforce Development County Tax Assessor, possibly others...
Health, Labor WFD, ATF, USDA, etc.
Vist tn.gov/ecd/bero.

This information is a general guideline for registering your business. Aspects of your business may require additional steps, registrations and/or licenses. You may need to consult an attorney, CPA or business counselor. tn.gov/ecd/bero
tn.gov/ecd/bero
Tennessee Department of Economic
and Community Development,
Authorization #ONLINE VERSION