This article provides three key state business startup requirements for self-employed sole proprietors and general partners who run residential house cleaning businesses. Information from the Secretary of State, the Tennessee Department of Revenue and selected city and county government sources were used to research this article.
Be aware that sole proprietor and general partner startup requirements in this state are always changing. Some requirements even vary from county to county. It is important that you call or visit your local county or city government to find out local requirements for residential house cleaning businesses and home-based businesses. This article is not intended to be exhaustive or a substitute for qualified legal or tax advice.
Business Name Registration
Sole proprietors and general partners who want a business name that does not include the owner(s) full names (for example, Janice Smith’s Cleaning Service or Martha Harris’ and Tom Graham’s Maid Service) need to find out whether the name they want to use is available. Start with a statewide corporate business name search to avoid legal problems and customer confusion.
Then do an online search for names similar to the one you plan to use. For example, if you want to use the name, Crystal Clean Maid Service, do simple Google searches for “Crystal Clean Maid Service+Tennessee” plus Crystal Clean Maid Service+your county” and “Crystal Clean Maid Service+your town or city”. Search beyond the first page of results. Go at least five pages deep into the search results to see if the name you want or similar names are being used in your state, county or city.
Sole proprietors and general partners should register for an Assumed Name or DBA (doing business as) or for their business with the local county clerk where the business will be based. Find a county clerk in Tennessee.
In the state of Tennessee, filing for an Assumed Name or DBA does not guarantee a business sole rights to the use of that name. Other businesses in the county and state may also register the same Assumed Name. Registered businesses are expected to legally defend their Assumed Names.
Business License Registration
Sole proprietors and general partners in Tennessee must apply for business licenses in every county in which the business operates. In addition, most cities require business licenses. The two county licenses geared to sole proprietors and general partners are the Minimal Activity Business License and the Standard Business License.
Minimal Business Activity License – is for businesses that gross more than $3,000 and less than $10,000 annually. File for a Minimal Activity Business License with the county clerk.
Standard Business License – is for businesses that gross more than $10,000 annually and that are not exempt from state business tax. File for a Standard Business License with the county clerk.
Find a county clerk in Tennessee.
In Tennessee, a general partnership is created when two or more owners form an oral or written agreement to start a business together. General partners are not required to file any documents with the Secretary of State. It is advisable for general partners to file an Assumed Name or DBA in the county where the business is based. A written partnership agreement drawn up by a lawyer is important for both or all partners. Partnership agreements do not have to be filed with the state.
While both or all general partners are considered agents of the partnership with the authority to bind the partnership, the state of Tennessee encourages general partners to file a Statement of Partnership Authority. This statement registers general partnerships with the state. The statement describes the authority of each partner to handle property and binding legal business between the partnership and government agencies and banks, etc.
Sole proprietors and general partners may apply for an Employer Identification Number (EIN) from the IRS even if they do not plan to hire employees. Getting an EIN may make it easier to open a bank account and reduce your risk of identity theft. You can apply for an EIN online. In addition, some business registration forms will require a NAICS business classification number for the house cleaning industry.
Business Tax Registration
Register a business at Tennessee Taxpayer Access Point (TNTAP) for gross receipts tax.
Residential house cleaning services are not taxable in Tennessee. Cleaning businesses do not have to collect and send sales taxes to the Department of Revenue.
Residential house cleaning businesses fall under Classification 3 and are not exempt from state gross receipts tax. The gross receipts tax is a tax on the gross sales of a business, unlike a sales tax which is a tax that customers pay and the business collects for the state. Get more information about Gross Receipts tax by calling the Tennessee Department of Revenue at 800) 342-1003 or (615) 253-0600.
Tennessee has no personal income tax. Sole proprietors and general partners do not owe estimated income tax to the state on business earnings. In addition, sole proprietorships and general partnerships do not have to file Tennessee franchise and excise taxes.
Tennessee general partnerships that file a Federal partnership information Form 1065, may need to file Schedule J-1 of the Tennessee franchise, excise tax return. Get more information from a CPA or qualified tax preparer to find out if your partnership must file those returns.
Selected Tennessee City Licenses
Chattanooga Business License: http://www.chattanooga.gov/finance/treasury-division/business-licenses
Clarksville Business License: https://www.cityofclarksville.com/178/Business-Tax-Information
Knoxville Business License: http://knoxvilletn.gov/government/city_departments_offices/Finance/business_license_tax_office
Memphis Business License: https://www.shelbycountytn.gov/559/Business-Tax-Division
Murfreesboro Business License: http://tn-murfreesboro2.civicplus.com/1330/Business-Licenses
Nashville Business License: http://www.nashvilleclerk.com/business/obtaining-a-business-license/