The Volunteer State
Business in
Tennessee.
No state income tax. Low cost of living. A growing economy. Tennessee is one of the most business-friendly states in America — for entrepreneurs, freelancers, remote workers, and corporations alike.
The Tennessee Tax Advantage
No state income tax
Tennessee is one of only nine states with no personal state income tax. This isn’t just a minor perk — for a freelancer earning $80,000 a year, moving from California (13.3% top rate) to Tennessee saves over $10,000 annually. For a household earning $200,000, the difference can exceed $25,000 per year.
Tennessee eliminated its final income tax — the Hall Income Tax on investment income — in 2021, making it a truly zero-income-tax state. You pay no state tax on wages, salaries, capital gains, or investment income.
Business taxes
Tennessee does have a franchise and excise tax on business income (6.5% on net earnings for corporations and certain entities). However, sole proprietors and single-member LLCs are generally not subject to this tax, making Tennessee particularly attractive for freelancers and small operators.
Tennessee’s sales tax is among the highest in the nation at 9.55% combined state and local — something to factor in, especially for product-based businesses. However, many services are exempt from sales tax in Tennessee, which benefits service businesses significantly.
Income Tax Rates by State
Top marginal personal income tax rate.
Tennessee has no income tax on wages, salaries, or capital gains as of 2021.
Tennessee’s Key Business Sectors
A diversified economy anchored by healthcare, automotive, logistics, and music — with a fast-growing technology sector.
Nashville is the healthcare industry capital of the world — more healthcare companies are headquartered here per capita than anywhere else. Hospital Corporation of America, Community Health Systems, and hundreds of healthcare IT and services companies call Tennessee home.
Tennessee is a major automotive manufacturing hub with Nissan’s North American headquarters in Franklin, Volkswagen’s US plant in Chattanooga, and a vast supplier network. The state is rapidly becoming a center for electric vehicle production as well.
Memphis International Airport is the world’s busiest cargo airport, largely due to FedEx’s global headquarters and SuperHub. Tennessee’s central US location makes it ideal for distribution — 75% of the US population is within a one-day drive.
Nashville’s music industry is a global economic force. Music Row employs thousands of songwriters, publishers, recording engineers, and music business professionals. The live entertainment industry extends to Dollywood, Memphis’s tourism economy, and major arenas statewide.
Nashville is emerging as a serious tech hub, particularly in healthtech, fintech, and SaaS. Oracle relocated its global HQ to Austin but maintains a major presence in Nashville. The city’s tech talent pipeline is growing rapidly, fueled by immigration from more expensive markets.
Tennessee whiskey (Jack Daniel’s, George Dickel, Nelson’s Green Brier) is a global brand. The state is a top producer of soybeans, cattle, and cotton. Nashville’s restaurant scene has made it a culinary destination, with a booming food and beverage manufacturing sector.
Tennessee is Built for Independent Work
Zero income tax, affordable housing, and strong broadband infrastructure make Tennessee one of the best states in the US for freelancers and remote professionals.
No state income tax means a freelancer earning $100K keeps the same as a $108K+ earner in most other states. The math is simple and significant.
Knoxville and Memphis offer median home prices under $250K. A home office in Tennessee costs a fraction of what it would in Austin, Denver, or any coastal city.
Chattanooga pioneered municipal gigabit internet. Statewide, Tennessee has invested heavily in rural broadband expansion. Fast internet isn’t limited to the big cities.
Form a Tennessee LLC for a one-time $300 fee. No annual report fee. A single-member LLC protects your assets while keeping your tax situation straightforward.
Nashville’s massive in-migration has created a large community of remote workers and freelancers. Co-working spaces, networking events, and professional communities are thriving.
Best Tennessee Cities for Remote Workers
The obvious choice. World-class restaurants, live music every night, a booming professional network, and direct flights to everywhere. Higher cost but exceptional lifestyle.
The remote worker’s secret weapon. Gigabit internet, stunning scenery, lower cost than Nashville, and a thriving downtown. Consistently ranked a top US city for remote workers.
Underrated and underpriced. College town energy, mountain access, and housing that’s still genuinely affordable. The fastest-growing mid-sized city in Tennessee.
Nashville suburb with lower housing costs. 35 minutes to Music City but noticeably more affordable. Strong option for families who want Nashville access without Nashville prices.
How to Form a Tennessee LLC
Tennessee makes it straightforward. Here’s the complete process — from name to operating agreement.
Your LLC name must include “LLC” or “Limited Liability Company” and must be unique in Tennessee. Search the Secretary of State’s business name database to confirm availability before filing.
Search: sos.tn.gov/business
File Articles of Organization with the Tennessee Secretary of State online or by mail. The filing fee is $300 for LLCs with up to 6 members. Online filing is typically processed in 2–5 business days.
Fee: $300 one-time
Apply for a free Employer Identification Number (EIN) from the IRS at irs.gov — takes 5 minutes online. Then open a dedicated business bank account to keep finances separate from personal funds.
EIN: free at irs.gov
Draft an Operating Agreement (not legally required but strongly recommended). Check if your industry requires a state or local business license — requirements vary by profession and county.
Most LLCs: no annual fee
Tennessee’s Growing Startup Ecosystem
Nashville’s rise as a tech hub
Nashville has quietly become one of the most active startup cities in the South. Venture capital investment in Nashville-area companies has grown significantly over the past five years, particularly in healthtech, SaaS, and fintech. The Nashville Entrepreneurship Center and Launch Tennessee are the anchors of a growing support network.
Knoxville’s innovation corridor
Knoxville benefits from proximity to Oak Ridge National Laboratory — one of the most important scientific research facilities in the world — and the University of Tennessee’s research programs. This has seeded a strong manufacturing technology and cybersecurity startup community.
Chattanooga’s tech advantage
Chattanooga’s gigabit internet infrastructure has made it a natural home for tech startups that need reliable, fast connectivity. The city’s CO.LAB accelerator has supported hundreds of companies and the city consistently punches above its weight for startup activity relative to population.
Funding landscape
Tennessee has several active venture funds including Solidus, Colossus, and Innova Memphis, alongside active angel networks in Nashville and Knoxville. SBIR/STTR grants from Oak Ridge also provide non-dilutive funding for deep tech startups.
Key Organizations
Tennessee’s flagship startup support organization. Programming, mentorship, and co-working for founders at all stages.
State-backed initiative connecting entrepreneurs with capital, talent, and resources across all three regions of Tennessee.
Chattanooga’s innovation hub. Accelerator programs, co-working space, and a strong network of mentors and investors.
One of the world’s top research institutions. Partnerships and technology transfer programs for startups in energy, materials, and computing.
Early-stage fund focused on West Tennessee startups. Particularly active in logistics, agtech, and healthcare innovation.
Commercializes intellectual property from the University of Tennessee. Active licensing and spinout support for founders.
Best Co-Working Spaces in Tennessee
From hot desks to private offices — the best places to work in Tennessee’s major cities.
Multiple Nashville locations in prime areas. Full amenities, great networking, and flexible month-to-month memberships. Best for professionals who travel frequently.
Not just co-working — the Entrepreneur Center’s space is the hub of Nashville’s startup community. Events, mentorship, and a network you can’t replicate anywhere else.
Chattanooga’s innovation anchor. More than a co-working space — an accelerator with programming, community events, and access to the city’s tech network.
Knoxville’s most established co-working community. Flexible memberships, dedicated desks, private offices, and a professional network rooted in East Tennessee business.
Memphis’s creative co-working hub. Particularly strong community for designers, marketers, and creative professionals. Located in the heart of Midtown.
Premium co-working in the heart of Nashville. Upscale amenities, prime location, and a professional atmosphere. Best for client-facing work and corporate remote workers.
Start & Grow Your Tennessee Business
Key guides and resources for entrepreneurs in the Volunteer State.
Step-by-step guide to starting an LLC in Tennessee — name, filing, EIN, and operating agreement.
💼Taxes, contracts, invoicing, and the best cities for independent workers in the Volunteer State.
💻The best Tennessee cities for remote workers, broadband access, and how to make the most of the no-income-tax advantage.
🚀Investors, accelerators, co-working spaces, and the network you need to build a company in Nashville.
🪪Which licenses your Tennessee business needs — by industry, county, and entity type.
💰State and federal grant programs available to Tennessee small businesses and entrepreneurs.
🧾What’s taxable, what’s exempt, and how to collect and remit sales tax as a Tennessee business.
🏢The best co-working spaces in Nashville, Memphis, Knoxville, and Chattanooga — with pricing and amenities.
Running a Business in Tennessee?
Look the Part.
A @tennessee.tn email address on your business cards, website, and proposals instantly signals your Tennessee roots. More credible than Gmail. More distinctive than a generic domain. A real Tennessee address for a real Tennessee business.
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