Welcome to the Tennessee Smart Start Guide, a guide for small 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 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 (BERO) with the assistance of the 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 Extension • Purchasing an Existing Business Program • Buying a Franchise • Business Incubators and • Starting a New Business Entrepreneur Centers

SETTING UP YOUR BUSINESS 10 AND 38 • Sole Proprietorships • Local, State, and Federal • • Franchise and Excise Tax • • and Use Tax • Limited Liability Company • Tax-Based Incentives • Relocating Your Business to • Insurance and Bonding Tennessee •

THE 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 • and -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 • 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 CHI AN SE FR

STIN NEW EXI 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. 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 attorneys and CPAs, may also know or general , you are of businesses for sale. Determine buying 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 and need to sign a contract with the strained relationships. 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 - 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 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-start- a variety of resources online or in business/20-questions-starting) can person. 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 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. from expectations, contributions and the the business is regular income filed responsibilities of each partner. SETTING UP YOUR 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 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 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 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 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 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 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 (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 (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 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 at irs.gov or by calling 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 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 . 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 MESSAGE REVENUE WHO DO YOU SERVE? WHAT IS THE PROBLEM YOUR WHAT IS YOUR STORY? HOW DO YOU MAKE MONEY FROM CUSTOMER HAS? HOW DOES YOUR CUSTOMER HEAR IT? YOUR CUSTOMER?

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

ALTERNATIVES HOW IS YOUR CUSTOMER CURRENTLY SOLVING THE PROBLEM? WHAT ARE THE ALTERNATIVE SOLUTIONS TO THE PROBLEM? WHAT’S THE BENEFIT COMPETITION? WHY DOES YOUR CUSTOMER WANT YOUR PRODUCT OR SERVICE? HOW DO YOU SOLVE THE PROBLEM?

SOLUTION ADVANTAGE WHAT DO YOU OFFER YOUR CUSTOMER? WHAT GIVES YOU THE EDGE OVER THE ALTERNATIVES? WHAT DOES YOUR CUSTOMER GET? WHY ARE YOU THE BEST PERSON TO DO THIS?

STARTUP NEEDS COSTS WHAT ARE YOUR ONE-TIME NEEDS TO GET STARTED (MONEY, WHAT ONGOING NEEDS ARE ESSENTIAL TO KEEP YOU GOING (MONEY, PEOPLE, THINGS, PEOPLE, THINGS, TECHNOLOGY, ACTIVITIES) ? TECHNOLOGY, ACTIVITIES) ?

20 CUSTOMER PROBLEM MESSAGE REVENUE WHO DO YOU SERVE? WHAT IS THE PROBLEM YOUR WHAT IS YOUR STORY? HOW DO YOU MAKE MONEY FROM CUSTOMER HAS? HOW DOES YOUR CUSTOMER HEAR IT? YOUR CUSTOMER?

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

ALTERNATIVES HOW IS YOUR CUSTOMER CURRENTLY SOLVING THE PROBLEM? WHAT ARE THE ALTERNATIVE SOLUTIONS TO THE PROBLEM? WHAT’S THE BENEFIT COMPETITION? WHY DOES YOUR CUSTOMER WANT YOUR PRODUCT OR SERVICE? HOW DO YOU SOLVE THE PROBLEM?

SOLUTION ADVANTAGE WHAT DO YOU OFFER YOUR CUSTOMER? WHAT GIVES YOU THE EDGE OVER THE ALTERNATIVES? WHAT DOES YOUR CUSTOMER GET? WHY ARE YOU THE BEST PERSON TO DO THIS?

STARTUP NEEDS COSTS WHAT ARE YOUR ONE-TIME NEEDS TO GET STARTED (MONEY, WHAT ONGOING NEEDS ARE ESSENTIAL TO KEEP YOU GOING (MONEY, PEOPLE, THINGS, PEOPLE, THINGS, TECHNOLOGY, ACTIVITIES) ? 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 , 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, , 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, 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 is anything the business owns of monetary value. Small business assets commonly include cash, notes receivable, accounts receivable, inventories, land, , 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 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 lines of credit. A business 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 ) 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 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 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 $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 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 WEBSITE 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 sba.gov Gov. Haslam’s $50 million INCITE SMALL BUSINESS INVESTMENT initiative to raise Tennessee’s profile COMPANIES (SBIC) in innovation-based economic rurdev.usda.gov development and increase the tvasites.com SBIC’s are private investment and number of knowledge-based jobs loan companies established to serve by assisting companies with access pathwaylending.org 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 (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 find SBA’s offers a wide variety of free a local incubation center. There are online tools including training regional accelerators, referred to as courses, videos, web chats and 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 . 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 TAXES AND 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 INSURANCE 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 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/Small- property within the state Businesses-&-Self-Employed. The • No Sales Tax is levied on: Tennessee Department of Revenue purchases, installation, and publishes a tax guide for new repairs of qualified industrial businesses. You can find additional machinery 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. The wage, overtime pay, record keeping 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 Advisory and regulates certain non-medical 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 tn.gov/commerce/section/ of Mental Health and Substance 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/topic/ Identification Number (EIN) from licensing). A facility or agency that the U.S. Internal Revenue Service serves both populations, MH and ID/ (IRS). The IRS requires you to DD, needs to be licensed. The DIDD keep all records of employment Office of Risk Management and taxes for at least four years. These Licensure functions to protect the records include Federal Income Tax interest of tax-paying citizens against Withholding (Form W-4) and Federal unlicensed service providers, unsafe Wage and Tax Statement (Form environments, inadequate education W-2). Form W-4 must be signed by and training of personnel, physical the employee on or before the date 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 . 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. 60 information collected during 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 , 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 [email protected] 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 [email protected].

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, and (and quite a few others, especially engineering examiners, auctioneers, medical related) barbers, contractors/ 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 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. 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., 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

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 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

tn.gov/ecd/bero

Tennessee Department of Economic and Community Development, Authorization #33026- 5,000 copies, December 2016. This public document has been promulgated at a cost of $1.59 per copy. 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