Tennessee Bookkeeping Services

Tennessee looks simple from the outside — no tax on your paycheck, and since the Hall tax was repealed in 2021, no state income tax at all — but the state replaces it with a stack all its own: a franchise tax of 0.25% on net worth (minimum $100, and everyone files), an excise tax of 6.5% on net earnings, a gross-receipts business tax with five classifications and both state and city layers, and sales tax that starts at 7% before a single local point is added. Nearly all of it comes due in one April window. We have kept books for businesses remotely since 2005, and dedicated bookkeepers from $75/month keep every one of those filings tax-ready.

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On This Page

• Tennessee’s small-business tax landscape
• Franchise & excise: the two-headed filing
• The business tax: a gross-receipts layer most states don’t have
• No income tax — what it actually buys you
• Sales tax: 7% before the local point
• Tennessee cities we serve
• Tennessee FAQs

Tennessee’s Small-Business Tax Landscape

Figures from Tennessee Department of Revenue (tn.gov/revenue), Tennessee Secretary of State (sos.tn.gov), and Tennessee Department of Labor & Workforce Development official sources — figures verified July 2026. This is bookkeeping context, not tax advice — confirm current-year specifics with the Department of Revenue and your CPA before filing.

Franchise & Excise: The Two-Headed Filing

Every Tennessee LLC and corporation answers to two taxes on one return. The franchise tax is 0.25% of your Tennessee net worth — assets minus liabilities — with a $100 minimum, which means there is no revenue level small enough to make the filing go away. The excise tax is 6.5% of Tennessee net earnings. Both ride the same return, due the 15th day of the fourth month after your books close — April 15 for calendar-year filers — and if your combined liability hits $5,000 in back-to-back years, quarterly estimates join the calendar too.

The rules changed meaningfully in 2024: the franchise tax’s alternative property measure (the old Schedule G, which taxed real and tangible property when it exceeded net worth) was repealed for tax years ending on or after January 1, 2024, with a one-time refund window for prior years that closed in November 2024. Today the tax rides on net worth alone — which puts your balance sheet, not just your income statement, on the state’s desk every spring. A balance sheet that has drifted — old loans never reconciled, owner draws booked as expenses, equity accounts nobody has touched since formation — now shows up directly in the tax math. Keeping it clean all year is precisely the job of daily virtual bookkeeping, not a heroic April cleanup.

The Business Tax: A Gross-Receipts Layer Most States Don’t Have

Here is the filing that surprises owners relocating from almost anywhere else: Tennessee also taxes gross receipts. The business tax is actually two taxes — a state portion and, where enacted, a city portion — and it applies once your gross receipts in a county reach $100,000, a threshold that moved up from $10,000 under Public Chapter 377 (2023). Between $3,000 and $100,000 you need a minimal activity license ($15) from your county or municipal clerk; at $100,000 or more you need a standard business license, posted before you operate.

Rates depend on your classification (1 through 5) and whether you sell as a retailer or wholesaler — fractions of a percent of gross receipts, with a $22 minimum — and the return is due the 15th day of the fourth month after your fiscal year ends, April 15 for calendar-year businesses, filed through TNTAP. Because the tax rides on receipts rather than profit, the bookkeeping stakes are specific: revenue recorded in the wrong classification, or receipts double-counted across locations, inflates a tax you pay even in a break-even year. Clean, classified revenue by location is the whole game — and it is built in the ledger, months before the return.

No Income Tax — What It Actually Buys You

Tennessee taxes no wages, and since the Hall income tax — the old levy on interest and dividends — was fully repealed for tax years beginning January 1, 2021, there is no individual income tax left at all. For pass-through owners that means distributions land free of state income tax, and no state return rides on your personal one. What it does not mean is “no state taxes”: the franchise and excise return, the business tax, sales tax, county tangible personal property schedules, and the Secretary of State annual report (LLCs pay a $300 minimum, due the first day of the fourth month after fiscal year end — April 1 for most) all still want accurate books. Tennessee simply moves the compliance weight off the income line and onto the entity — which is a fine trade only if someone is actually keeping the ledger.

The same logic applies once you hire. There is no state income tax withholding to run, but employers still answer to the Department of Labor & Workforce Development for unemployment insurance: new employers generally pay 2.7% for 2026 on a $7,000 wage base — one of the lowest wage bases in the country — with experience-rated premiums recalculated each July from your reserve ratio. Small per employee, but quarterly and unforgiving, and your actual rate arrives on your notice, so the books should never hard-code last year’s figure.

Sales Tax: 7% Before the Local Point

Tennessee’s state sales tax rate is 7% — among the highest state rates in the nation — and every local jurisdiction adds its own rate on top, up to a 2.75% cap. Nashville and the rest of Davidson County sit at the full 9.75% combined since a voter-approved transit surcharge took effect February 1, 2025. Returns are due the 20th of the month, and the perennial bookkeeping failure is universal: collected tax quietly commingled with operating cash and spent before the 20th arrives. We keep sales tax in its own liability account from day one, so the remittance is a transfer, not a scramble. Months behind on any of this? Catch-up bookkeeping rebuilds the year fast — in time for the April filings.

Tennessee Cities We Serve

Dedicated local guide: Nashville — plus Memphis, Knoxville, Chattanooga, Franklin, and every corner of the state, all served remotely. Browse all locations.

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Tennessee Bookkeeping FAQs

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