Starting a business in Tennessee can be exciting. Whether you're launching a new venture in Nashville, relocating an existing business to Middle Tennessee, or finally turning a side business into something bigger, there are plenty of opportunities for growth.

But before you start signing clients, hiring employees, or investing in your business, it's important to get the financial foundation right.

A few decisions made early can affect your taxes, cash flow, profitability, and ability to grow for years to come.

Here's a financial checklist to help you get started.

1. Choose the Right Business Structure

One of your first decisions is how your business will be structured.

Depending on your situation, you may operate as a:

• Sole proprietorship

• Limited liability company (LLC)

• Partnership

• S corporation

• C corporation

Your business structure can affect how you're taxed, how you pay yourself, your personal liability, retirement planning opportunities, and even how easily you can bring in partners or eventually sell the business.

Don't automatically choose an LLC or S corporation because that's what another business owner recommended. The right structure depends on your specific business and financial situation.

2. Register Your Business and Tax Accounts

Depending on your entity and business activities, you may need to register with the State of Tennessee and establish appropriate state tax accounts.

The Tennessee Department of Revenue allows new businesses to register for applicable taxes through the Tennessee Taxpayer Access Point, or TNTAP.

You may also need:

• An Employer Identification Number (EIN)

• State and local business licenses

• Sales and use tax registration

• Payroll tax accounts

• Industry-specific licenses or permits

Getting these requirements right from the beginning can help you avoid missed filings, penalties, and cleanup work later.

3. Open a Separate Business Bank Account

Mixing business and personal finances may seem harmless when you're just getting started, but it can quickly create accounting and tax problems.

Set up a dedicated business bank account and, when appropriate, a business credit card.

Keeping business transactions separate makes bookkeeping easier, creates cleaner financial records, and gives you a much clearer picture of how your business is actually performing.

4. Set Up Your Accounting System Before You Need It

Don't wait until tax season to organize your finances.

Your accounting system should allow you to track:

• Revenue

• Expenses

• Accounts receivable

• Accounts payable

• Payroll

• Cash flow

• Profitability

More importantly, your books should provide information you can actually use to run your business.

Accurate, timely financial reporting allows you to spot potential cash flow issues, monitor expenses, evaluate profitability, and make informed decisions throughout the year.

5. Understand Your Tennessee Tax Obligations

You've probably heard one of Tennessee's biggest selling points: no state individual income tax on wages.

But that doesn't mean operating a business in Tennessee is tax-free.

Depending on your business structure and activities, you may have Tennessee franchise and excise tax, business tax, sales and use tax, payroll taxes, and federal tax obligations. Tennessee's excise tax generally applies at 6.5% of net earnings from business conducted in the state, while the franchise tax generally applies at 0.25% of the applicable tax base, with a $100 minimum.

Understanding what applies to your business before deadlines arrive can prevent costly surprises.

6. Create a Tax Strategy, Not Just a Tax Return

Tax planning shouldn't begin when your return is due.

As a business owner, decisions you make throughout the year can affect what you ultimately owe. Your entity structure, compensation, retirement contributions, equipment purchases, hiring decisions, and other investments may all have tax implications.

Proactive planning gives you time to evaluate your options while you can still do something about them.

7. Build a Cash Flow Plan

Profit and cash flow aren't the same thing.

Your business can look profitable on paper and still struggle to cover payroll, rent, taxes, or other expenses if cash isn't coming in at the right time.

Start by understanding:

• How much cash your business needs each month

• When customers typically pay

• When major expenses occur

• How much you should reserve for taxes

• Whether you have enough working capital for unexpected costs

A simple cash flow forecast can help you anticipate problems before they become emergencies.

8. Establish a Budget

A budget isn't about limiting your business. It's about giving yourself a financial roadmap.

Consider expected revenue and expenses, but also plan for:

• Marketing

• Technology

• Equipment

• Insurance

• Professional services

• Hiring

• Taxes

• Emergency reserves

Then compare your actual performance against your budget throughout the year.

9. Think Ahead Before Hiring

Adding employees can be an important step in growing your business, but salary is only part of the cost.

Payroll taxes, benefits, insurance, equipment, technology, training, and workspace can all increase the true cost of a new hire.

Before expanding your team, understand what the business can realistically afford and how the position is expected to contribute to growth.

10. Build Your Financial Team Early

You don't have to wait until your business is large to get professional financial guidance.

Working with a CPA early can help you establish the right systems, understand your tax obligations, evaluate financial decisions, and avoid mistakes that become more difficult and expensive to correct later.

Build Your Tennessee Business on a Stronger Financial Foundation

Starting or relocating a business involves a lot of decisions. Getting the financial pieces in place early gives you better information, fewer surprises, and a stronger foundation for growth.

At Summersgill CPA, we work with entrepreneurs and growing businesses throughout the Nashville area to provide accounting, tax planning, bookkeeping, and business advisory services designed to support long-term success.

Starting or growing a business in Nashville? Contact Summersgill CPA to schedule a consultation and make sure your financial foundation is built for what's next.