The Volunteer State has a very multifaceted economy. Since the early 80s, the state’s automotive manufacturing industry has grown in leaps and bounds and today it is home to five vehicle assembly lines owned by Mitsubishi, Nissan, Van Hool, Volkswagen and General Motors. Tennessee is also one of the top producers of consumer electronics in the US including brands such as LG Electronics, WhirlPool, Electrolux and Monogram Refrigeration. In total, the state’s manufacturing establishments produce more than $29 billion worth of goods annually.
Before the 2nd World War, Tennessee’s economy was mostly agrarian-based and despite diversifying to manufacturing and commerce, agriculture is still an important sector of the state economy. The annual revenue from livestock and crop production is around $3.5 billion.
But perhaps the most important contributor to the state’s wealth is small businesses (SMBs). They make up a majority of private enterprises and employ close to half of Tennessee’s labor force. Entrepreneurs are attracted by the low tax burden, an exceptionally low cost of living and easy access to multiple, large markets. In addition, there is a large community of business owners and development centers that are available to offer help and advice.
Let’s have a look at some interesting statistics on small businesses from the state of Tennessee:
- There are 620,125 small businesses that represent 99.5% of all private enterprises in the state.
- Lack of skilled and technical labor is a major hurdle facing small business owners. Most young graduates prefer to take on jobs in large corporations due to better compensation.
- Small businesses employ a total of 1.1 million workers – approximately 42.5% of all workers in the state.
- Out of the over 620,000 small business owners, 58,191 or 9.4% are self-employed minorities.
- The top five industries with the highest number of small businesses are:
- Other Services (except Public Administration) – 105,128.
- Construction – 72,462.
- Professional, Scientific, and Technical Services – 68,903.
- Administrative, Support and Waste Management – 59,335.
- Retail Trade – 58,819.
- There are 6,088 small businesses in the export business and account for 14.5% of Tennessee’s $30.4 billion worth of export revenue.
- State law requires that every new Tennessee LLC designates a Tennessee registered agent that will be available during regular business hours at a physical address within the state.
- The median income for self-employed individuals who run their own incorporated businesses is $56,000 which is $30,000 more than those without incorporated businesses.
- To form a corporation in Tennessee, you need to file your Corporation Charter with the Secretary of State. The filing fee is $100.
- Tennessee’s excise tax is a flat 6.5% tax on net earnings from doing business in the state. All capital losses are claimed in the year incurred. Generally speaking, only general partnerships and sole proprietorships are exempt from the excise tax.
- The three industries with the largest share of small business employees include:
- Accommodation and Food Services – 162,824.
- Health Care and Social Assistance – 159,156.
- Retail Trade – 107,665.
- In 2018, while reporting under the Community Reinvestment Act, Tennessee banks issued 92,509 loans under $100,000, a cumulative value of $1.4 billion.
- To form an LLC, the Articles of Organization must be filed with the Tennessee Secretary of State. The filing fee is $50 per member with a minimum fee of $300 and a maximum fee of $3,000.
- Private-sector employment decreased 12.3% during the 12-month period ending in April 2020.
- The utilities industry is the smallest in the state with only 250 small firms working in it.