Tennessee tax webinar covers franchise and excise tax basics for businesses

The New Business Workshop hosted by the Tennessee Department of Revenue on July 10, 2025, focused on essential tax information for new and established businesses in the state. The session aimed to equip attendees with knowledge about sales tax, franchise tax, and excise tax, emphasizing the importance of compliance for business operations.

The workshop began with a detailed overview of sales tax requirements. Participants learned that in-state businesses with tangible personal property exceeding an annual threshold of $4,800 must collect sales tax. Additionally, service-related businesses generating over $1,200 in annual sales are also required to register for and remit sales tax.

Following the sales tax discussion, the workshop transitioned to franchise and excise taxes. The facilitator highlighted that these taxes are imposed on corporations and most limited liability companies for the privilege of conducting business in Tennessee. Key topics included the registration process, determining nexus, filing requirements, and exemptions.

A significant change to the franchise tax was noted, effective January 2024, where the tax will now be computed solely based on a business's net worth, rather than the greater of net worth or property value as was previously the case. The excise tax, on the other hand, is calculated based on net income or loss.

The workshop also addressed which entities are subject to franchise and excise taxes, including corporations, LLCs, and limited partnerships, while noting that sole proprietorships and general partnerships are exempt. Exemptions for certain entities, such as industrial development corporations and Masonic lodges, were also discussed, along with the requirement for application and renewal for some exemptions.

The session concluded with a brief mention of filing complexities for out-of-state entities, directing attendees to further resources for detailed guidance.

Overall, the workshop provided crucial insights into tax obligations for businesses in Tennessee, reinforcing the importance of understanding and adhering to state tax laws for successful operations.