How to Start a Construction Company in Tennessee

Choose Your Business Structure First

The business structure you register determines how your contractor license gets issued — and every document filed after this point must carry the exact same legal name. Getting the entity right at the start prevents name-mismatch rejections later.

Most new Tennessee contractors choose between three options:

LLC (Limited Liability Company) is the most common choice. File Articles of Organization (Form SS-4270) with the Tennessee Secretary of State through the TNCaB portal. The filing fee is $300 for up to six members, plus $50 per additional member, capped at $3,000. An LLC protects personal assets from business liabilities while offering flexible tax treatment.

Corporation requires filing a Corporate Charter (Form SS-4417) with a $100 filing fee. Corporations carry more administrative overhead — annual meetings, board minutes, franchise and excise tax filings — but some contractors prefer the structure when bringing on investors or planning rapid growth.

Sole Proprietorship requires no state filing, but it offers zero liability protection. If a job goes sideways, your personal assets are exposed. Most construction attorneys advise against this structure for contractors working on projects above a few thousand dollars.

If you plan to operate under a name different from your registered entity, file an assumed name (DBA) with the Secretary of State using Form SS-4402 and a $20 fee. The DBA must appear on your contractor license and all insurance certificates.

Get Your Federal EIN

Every Tennessee construction company needs a Federal Employer Identification Number from the IRS, even if you have no employees yet. You need the EIN to open a business bank account, register for state taxes, and file for workers' compensation coverage or exemptions.

Apply online at irs.gov — it takes about ten minutes and the number is issued immediately. Do this before moving to tax registration, because the state's system requires the EIN to complete your account.

Register for Tennessee Business Tax

Contractors register their business tax accounts online through the Tennessee Taxpayer Access Point (TNTAP). Your obligations depend on gross receipts:

• Under $3,000/year: exempt from state and local business licensing requirements.
• $3,000 to $99,999: obtain a Minimal Activity License from your county and/or municipal clerk. No annual business tax return is required.
• $100,000 or more: register with the Department of Revenue for standard business tax and obtain a Standard Business License from your local clerk. Contractors fall under Classification 4, with an annual tax rate of 0.1% applied to gross receipts.

The business tax threshold is entirely separate from the contractor licensing threshold. You need a state contractor license for any project valued at $25,000 or more, regardless of your total annual revenue. For more on this distinction, see our Tennessee contractor business tax guide.

Apply for Your Contractor License

With your entity formed, EIN in hand, and tax accounts set up, you can pursue your state contractor license through the TDCI Board for Licensing Contractors. The core sequence:

1. Pass the Tennessee Business and Law exam through Prov (the state's testing provider as of July 2026) — plus any trade-specific exams for your classification.
2. Prepare your financial documentation: either a CPA-reviewed financial statement or a Contractors' Surety Bond equal to at least 50% of your requested monetary limit (the bond option became available July 1, 2026 under Public Chapter 1039).
3. Secure general liability insurance and workers' compensation coverage (or register for the owner exemption if you qualify).
4. Submit the initial application through the CORE portal at core.tn.gov with the $250 application fee.

Our full guide on Tennessee contractor license requirements covers each step in detail, and the Tennessee contractor license application post walks through the CORE portal submission process.

Get Local Permits Before Breaking Ground

A state license authorizes you to bid and contract for work. Local building permits authorize you to actually start construction. These are two separate systems, and you need both.

Before your first project, register with the county clerk and municipal clerk where you will be working. Nashville requires Metro Codes registration with a $40,000 permit bond. Memphis uses the Develop 901 portal. Other cities and counties have their own registration requirements.

The Tennessee General Contractor License Guide maps the complete formation-to-first-permit sequence with checklists for each phase, so nothing falls through the cracks during the startup process.

See more Tennessee guides →