To start a nonprofit in Tennessee, you file a nonprofit charter with the Secretary of State for a $100 fee, get a federal Employer Identification Number, apply separately to the IRS for 501(c)(3) tax-exempt status, register for state tax exemptions, and — if you plan to fundraise from the public — register with the Division of Charitable Solicitations and Gaming before you ask anyone for money. Each step depends on the one before it, so the order matters as much as the paperwork.
Pick a Name the State Will Accept
Your nonprofit’s name has to be distinguishable from every other entity name already on file with the Tennessee Secretary of State.1Justia. Tennessee Code 48-54-101 – Corporate Name That means every LLC, for-profit corporation, and other nonprofit in the state, not just charities in your field. Run your candidate through the Secretary of State’s online Business Entity Search before you commit.2Tennessee Secretary of State. Businesses A conflict here is the most common reason a charter gets rejected on the first pass.
File the Charter with the Secretary of State
The charter is what actually creates your nonprofit as a Tennessee legal entity. The form is called the Charter Nonprofit Corporation, Form SS-4418, and you submit it to the Secretary of State’s Division of Business Services with a $100 filing fee.3Tennessee Secretary of State. Charter Nonprofit Corporation SS-4418 Online filings clear in a few business days; paper mailed to the Nashville office takes longer.
The form asks for:
- Your corporate name.
- A registered agent with a physical Tennessee street address (P.O. boxes are not accepted) who can receive legal documents for the organization.
- Corporate classifications: public benefit or mutual benefit, religious or non-religious, and whether the corporation will have members.
- A dissolution clause explaining how assets get distributed if the organization shuts down.
The Three-Director Minimum
Tennessee requires every nonprofit to have at least three directors.4Justia. Tennessee Code 48-58-103 – Number of Directors They have to be individuals rather than other organizations, and state law doesn’t require them to live in Tennessee unless your own charter or bylaws say so.5Justia. Tennessee Code 48-58-102 – Qualifications of Directors
Get the Dissolution Language Right the First Time
The dissolution clause is small but consequential. If you plan to apply for 501(c)(3) status (as most Tennessee nonprofits do), the IRS wants this clause to state that any remaining assets will pass to another tax-exempt organization or to a government entity for a public purpose.6Internal Revenue Service. Suggested Language for Corporations and Associations Writing it correctly in the original charter saves you from filing (and paying for) an amendment later.
Public Benefit or Mutual Benefit
The form makes you pick one. Public benefit corporations serve the general public; that’s the box most groups seeking 501(c)(3) status check. Mutual benefit corporations serve their own members, like trade associations or social clubs. The choice affects governance and state oversight, so classify honestly.
Get an EIN from the IRS
Once the charter is filed, apply for an Employer Identification Number by submitting IRS Form SS-4.7Internal Revenue Service. About Form SS-4, Application for Employer Identification Number The online application issues the nine-digit number immediately, and there’s no fee. You’ll need it for the 501(c)(3) application, state tax registrations, and opening a bank account, so do this before the next step.
Apply to the IRS for 501(c)(3) Status
Federal tax-exempt status doesn’t happen automatically when you incorporate. You have to apply, and the IRS offers two paths.
Form 1023-EZ is the streamlined version, open to organizations that expect gross receipts of $50,000 or less for the next three years, haven’t exceeded $50,000 in any of the past three years, and hold total assets of $250,000 or less.8Internal Revenue Service. Instructions for Form 1023-EZ The user fee is $275.9Internal Revenue Service. Form 1023 and 1023-EZ: Amount of User Fee
Everyone else files the full Form 1023, which asks for a narrative description of every planned activity, three years of financial projections (or three years of actual history for existing groups), and specific language limiting your activities to exempt purposes. The user fee is $600.9Internal Revenue Service. Form 1023 and 1023-EZ: Amount of User Fee
Before you file, have your charter, bylaws, a conflict-of-interest policy, and your EIN in hand. Bylaws set out internal governance — meetings, elections, officer duties — and the conflict-of-interest policy tells the IRS that board members won’t personally profit from the organization’s finances. Both forms go through the IRS Pay.gov portal, and the user fee is non-refundable. The 1023-EZ can clear in a few weeks; the full Form 1023 often takes several months. Approval comes as a Determination Letter, which you’ll need for state tax exemptions, grant applications, and to show donors their gifts are deductible.
Register for Tennessee Tax Exemptions
Federal exemption does not exempt you from Tennessee taxes. Those are separate applications.
Sales and Use Tax
Qualifying nonprofits can get a Tennessee sales and use tax exemption for goods and services they purchase for their own use.10Tennessee Department of Revenue. Application for Exempt Organizations or Institutions – Sales and Use Tax Exemption File the state application with your IRS Determination Letter, and the Department of Revenue will issue a Certificate of Exemption if you qualify. Note the limit: the exemption covers your own purchases only. If your nonprofit sells taxable products or services to the public, you still collect and remit sales tax on those sales.11Tennessee Department of Revenue. SUT-78 – Nonprofit Exemption – Nonprofit Organizations Making Sales of Taxable Products or Services
Franchise and Excise Tax
Tennessee’s franchise and excise tax reaches some nonprofits. To claim an exemption, file Form FAE 183 through the Tennessee Taxpayer Access Point (TNTAP) by the 15th day of the fourth month after the close of your taxable year, and renew the exemption annually by certifying that you still qualify.12Tennessee Department of Revenue. Entities Exempt from Franchise and Excise Tax A federal income tax extension automatically extends this filing too.
Register Before You Fundraise
If you plan to solicit donations from the Tennessee public — mail, online, in-person, any channel — you must register with the Secretary of State’s Division of Charitable Solicitations and Gaming before you start.13Justia. Tennessee Code 48-101-504 – Filing of Registration Statement Initial registration costs $50 and requires you to disclose corporate officers and any professional solicitors you’re using.14Tennessee Secretary of State. Charitable Organization Initial Registration Guide
Registrations expire six months after your fiscal year ends and must be renewed by that date.15Justia. Tennessee Code 48-101-506 – Issuance of Registration – Renewal – Withdrawal of Registration Renewal fees scale with gross revenue, from $80 for organizations at $50,000 or less up to $240 for those above $500,000. Late renewals cost $25 per month, capped at $300 per calendar year. Any nonprofit with more than $1 million in gross revenue during its most recent fiscal year has to include an audited financial statement from an independent CPA. Soliciting without a current registration can bring fines or legal action.
Stay Compliant Every Year
Formation is one thing; keeping the organization alive on paper is another. Missing an annual filing costs money, and missing them repeatedly can cost you your tax-exempt status.
Tennessee Annual Report
Every Tennessee nonprofit corporation files an annual report with the Secretary of State by the first day of the fourth month after its fiscal year ends — April 1 for calendar-year organizations.16Justia. Tennessee Code 48-66-203 – Annual Report for Secretary of State The fee is $20, with another $20 if you’re changing your registered agent or office in the same filing.17Tennessee Secretary of State. All Frequently Asked Questions for Businesses
IRS Form 990
Most 501(c)(3) organizations file an annual return with the IRS. Which version depends on size:
- Form 990-N (e-Postcard) for gross receipts normally $50,000 or less; it’s a brief electronic notice rather than a full return.18Internal Revenue Service. Annual Electronic Filing Requirement for Small Exempt Organizations – Form 990-N (e-Postcard)
- Form 990-EZ for gross receipts under $200,000 and total assets under $500,000.19Internal Revenue Service. Instructions for Form 990-EZ
- Form 990 for organizations above either threshold.
Skip three years in a row and the IRS automatically revokes your tax-exempt status.20Internal Revenue Service. Automatic Revocation of Exemption Getting it back means filing a new application and paying the user fee over again, so even the smallest organizations need this on the calendar.
Unrelated Business Income
If your nonprofit brings in $1,000 or more in gross income from activities unrelated to its exempt purpose — commercial rentals, a side business — it must file Form 990-T and pay tax on that income.21Internal Revenue Service. Unrelated Business Income Tax Ordinary fundraising like charity auctions and donation drives generally doesn’t count.
What It Costs to Start
The government fees for setting up a Tennessee nonprofit and keeping it in good standing:
- Tennessee charter filing: $100
- EIN application: free
- IRS 501(c)(3) application: $275 (Form 1023-EZ) or $600 (Form 1023)
- Charitable solicitation initial registration: $50
- Tennessee annual report: $20 per year
- Charitable solicitation renewal: $80 to $240 per year, based on revenue
Outside of government fees, hiring a commercial registered agent runs roughly $50 to $300 per year, and legal help with the charter and bylaws can run from $500 to $5,000 depending on complexity. Many straightforward nonprofits handle the drafting themselves using the IRS suggested language and the state form’s instructions.