Tennessee Nonprofit Corporation FAQ

What document creates a nonprofit in Tennessee?

A nonprofit corporation is created by filing a charter — Tennessee's term for the formation document other states call Articles of Incorporation — with the Tennessee Secretary of State, Division of Business Services. Once the charter is processed, the corporation legally exists as a separate entity that can hold property, sign contracts, and be sued in its own name. You file online through the state portal at tncab.tnsos.gov, with new-business filings starting at tnbear.tn.gov/NewBiz.

Is incorporating the same as becoming a 501(c)(3)?

No, and this is the most important thing to understand. Incorporating with Tennessee creates the entity under state law. Becoming tax-exempt requires a separate application to the IRS for 501(c)(3) recognition. Two governments, two processes, done in sequence — incorporate first, then apply for exemption.

What law governs Tennessee nonprofits?

Tennessee nonprofit corporations are governed by the Tennessee Nonprofit Corporation Act, found in Title 48, Chapters 51 through 68 of the Tennessee Code. It sets the framework for how the corporation is formed, governed, and dissolved, and it's why the state uses terms like "charter" and imposes the registered agent and annual report requirements.

How long does formation take?

Tennessee's online charter processing is fast — filings are typically handled the same day the state receives them. That's just the state incorporation step, though. The full journey to a fundraising-ready 501(c)(3) takes longer, because the IRS exemption review that follows can run from a few weeks to several months.

Who owns a Tennessee nonprofit?

Nobody. A nonprofit has no owners and issues no stock. It's controlled by a board of directors who act as fiduciaries for the mission, not as investors. Some nonprofits have voting members with rights defined in the bylaws, but even members don't own the corporation the way shareholders own a company. If the organization dissolves, remaining assets must go to another exempt purpose — never to individuals.

How many directors do we need?

Tennessee requires a board, and for a 501(c)(3) the practical minimum is three unrelated directors. In practice the IRS looks for at least three, and funders prefer a board that no single individual or family can dominate. Your bylaws set the exact number and how directors are elected and rotated.

Does a Tennessee nonprofit have members?

It can, but it doesn't have to. Tennessee asks you to state on the charter whether the nonprofit will have voting members. Many organizations choose to have no members, with the board holding all governance authority. Others have a member body with defined voting rights. Your bylaws should spell out clearly which structure you've chosen and what any members can vote on.

What's the difference between bylaws and the charter?

The charter is the short public filing that creates the corporation with the state. The bylaws are the longer, private, internal document that governs how the corporation runs — the board, officers, meetings, quorum, voting, and conflict-of-interest handling. The charter brings the entity into existence; the bylaws make it functional. Tennessee doesn't file your bylaws, but the IRS will want to see them.

Do we need a registered agent?

Yes. Every Tennessee nonprofit must name and maintain a registered agent with a physical street address in Tennessee to receive service of process and official state correspondence. The nonprofit cannot be its own agent. You can name a director, officer, or volunteer with a Tennessee address, or use a commercial registered agent service that keeps a founder's home address off the public record.

When is the annual report due?

The Tennessee nonprofit annual report is due April 1 each year, filed with the Secretary of State. It updates your registered agent, registered office, principal address, and the names of your directors and officers. It's a record-keeping filing, not a financial statement. Missing it puts the organization on the path to administrative dissolution, so calendar the deadline.

Do we have to file a Form 990?

Yes. Every 501(c)(3) files an annual information return with the IRS — Form 990-N for the smallest organizations, 990-EZ for mid-sized, or the full Form 990 for larger ones, depending on gross receipts and assets. Even an all-volunteer organization with little activity must file its 990-N. Failing to file for three consecutive years causes the IRS to automatically revoke tax-exempt status.

Do we have to register before fundraising in Tennessee?

In most cases, yes. If your nonprofit solicits contributions from the Tennessee public, you generally register with the Secretary of State's Division of Charitable Solicitations, Fantasy Sports and Gaming before you begin, and renew that registration each year. Some small organizations and certain religious organizations may be exempt, but confirm your status rather than assuming — soliciting without a current registration means fundraising out of compliance.

Does Tennessee charge franchise and excise tax on nonprofits?

Generally no. For-profit Tennessee entities owe franchise and excise (F&E) tax, but 501(c) organizations are typically exempt, which is a real advantage of the nonprofit structure. You usually establish the exemption with the Tennessee Department of Revenue rather than assuming it applies automatically. Sales and use tax can still apply to certain transactions, so confirm your specific situation.

Are donations to our nonprofit tax-deductible?

Only after you have 501(c)(3) recognition from the IRS. Incorporating in Tennessee alone doesn't make gifts deductible — donors can deduct contributions only once the IRS has issued your determination letter recognizing the organization as a 501(c)(3). This is one of the main reasons the federal exemption step matters so much: it's what unlocks deductible giving and access to most grants.

What does it cost to start a Tennessee nonprofit?

There are two layers. The state charter filing with the Secretary of State is the one-time cost to create the corporation (shown on the receipt cards elsewhere on the site — we charge exactly what the state charges). Separately, the IRS 501(c)(3) application carries its own fee, which depends on whether you file the full Form 1023 or the streamlined 1023-EZ. Recurring costs include the annual report and, if you fundraise, charitable solicitation registration.

Do we need an EIN, and is that the same as being tax-exempt?

You need an EIN — the nonprofit's federal tax ID — to open a bank account and to apply for exemption, and it's free from the IRS. But getting an EIN is not the same as becoming tax-exempt. The EIN just gives the organization a federal identity; 501(c)(3) status is a separate determination you earn only by applying to the IRS. Get the EIN first, then use it to apply for exemption.

How do we dissolve a Tennessee nonprofit?

The board (and voting members, if you have them) approves the dissolution, you settle the organization's debts, and you distribute any remaining assets to another 501(c)(3) or a government entity for a public purpose — never to individuals. Then you file articles of dissolution with the Secretary of State and file a final Form 990 with the IRS. A nonprofit's assets are dedicated to a charitable purpose, so the distribution rules are strict and getting them wrong can create personal liability.

Can we operate in Tennessee if we formed in another state?

Yes, but you generally have to qualify as a foreign nonprofit — register with the Tennessee Secretary of State for a certificate of authority and appoint a Tennessee registered agent — if you'll conduct your affairs in the state on an ongoing basis. If you also solicit donations from Tennessee residents, you likely need charitable solicitation registration too. These are separate requirements, and a fundraising out-of-state nonprofit often needs both.