Last reviewed: July 2026
New Tennessee employers need a federal EIN from the IRS and an SUI account with the Tennessee Department of Labor and Workforce Development. Because Tennessee has no state income tax, there is no withholding account to open. Workers' compensation insurance becomes mandatory once you reach 5 employees (or immediately for construction). Register for SUI before your first payroll.
Table of Contents
Hiring your first employee in Tennessee starts a short list of registration requirements at the federal and state level. Missing a step can mean back taxes, penalties, or a payroll run you legally can't process yet. Here is the order to work through them.
Registration Overview
Every new Tennessee employer needs:
- A federal Employer Identification Number (EIN)
- An SUI account with the Tennessee Department of Labor and Workforce Development
- Any additional Tennessee Department of Revenue registrations that apply to the business (sales tax or business tax, for example)
- Workers' compensation insurance once the employee-count threshold applies
- New hire reporting set up for every future hire
Step 1: Get Your Federal EIN
Apply for a free EIN at irs.gov/ein. The online application takes about 15 minutes, and you receive the number immediately. You'll need it for every registration that follows.
Step 2: State Tax Registration
Tennessee has no state income tax, so there is no employer withholding account to set up. If your business sells taxable goods or services, or owes franchise and excise tax, register with the Tennessee Department of Revenue through the state's TNTAP portal. This is separate from payroll and depends on your business type, not on hiring employees.
Step 3: Register for SUI
Register with the Tennessee Department of Labor and Workforce Development as soon as you pay your first wages. You'll be assigned an employer account number and a new employer premium rate, currently 2.7%, applied to the first $7,000 of each employee's wages for 2026. Tennessee reviews rates twice a year based on the trust fund balance, so confirm the current table each January and July.
Step 4: Workers' Compensation
Most Tennessee employers must carry workers' compensation insurance once they employ 5 or more full-time or part-time workers, including corporate officers and qualifying family members who count toward that threshold even if they later opt out personally. Construction industry employers do not get that grace period: coverage is required starting with employee number one. Coverage is purchased through a private insurance carrier and is overseen by the Tennessee Bureau of Workers' Compensation.
Step 5: New Hire Reporting
Report every new or rehired employee to the Tennessee New Hire Reporting Program within 20 days of their start date. You'll need the employee's name, address, Social Security number, start date, and your EIN. This feeds a national system used to enforce child support orders, and most payroll software files it automatically.
Once registrations are complete, use our paycheck calculator to check net pay, and send new hires to our W-4 helper for their federal withholding form. Our Form 941 guide covers the federal side of quarterly filing.
Frequently Asked Questions
Where do Tennessee employers register for unemployment insurance?
Tennessee employers register for an unemployment insurance account with the Tennessee Department of Labor and Workforce Development. Registration is completed online and should happen as soon as you hire your first employee.
Do Tennessee employers need to register for state income tax withholding?
No. Tennessee has no state income tax, so there is no withholding account to register for. Some employers still register with the Tennessee Department of Revenue for other business taxes, such as sales tax or business tax, depending on what the business does.
How soon must a new Tennessee employer register?
Register for your SUI account with the Department of Labor and Workforce Development as soon as you pay your first wages. Waiting until a quarterly deadline forces you to file a backdated report and can trigger penalties on top of the tax owed.
At what point does a Tennessee employer need workers' compensation insurance?
Most Tennessee employers need workers' compensation insurance once they reach 5 full-time or part-time employees. Construction industry employers must carry coverage from their very first employee, regardless of headcount.
Payroll Without the Extra Layer of Withholding
Because Tennessee has no state income tax, running payroll here comes down to federal filings plus SUI reporting to the Department of Labor and Workforce Development. Pacific Data Services, in business since 1969, handles that combination remotely for Tennessee employers so registration paperwork and quarterly filings never slip.
See how Pacific Data Services supports Tennessee employers remotely →
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Legal & Tax Disclaimer
This article is for general informational purposes only and does not constitute legal, tax, or professional advice. Employment laws, tax regulations, and compliance requirements change frequently. The information on this page reflects our understanding as of July 2026 and may not reflect recent changes in federal or Tennessee state law.
Do not act or refrain from acting based solely on the information in this article. Always consult a qualified attorney, CPA, or HR professional familiar with Tennessee law before making payroll or compliance decisions for your business.