So I mentioned in the past that my brother moved to Tennessee and we started looking at buying properties in the Memphis area. We bought our first property in TN in Feb 2013 and our second property in June 2013. We went to turn on the utilities until we can get a renter in the house and the utility company said they can't because they couldn't find us on the TN Secretary of State website. We found out that we had to register with the SoS in TN when we started doing business even though we were formed in MS.
Some of you might be thinking, "Well yea, you have to register with the SoS in every state you do business in." Looking back it seems pretty obvious that we should have done that, but no one thought of it at the time. Turns out there is a $600 penalty if you don't file in time. We should have filed in Feb of 2013. So we had to pay $600 more than we would have when we filed in July. $600 may not seem like a big mistake but it is to us. We're kicking ourselves for making it.
But, we have definitely learned from it. If we had a CPA on staff or an attorney, maybe we wouldn't have made that mistake. Unfortunately having someone like that on staff would have cost a lot more than $600. We just don't have the funds yet to have a fully staffed team (even on a temporary basis) yet so we have to do the best with what we have. One of the constant things I've read is to surround yourself with a good team. At the time, we can't afford a good team unfortunately. We have to rely on ourselves for a lot. Keep in mind, we bring in others when necessary. For example, we use a title company when closing on a house instead of doing it ourselves. We do what we can, when we can, and try to keep our cash flow as high as possible.
Fortunately because we are 100% family owned, we are exempt from the TN Franchise and Excise tax or that would be more tax of which we weren't aware. We're pretty sure we've got everything in line now for doing business in TN. But we have learned the lesson that we need some assistance if we move into another state.
