In September of 2021, Ford Motor Co. announced their plans to build a new factory 40 miles northeast of Memphis, TN. They’re calling it “BlueOval City.”
The plant, which is expected to employ around 6,000 workers, will produce Ford’s new all-electric truck as well as batteries for vehicles across the Ford and Lincoln lineup. Once completed in 2025, it will cover 6 square miles making it one of America’s largest auto manufacturing plants.
Until then, it will take over 6,000 contractors to make Ford’s dream a reality. If you are one of those new BlueOval City contractors (or would like to be one), this post will help you with what you need to know about Tennessee contractor laws and taxes.
What BlueOval City Contractors Need to Know
The general contractor for this massive project is Detroit-based construction company, Walbridge. Subcontractors interested in working with Walbridge can access more information here. You can find specific information about their work on Ford’s BlueOval City at a dedicated site: walbridgeblueoval.com.
A project this big requires a lot of subcontractors in order to deliver a final product on time. Several contracts have been awarded already, but there are many more to be bid on.
Note: On the site at that link, they list a couple of different projects: BlueOval City (abbreviated as BOSK) and a similar plant in Kentucky (abbreviated as TEVC). Scroll down to find the awarded BOSK contracts as well as those currently bidding.
Contractors from all across West TN and surrounding areas (even other parts of the country) will be used to build BlueOval City. Here’s what BlueOval City contractors need to know about doing business in Tennessee.
1. You Must Have a Contractor’s License.
The first step is to make sure you are legally able to operate as a business in the state of TN. (More than likely, if you’re a contractor working on something the scale of BlueOval City this is obvious and nothing new. But it’s worth pointing out just in case.)
According to the Tennessee Board for Licensing Contractors, “A Tennessee contractor’s license is required BEFORE bidding or offering a price, for projects $25,000 and up (includes materials and labor).”
This not only applies to prime (general) contractors but subcontractors as well who perform electrical, mechanical, plumbing, HVAC, and roofing services when their portion of the project is $25,000 or more. (There is legislation making its way through the state assembly–SB 1444–that would raise that amount to $40,928, though.) Masonry subcontractors are required to have a license when their part of the project is $100,000 or more.
The fee for a TN contractor’s license is $250, and it is good for 2 years. After that, you’ll need to simply renew it if you plan to keep working here beyond that point.
The process for getting a TN contractor’s license can take anywhere from 4-6 weeks, so it is something you’ll want to get done sooner rather than later.
We covered this topic in detail in a couple of previous posts: “TN Contractors License Renewal Made Easy (And 5 Mistakes to Avoid)” and “How Long Does It Take To Get A TN Contractor’s License?”
We highly recommend that you read both of those if you are interested in working as a BlueOval City contractor.
To apply, renew, or verify a license, go to the TN Board for Licensing Contractors website.
2. You Must Be A Registered Business With the State.
Information on registering a business can be found on the TN Secretary of State’s website.
All corporations outside Tennessee are considered “foreign” and must get a certificate of authority from the Secretary of State before conducting business here. You face the possibility of triple the penalties, taxes, and fees that you would have paid if you had registered properly, so be sure to take care of this step.
3. You Must Register With the County.
Businesses are also required to register with the Register of Deeds in the county they plan to work in. Memphis is located in Shelby County (register.shelby.tn.us), and BlueOval City is located nearby in Haywood County (haywoodtn.gov).
BlueOval City Contractors & TN Taxes
In Tennessee, the following taxes apply:
- Sales & Use – The state-level sales and use tax rate is 7% for items except for food, which is taxed at 5%. Local county and city rates are added to that and cannot exceed a combined rate of 2.75%.
Local rates only apply to the first $1600. A 2.75% tax is then additionally taken by the state for items between $1600-3200.
Contractors face a use tax when bringing personal property into the state for the purpose of fulfilling contractual obligations. This tax applies even if the property in question is owned by a tax-exempt organization. - Franchise & Excise – Any business entity (most types other than sole proprietorships) operating in TN must pay franchise and excise taxes on their earnings each year. The franchise tax rate is 25 cents per $100 of the taxpayer’s net worth. The excise tax is 6.5% of the taxpayer’s net earnings.
- Business – Anyone doing business in TN must register and pay a business tax. The amount varies depending on the nature of your business and industry. There are two different types of business tax in TN: state level and municipal level. Brownsville and Stanton (cities in Haywood County where BlueOval City will be located) both have municipal-level business tax requirements.
- Property – This one most likely doesn’t apply to BlueOval City contractors coming into the state to help with the project. Still, if your business owns property in the state of TN you are responsible for paying property taxes to the municipal government where that property is located. Each municipality sets its own tax rate, and the amount due is determined by multiplying that rate by the property’s assessed fair value.
- Unemployment – The TN Department of Employment Security collects unemployment tax from every employer operating within the state.
Further details on these taxes and Tennessee’s requirements can be found on the TN Department of Revenue website.
For further reading on the topic, check out a post we did a while back on “5 Types of Business Taxes (And Why Your Business Structure Matters)”.
We’re A CPA For BlueOval City Contractors
Our firm has 6 locations across West Tennessee: Jackson, Brownsville, Dyersburg, Paris, Martin, Milan – near the upcoming BlueOval City. With 40+ years of helping small businesses and contractors in all kinds of tax situations, we are perfectly positioned and equipped to help you as you get ready to build Ford’s new BlueOval City plant.
Schedule a call today to find out why we say you should “expect more from your CPA.”
