Start an LLC in Tennessee

Quick facts about forming an Tennessee LLC

Filing Fee	Minimum $300 + $7.50 processing fee ($50 per member to a max of $3000)
Processing Time	1-3 business days online, 1-2 weeks by mail
Annual Report Fee	$50 per member (minimum $300; maximum $3,000)
Registered Agent Required	Yes, must have a physical Tennessee address
State Franchise Tax	$100 minimum, TN charges both franchise tax and excise tax for most LLCs
Business License	Most Tennessee businesses must obtain a local business license based on annual revenue
Managing Authority	Tennessee Secretary of State, Business Services Division

How to start an LLC in Tennessee in 5 steps

The limited liability company is similar to a corporation in that it offers the same protections. However, it is taxed differently, based on the type of LLC you decide to create. Before deciding to register as an LLC as opposed to a corporation, nonprofit, partnership, or another entity, be sure to speak to a business attorney about the tax ramifications of the various entities.

Tennessee also allows “series” LLCs, i.e. a business creates one or more limited liability companies under the same umbrella as the master LLC. Each LLC has its own bank account. They do share certain factions.

Before starting a limited liability company in Tennessee, you will need certain information and a business name. If you have everything ready before starting, you won’t have to stop to look up information or take additional steps.

To form an LLC in TN, you’ll need to:

1. Name your Tennessee LLC
2. Choose your registered agent
3. File articles of organization
4. Create an operating agreement 
5. Apply for an EIN

Keep reading for a detailed walk-through and video of the steps to start an LLC in Tennessee.

Step 1: Name Your Tennessee LLC

Tennessee has several rules to create a business name, including that the name must be available.

You’ll need to include LLC, L.L.C or Limited Liability Company to your business name and make sure that it’s not violating any of Tennessee’s naming guidelines. First, begin with a Tennessee business entity search to check that your business name isn’t already in use.

Step 2: Choose a registered agent

A registered agent must be in the office during business hours. The registered agent accepts important and time-sensitive documents, including those from the Secretary of State and lawsuits.

Additionally, the Tennessee LLC registered agent lets you know when important filings are due with the Secretary of State. Missing filings could cost the business hundreds in filing fees.

You can opt to be your own registered agent, but if you do not expect to be in the office during regular business hours, even for a few days per year, it is better and safer to use a registered agent service.

If you choose to register an LLC in Tennessee, but you do not live in the state or otherwise do business in the state, you can. However, you must have a physical address to register for an LLC in Tennessee. A professional registered agent provides that service. Thus, if you live in Washington but like Tennessee’s business practices better, you can form a TN LLC with a registered agent in Tennessee as the registered agent provides a physical address in the state.

Step 3: File articles of organization

Tennessee requires a limited liability company to file articles of organization. You can complete a simple form or have an attorney complete it for you. The articles of organization is the document that defines your business as a limited liability company.

State fees

The fees for registering a name and filing Articles of Organization and other documents may change. You can find the fees on each document you need to file. 

Your total Tennessee LLC filing fee is $307.5, which includes a $300 state filing fee for the articles of organization and a $7.5 processing fee. This applies for up to six members. There is a $50 per member fee but a minimum of $300 applies. If there are more than six members the fee becomes $50 times the number of members up to a maximum of $3000. For example:

• Up to 6 members = $300 (the minimum)
• 7 members = $350
• 8 members = $400
• 10 members = $500
• 60 members = $3000
• Over 60 members = $3000

Requirements

The articles of organization need specific information, including:

• The name of the company. It must meet the requirements of TCA §48-249-106, including being unique. If you have a name similar to another company and are using it with the other company’s consent, you must check the box and enclose an additional $20 fee
• The type of company, e.g., bank, insurance company, nonprofit LLC, professional LLC, series LLC, trust company
• The name and address of the initial registered agent
• The month your fiscal year closes
• The effective date if you want to make it later than the approval date
• Whether the LLC is director-managed, member-managed, or manager-managed
• The number of members as of the date of filing
• Whether the LLC has an end date or if it is perpetual
• The principal executive office address (physical location)
• The mailing address of the entity if it is different from the principal office address
• Check the specific boxes as applicable for a nonprofit LLC, series LLC, or PLLC
• List of obligated members and their signatures if applicable
• Check the box if the entity is not allowed to do business in Tennessee
• Add additional information as needed. This section is optional and is for details of the LLC that are not required in the Articles of Organization
• Signature of the person executing the document, along with the date of the signature and title of the person signing the document

How to file

Tennessee allows a business to file the LLC via one of four different ways, including:

• Online via the Secretary of State, Business Services Division. You can pay by debit card or credit card. If you do not wish to pay the convenience fee, you can print the online application and mail it in
• Print and mail. Mail the application with a check for the filing fee to: Secretary of State, 6th FL – Snodgrass Tower, ATTN: Corporate Filing, 312 Rosa L. Parks Ave., Nashville, TN 37243
• Paper submission. You can find a blank form online or email the Secretary of State at [email protected]. You can also call (615) 741-2286 to request a form. Complete the form and mail it to the above-listed address
• Walk-in. Pick up a blank form at the Secretary of State’s office, complete the form, and give it to the clerk

Step 4: Create an operating agreement

An operating agreement dictates how you run the business. Even sole-member LLCs should have an operating agreement. While having an Tennessee LLC operating agreement is not a state requirement for a limited liability company, we recommend (and so does the SBA) that you create one nonetheless. In short, the operating agreement is a contract between the members.

The operating agreement dictates many business actions, including but not limited to:

• Contributions
• Salaries, allocations, and distributions
• Management, including major decisions, minor decisions, basics of accounting, financials, banking, securities and more
• Members’ powers
• Authority of members
• Term of members
• Restrictions
• Additional members
• Dissolution of the LLC
• Preferential rights
• Determining fair market value
• Indemnification

These are only a few of the sections of a detailed operating agreement. The agreement could prevent lawsuits between members. Many banks and loan companies require a copy of an operating agreement before extending a business loan or allowing the business to open a bank account.

Is an operating agreement a must?

Tennessee does not require its limited liability companies to have an operating agreement. However, banks, loan companies, vendors, and others might require an operating agreement before doing business with you.

If you decide to draft an operating agreement, it should have the information on the Articles of Organization. We recommend a complete, detailed operating agreement if the business has members.

Step 5: Apply for an EIN

When applying for an EIN (Employer Identification Number), you can use our services or go directly to the Internal Revenue Service’s website. You must complete the application in one sitting, so be sure you have a valid taxpayer identification number, such as a Social Security number, ITIN, or an EIN of another company. The session expires in 15 minutes, after which you’ll have to start over. Furthermore, you can only apply online Monday through Friday from 7:00 a.m. through 10:00 p.m.

You can choose to print your EIN after you complete the application or have the IRS mail it to you.

If you are single-member LLC and do not plan to add members later, you do not need an EIN. However, we recommend that you apply for one as it keeps your personal finances separate from your business finances.

You can apply by mail by completing Form SS-4 and mailing it to the Internal Revenue Service at the address listed in the form’s instructions. It takes about four weeks to receive your EIN if you apply by mail.

You can also fax Form SS-4 24 hours per day, seven days per week. The IRS will send your EIN by fax within four business days.

If you are not comfortable with applying for an EIN yourself or are not sure of the answers to some of the questions on the application, Tailor Brands can apply for the EIN for you as part of starting your business.

What to do After you’ve created an LLC in TN

After you form a limited liability company, you still have several administrative tasks to take care of.

Open a separate business bank account

Even if you are the sole member of a limited liability company, you should open a separate bank account. Keeping business and personal finances separate helps with limited liability and other factors.

If you commingle funds – mix business funds with personal funds – and someone sues you, that person could argue that you are also personally responsible for liability since you and the business are one and the same instead of two different entities.

Keeping a separate bank account and taking a paycheck shows the courts that the business is a separate entity from you. It will be much more difficult for someone to go after your personal assets, such as your home, if your insurance does not cover the settlement or amount awarded in a trial should you lose the case.

Additionally, a separate bank account provides the business with credibility and shows customers that you are professional. It also makes it easier to keep track of your finances. And, it makes your accountant’s life much easier since the accountant will not have to “guess” which expenses are personal and which are business.

Finally, a separate bank account makes it easier for you to track money going in and out. If you are able to track money easily, it is easier to determine if someone who has access to your account is siphoning money from the business.

Understand your ongoing annual LLC fees

Limited liability companies must file an annual report. The fee is $20 per year. However, if the LLC makes any changes to the registered agent or the registered agent’s office, the Secretary of State levies an additional $20 fee. Additionally, the annual fee for the LLC is a minimum of $300 per year. Each member is an additional $50 for more than six members. The maximum fee is $3,000.

File your LLC’s annual report

The annual report tells the state certain details of your business. It also contains any changes you might have, such as a change of address, new members, deleted members and more. The annual report also gives the state a chance to tell you of any new legal requirements, such as licenses.

The annual report includes the limited liability company’s name, the registered agent’s information, and the control number from the Secretary of State that you received when you originally formed the company.

The easiest way – and the best way to ensure your annual report is on time – is to file it online. If the annual report is late, you are saddled with a late fee. If you continue “ignoring” the filing, the state will administratively dissolve the limited liability company.

Obtain relevant business licenses and permits

Certain businesses must obtain licenses and permits. You can locate industry-specific licenses on Tennessee’s government website. Counties and municipalities might have separate licenses and permits, such as a city or county occupancy permit to do business.

Comply with Tennessee’s tax requirements

The IRS taxes a limited liability company based on how you set it up. We recommend discussing the tax ramifications of the various ways to set up an LLC with a business tax attorney. In most cases, federal taxes pass through to the owner of the limited liability company.

How your LLC will be taxed

Tennessee also has tax requirements for businesses. These also depend on factors such as how you set up the limited liability company and whether you have employees.

The IRS allows several classifications for limited liability companies, all of which have different tax consequences. If an LLC is not classified as a corporation and the business does not file Form 8832, the IRS will classify the business under the default rules. The default classification is based on whether the LLC has one or more members.

If an LLC has one member, it is classified as a disregarded entity, which means the IRS considers the owner and the business as the same entity. A limited liability company with more than one member is classified as a partnership.

Single-member LLCs file taxes on their personal tax returns. Depending on your business, you might need to file Schedule C, Profit or Loss from Business (Sole Proprietorship), Schedule E, Supplemental Income or Loss, or Schedule F, Profit or Loss from Farming.

Single-member LLCs are subject to taxes on net earnings in the form of self-employment. However, if the LLC is a single-member limited liability company and is disregarded but is owned by another corporation or partnership, the corporation or partnership claims the LLC on its federal tax return as a division of the main corporation or partnership.

When setting up your LLC, be sure to choose a classification so that the IRS does not choose it for you.

Income tax

In many cases, Tennessee imposes an excise tax and franchise tax on limited liability companies. If your LLC is liable for one or both taxes, you must register with the Tennessee Department of Revenue.

The franchise tax is based on the net worth or book value of the tangible personal property and real property the LLC owns, whichever is higher. The minimum franchise tax is $100 if you are registered through the Secretary of State to do business in Tennessee, even if the company is inactive.

The excise tax is based on net earnings for the tax year (income tax).

Sales tax

If your LLC sells tangible personal property and certain services, you will need to register with the Tennessee Department of Revenue to file sales tax returns and make payments for sales and use taxes. Depending on which industry you are in, you might have additional taxes, such as lodging taxes and rental taxes.

Self-employment tax

Since most limited liability companies are pass-through entities and the business tax passes onto the owner, you may have to pay self-employment tax on profits from the company. The self-employment tax is figured on your personal federal income taxes, usually via Schedule C.

Payroll tax

If you have employees, you will need to create an account at Tennessee’s Department of Labor and Workforce for state unemployment taxes. You will also have to pay federal employment taxes.

Other state taxes

Tennessee has other taxes that might or might not apply to your situation, including but not limited to:

• Automobile rental surcharge taxes
• Alcoholic beverage taxes
• Liquor by the drink taxes
• Beer taxes
• Bail bond taxes
• Coin-operated amusement taxes
• Fantasy sports tax
• Gift tax
• Hall income tax
• Local occupancy taxes
• Motor fuels taxes
• Local taxes
• Oil and tire fees
• Severance taxes
• Professional privilege taxes
• Tobacco taxes
• Unauthorized substances taxes

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