How to Start an LLC in Tennessee (TN LLC 2024) (original) (raw)
How to Start an LLC in Tennessee: If you’re looking to start an LLC in Tennessee, you’ve come to the right page. Setting up an LLC is easy and cost-effective. To form an LLC, you must follow a few steps that include naming your LLC, hiring a registered agent, filing your formation documents, doing the operating agreement, and finally obtaining the EIN. You can easily set up your LLC at a very low cost in Tennessee. Though, you must pay the mandatory state filing fee. These fees and charges can be tax deductible, making the LLC formation cost almost negligible.
On this page, You’ll find all the steps that must be taken to ensure that your Tennessee LLC has been correctly formed. We recommend you read the whole article very carefully, word by word, don’t miss anything 🙂
How to Start an LLC in Tennessee
An LLC (aka Limited Liability Company) is a hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. It separates your personal assets from your business assets, thus giving you personal asset protection. For an LLC, members’ personal assets are not affected by business debts. However, in some cases, if the LLC is sued for business debts, courts might pierce the corporate veil and use the owner’s personal assets to meet their corporate liabilities.
If you wish to start an LLC in Tennessee, you must file your Articles of Organization with the State and pay a filing fee of $300. While it’s the most important step, it’s not the only one. There are 4 other crucial steps to follow to get your LLC formed in Tennessee. Below are all 5 steps that explain everything you need to do to start a Tennessee LLC in 2024. Let’s get started! You can always hire a professional LLC formation service in Tennessee to set up your LLC instead of doing it alone; a Pro service will ensure everything is done properly.
Step 1: Decide a Name for Your Tennessee LLC
The first step while forming a limited liability company in Tennessee is to give a proper name to your LLC. Before you name your business, you must know that the name should be easy to remember, available in the state, and follows all the LLC naming guidelines.
Tennessee LLC Naming Guidelines
There are a few specific requirements all the LLCs in Tennessee have to follow while naming their Company. Some of the most important requirements are as follows:
- “Limited Liability Company”, “LLC”, and “L.L.C.” – any one of these has to be used as a suffix in your business name.
- You cannot use any name for your business that is confusing or misleading. Terms such as “Treasury”, “State Department”, “FBI”, “CIA”, etc. shouldn’t be included.
- Terms like “Bank“, “University“, “Attorney“, “Doctor“, etc can be added only after the additional requirements by Tennessee State Government are fulfilled.
- (Optional) It’s better to name your business something for which your desired domain is available.
| Important Links – | Submit Offline Form to – |
|---|---|
| Tennessee Business Entity Search – Online Name SearchName Reservation Form – PDFTennessee LLC Name Search – Instructions | Corporate Filings312 Rosa L. Parks Avenue6th Floor, William R. Snodgrass TowerNashville, Tennessee 37243 |
Reserve Business Name for Future
If you do not wish to file your LLC right now but want to hold the name you have decided on, then you can reserve your LLC name for 4 months. To keep the name, you must file a name reservation application and pay $20 to reserve your name with the Tennessee Secretary of State.
Doing Business As (DBA) or Trade Name
Once you have a legal name for your LLC, you can register it. However, it is not mandatory. You can, instead, use DBA, Fictitious Name, or Trade Name. In that case, you must register your name with the Tennessee Secretary of State by submitting an Application to Register Trade Name in Tennessee and the filing fee of $15.
Recommended: You can do name search, business domain, website, emails, and a lot more in one place by hiring a professional service. We recommend using –
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ZenBusiness – ($0 for LLC Formation)
Apart from LLC formation, ZenBusiness offers customized website templates and business emails at a very reasonable price. If you plan to get a website, then it is wise to have a “.com” domain for your business, but these days you can also use other TLDs like “.io”, “.company”, “.xyz,” etc. Here you can get everything you need for your business in one dashboard.
Do I have to include LLC in my company email/domain?
It is not legally mandatory to use the word LLC in your domain name or email. If you want, you can use it. However, it is recommended not to use LLC in the domain name. A domain name should be short and easy to remember.
Step 2: Assign a Registered Agent in Tennessee
The second step to forming an LLC in Tennessee is to appoint a Registered Agent. A registered agent is a person or business entity working on your LLC’s behalf. This person or business will receive important tax forms, legal documents, all notices of lawsuits, and other official government correspondence in Tennessee. Hence, hiring a competent Tennesee Registered Agent for your LLC is necessary.
Make sure your registered agent is a resident of Tennessee or has a physical street address. This address will be used as the principal address of your LLC to receive any legal documents. Most LLC formation companies also provide registered agent services. Below are two great LLC formation services; even if you buy their cheapest plan (normally $0), you also get registered agent service and other services at a very reasonable price.
| LLC Service | Our Rating & Pricing | Top Features | Learn More |
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#1 TOP PICK |
4.5/5 $0 + State Fees | 100% accuracy guarantee Worry-free service Great customer support | Learn More |
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4/5 $0 + State Fees | Free LLC Formation Affordable Add-on services Other business solutions | Learn More |
These two are our top recommendations for registered agent service, as they are competent and authorized to conduct business in Tennessee. Some LLC formation services also offer standalone Tennessee registered agent services. You can purchase only Registered Agent services without purchasing any other LLC formation services. This standalone service might become handy if you are doing it yourself and don’t want to disclose your home address or you don’t want to pierce the corporate veil.
Who Can Be a Registered Agent?
A person above 18 years of age and has a physical address in the state of Tennessee can be a Registered Agent. A Registered Agent can be an independent person or can be a business entity. One is responsible for handling all the legal documents on the LLCs behalf.
Can I Be My Own Registered Agent?
Yes, you can be your own registered agent if you are a resident of the state of Tennessee and you are above 18 years of age. To become a registered agent, you must have the authority to conduct any type of business in Tennessee.
Why Shouldn’t I be My Own Registered Agent?
There are a few reasons why you shouldn’t be your own registered agent. The address of the registered agent is used to communicate with the SOS or for any legal activities. If you are your own registered agent, you might have to upload your personal address to the public forum. Besides, the registered agent must be at the address during business hours. It won’t be easy for you as you also have to take care of other things in your LLC. Hence, it is wiser to appoint a separate entity as your registered agent.
What is Piercing the Corporate Veil in LLC?
If an LLC is sued in Tennessee, in some cases, courts might decide to lift the corporate veil, which means the owners of the LLC will be personally liable for their business debts. They might have to forgo their personal assets to repay their business debts. This is called piercing the corporate veil, where personal and business assets are not separated anymore. Your personal assets can be protected if you have enough capital and all your LLC documents are properly filed.
Registered Agent Consent Application
In Tennessee, there is no separate Consent Letter to be produced to the Secretary of State. At the time of change of Registered Agent (or the name or address), the new Registered Agent has to sign the consent letter. It comes with the Application form to Change the Registered Agent. The filing fee of $20 should be paid for it. For more information on the same, read our guide on Tennessee Registered Agent.
Step 3: File Articles of Organization in Tennessee
The third and most important step in forming a Tennessee LLC is to file the Articles of Organization. This Tennessee Articles of Organization is a legal document that is required to register your business with the Tennessee Secretary of State. It costs $300 (by mail and online) to file your formation certificate in Tennessee.
The Articles of Organization include details like the name of the LLC, the registered agent’s name, address, employees’ details, and company structure (member-managed or manager-managed). Before hiring employees in Tennessee LLC, one should know about the rules and regulations thoroughly. Also, if you are expanding your existing business (an LLC) in other states to Tennessee, you must register as a Tennessee Foreign LLC.
How to File Online
Processing Time: Normally, it takes around 5 business days (approx) to get your LLC formed in Tennessee. The processing time for online filing might be a little faster than offline filing. With an additional cost, you can get expedited filing as well. However, the document processing time can be changed due to various factors.
Recommended: Online LLC Formation service can provide all these documents way faster than usual time with lifetime customer support and 100% accuracy. We recommend using –
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Every LLC owner has to pay the filing fees to register their business in Tennessee. This fee is mandatory but also tax deductible. If you’re doing it yourself (filing on your own), it will not cost you any additional service fee. However, it is not feasible to do that as the DIY process might be delayed, complicated, and messy, especially if you’re a novice entrepreneur. Hence, it is recommended to get professional guidance to get your LLC formed in Tennessee.
Step 4: Create Your Tennessee LLC Operating Agreement
Moving on to the fourth step, filing your operating agreement. An operating agreement is a document that legally outlines the proprietorship and operating procedures of your LLC. If you’re forming an LLC with spouses, you must need an operating agreement for that. This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
When it comes to filing a Tennessee LLC Operating Agreement, the state does not require you to have a comprehensive operating agreement, but it is ideal to have one that contains all the details of your business operation that helps in taking future business decisions, especially if you decide to dissolve Tennessee LLC later. Hence, having an operating agreement may not be necessary, but it is surely ideal.
Recommended: You can get a professionally made operating agreement for very less cost with ZenBusiness. You don’t need to worry about drafting it as they will take care of it on your behalf. We recommend using –
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ZenBusiness – ($0 + State Fees) Online LLC Setup
The operating agreement draft can be created for free if you don’t hire a professional. However, there is an advantage to appointing a proficient person/service. You will get a businesslike quality operating agreement at a very cheap fee, which will help you in the future. Hiring a professional service means you can sleep well at night 🙂
Step 5: Filing a Tennessee LLC EIN
The Employer Identification Number (aka EIN) is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify the type of business for tax purposes and taxes in general. The EIN is necessary for any active business or any form of business.
An EIN number in Tennessee is needed when the LLC hires employees. Hiring employees in Tennessee LLC requires following specific rules and regulations. On the other side, EIN for Tennessee foreign LLC should be obtained if your LLC is based in other states.
To obtain EIN (aka FEIN), one must fill up a form (Online or by mail) and submit it to the IRS. Enter details of your LLC, and finally, complete the form and send it to the address given. You can also get an EIN Assistant to help you with the process.
Mail to: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999
Fax: (855) 641-6935 | Fee: Free
Recommended: This hassle will be reduced when you hire an LLC formation service. They take care of obtaining EIN and all other things for your LLC. We recommend using –
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ZenBusiness – ($0 + State Fees) Online LLC Setup
Note: You don’t need a Social Security number when getting an EIN. You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.
Congratulations, you are now done with all the necessary steps to form your Limited Liability Company in Tennessee. If you do it yourself, it should take you a long time to understand and do all the steps properly.
However, if you use ZenBusiness, it should be way faster. You will always have a live chat option and phone support with experts for any help you need. Their worry-free service will make things easier for you.
After Starting Your Tennessee LLC
After forming your LLC, there are still some things that you will need. The most important thing is to separate your business and personal assets. LLCs have limited liability protection that protects your personal assets from business liability. This is called a corporate veil. However, the corporate veil can be lifted or pierced by the court if the LLC is sued. In that case, the owners of the LLC become personally liable for their corporate debts. A few things like appointing a legit registered agent, having enough capital, and filing all the major documents with the state can save the LLCs from being pierced into the corporate veil.
BOI Report Filing
According to the Corporate Transparency Act, every LLC, corporation, and other type of business that is registered with the Tennessee SOS or similar authority, must file the BOI report with FinCEN. From January 1, 2024, it is mandatory to file a BOI report for every business entity. In this report, LLCs have to share information about the beneficial owners (having equal or more than 25% share). LLC owners can file BOI reports online or offline.
LLCs in Tennessee that are created before January 1, 2024, should file their BOI report by January 1, 2025. LLCs that are created in 2024, must file the BOI report within 90 business days of finishing the LLC formation process. Missing out on filing the BOI report may lead to a monetary penalty of $500/day.
Apart from that, there are a few things you need to take note of,
- Get a company business bank account
- File Tennessee business permits & licenses
- Get general liability insurance and professional liability insurance with coverage for employees.
- File a Tennessee LLC annual report or biennial report
This page has provided you with steps to LLC formation and filing processes. You now have to remember upcoming filing deadlines and filing fees or filing costs, including fees for late filings to make sure your LLC is up-to-date.
The LLC formation processing time in Tennessee is 3-5 business days if filing offline (by mail). The process starts immediately if filed online. Check how long it takes to form an LLC to know about the tentative timelines.
Cost of Tennessee LLC
LLCs can be formed by spending very less price. Apart from the mandatory state filing fees, you don’t have to bear additional service charges if you do it yourself. Following are the fees and taxes LLCs in Tennessee must pay to register and run a business in the state. Forming an LLC is no doubt cost-effective compared to other business structures. However, the fees and charges (tax-deductible) that you must pay to the state, such as name reservation fee, name filing fee, LLC filing fee, and Franchise Tax & Sales Tax (If applicable). Here are the main fees and taxes you must pay while forming your limited liability company in Tennessee,
| Fees/Tax | Amount to be Paid |
|---|---|
| Name Reservation Fee | $20 |
| Articles of Organization Fee | $300 |
| Franchise Tax | 0.25% ($100 minimum) |
| LLC Annual Fee | $50 per member |
| Sales Tax | 7% |
| Excise Tax | 6.5% |
In Tennessee, an LLC name reservation is not mandatory. You can register your LLC name at the time of registering your LLC. If you wish to hold the name for some time without registering your LLC, then you can do that online. Your LLC name will be reserved for 4 months without registering your LLC. It can be renewed by paying $20.
In Tennessee, an Annual Report has to be produced every year. It costs 50permemberoftheLLC.Also,theStateofTennesseerequirestheFranchiseTaxeachyear.TheamountofFTdependsontheLLC’srevenue.Theamountisaminimumof50 per member of the LLC. Also, the State of Tennessee requires the Franchise Tax each year. The amount of FT depends on the LLC’s revenue. The amount is a minimum of 50permemberoftheLLC.Also,theStateofTennesseerequirestheFranchiseTaxeachyear.TheamountofFTdependsontheLLC’srevenue.Theamountisaminimumof100 (0.25%). Read our guide on LLC costs in Tennessee for more information.
Tennessee Foreign LLC
If you are interested in forming a Foreign LLC in Tennessee then you need to file the Certificate of Foreign LLC to the Tennessee Secretary of State. Foreign LLCs allow you to operate your business in more than one state. Along with the Certificate of Foreign LLC, you need to submit some more documents like the Certificate of Good Standing, etc. to the Tennessee SOS to form your foreign LLC in Tennessee. To know more in detail, check out our guide on Tennessee Foreign LLC.
Reasons to Start an LLC in Tennessee
The number of filings that the state of Tennessee is making every year is increasing year by year, and the reason is various attractive incentive programs. These programs offer various business funding options and a reduction in tax liabilities, such as no double taxation like corporations. Read more on Tennessee’s classification of LLC tax. The government has started many incentive programs that the LLC startups are attracted to the state and establish their entity. Some of them are mentioned below.
Tennessee Economic Development Incentive Program
Any entrepreneur tries to implement different business changes and look for a different kinds of assistance to make their business sustainable and set its pace in the growth phase. That is why to fulfill the demand of Tennessee LLC for sustainable growth. The government has launched different programs for the development of the LLC. They are:-
- There is a fast-track infrastructure program under which assistance is provided by the government to form an infrastructure for their business. Some financial assistance and tax advantages are included in this program.
- Amid the creation of jobs, the Tennessee government provides a tax credit to the LLC to keep creating such opportunities in the future.
- Fasttrack Job Training Assistance Program is a specially launched scheme by the government in which the government provides job training for jobs to the youth. This training will help them learn the skills that are required for working in the professional sector.
- A sales tax exemption program under which the companies qualified will be provided a rebate on the sales tax or be exempted from paying any amount.
Valley Incentive Program
If you want to start an LLC in Tennessee, you can also enroll your business in a valley incentive program. In this program, different types of bonuses will be provided to companies based on their field and their idea of starting a business. The investment credit program is one of them. This is a performance-based incentive based on the company’s development or those who are planning for further development. In this, a business can get a profit of 10-20% on their annual power consumption for 5-10 years straight.
Loan Funds
The loan fund scheme also targets the new startups in the state. The main objective of this program is to leverage the capital of the company through the investment so that the business can focus on job creation and expansion. An LLC in Tennessee can get a loan of up to $3 million under this scheme, repayment of which can be done in flexible terms of 5 to 20 years.
Leading Businesses Operating In Tennessee
The knowledge of the top businesses of Tennessee is important to know if you want to form an LLC in Tennessee. The reason behind this is that this knowledge will help you understand the business environment of the state better.
Advanced manufacturing
The biggest contributor to the state’s GDP is advanced manufacturing, with a total of around $49.22 billion. There is a huge production house of state-of-the-art cooking in the state that is producing firearms. Along with that, the automotive industry is also huge. The main reason why manufacturing is preferred in Tennessee is the low business cost and skilled labor.
The top brand names in the state are General Motors assembly and Volkswagen manufacturing unit the state.
Service Sector
There is a list of services that are contributing a huge amount to the GDP of the state. The main two out of them are the educational services and health care. There are more than 70 institutions present in the state in which easy students can get admission easily. Along with that, a health care industry in the state is producing high-quality services for people living in the state.
It is estimated that around 335,000 people are currently working in the state’s service sector that is contributing around $36.44 billion in revenue.
Entertainment businesses
The state is known for a well-established place for different music production houses and television setups. The major media companies present in the state are Ingram Entertainment, Scripps Networks Interactive, and Viacom. The entertainment sector’s total contribution is around 17.79billion,ofwhich17.79 billion, of which 17.79billion,ofwhich10 billion is the Nashville industry’s share.
There are some people who are looking for some small investment businesses in the state. they are mentioned below.
- Recruiting agency
- Social media management businesses
- Music tutoring
- Business planning business
Tennessee LLC Formation Review
Time needed: 5 minutes
Just to recap, here are the easy steps again when forming an LLC in Tennessee. Click on the steps in this list to read the full detail.
- Name your Tennessee LLC
The first thing you must do is to choose a company name, which should be unique, easy to find, and available in the state.
- Choose a Registered Agent
In Tennessee, it is mandatory to select a registered agent for your LLC. Get a professional Registered Agent from LLC formation services to get things done hassle-free.
- File a Formation Certificate
Filing a formation certificate is necessary when forming an LLC in Tennessee. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
- Create an Operating Agreement
An operating agreement is not a strict requirement in Tennessee but something encouraged when you start an LLC to avoid future conflicts.
- Get an EIN
The Employer Identification Number (EIN), also called Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
F.A.Qs
Can I file an LLC in Tennessee by myself?
If you are a resident of Tennessee, then you can file your LLC by yourself. However, it is always worth having a professional than doing it yourself to handle legal complexities, paperwork, and other documentation.
What is the cost of forming an LLC in Tennessee in a year?
Apart from the formation fee of 300(domesticLLC)and300 (domestic LLC) and 300(domesticLLC)and300 (foreign LLC), LLC costs in Tennessee include 50permemberforAnnualReportseveryyear.LLCsareliabletopaysalestaxof750 per member for Annual Reports every year. LLCs are liable to pay sales tax of 7% every year. Tenessee Franchise Tax is 0.25% (Min 50permemberforAnnualReportseveryyear.LLCsareliabletopaysalestaxof7100) and excise tax is 6.5%.
How long does it take to get an LLC in Tennessee?
It takes 24 hours to get an LLC in Tennessee if you file it online. For the mail filing, it takes 3 to 5 business days to get an LLC. If you hire a professional LLC service, then it might take less than that. We recommend TailorBrands which has impeccable turnaround time.
How to renew my LLC in Tennessee?
Every year all the LLCs have to submit an Annual Report and pay $50 per member to the Tennessee Secretary of State and renew the LLC. It is mandatory to renew your LLC every year.
What is the tax structure for an LLC in Tennessee?
Generally, for the LLCs, it is a default tax structure. Once you will obtain the EIN, you will get the various tax structure options to select. Sometimes LLCs choose S Corp to reduce federal tax burdens. Read more on the Tennessee Classification of LLC Tax.
In Conclusion
When it comes to forming an LLC in Tennessee, it is much simpler than other business structures. In Tennessee, starting a small business or a start-up is easy because of its diverse resources. For small budget holders, forming a limited liability company is desirable. The steps explained in this article are generic steps for starting a business in Tennessee. It is recommended to consult an attorney or service provider.
In Tennessee, while establishing an LLC, make sure you check with the local bodies like the city council and district office to get updated with local regulations. We recommend ZenBusiness, one of the best LLC services that offers LLC formation at $0 (+ state filing fees). Hiring a professional service would make things easier. From having a registered agent to complying with the local and state government, everything will be smoother than doing things all by yourself.