How To Start An LLC In Tennessee
To start an LLC in Tennessee, you must file Articles of Organization with the Tennessee Secretary of State. You can file the document online, by mail or in person. The Articles of Organization cost $300 to file. Once filed with the state, this document formally creates your Tennessee LLC. However, to actually ready the LLC to do business, you must complete several additional steps.
Starting a Tennessee LLC Guide:
Tennessee LLC Filing Options
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Tennessee Articles of Organization Requirements
To form a Tennessee LLC, you must complete and file the Articles of Organization with the Tennessee Secretary of State. See the document below and click on any number to see what information is required in the corresponding section.
Your name must include “Limited Liability Company” or an abbreviation. Most businesses keep it short and sweet with “LLC.”
Want to use an LLC name already in use in Tennessee? You can if you get permission and tick the box in this section. Tip: Most businesses opt for something original and skip this section.
If your LLC isn’t just a standard LLC (for example, if you’re a nonprofit, a professional LLC or a series LLC), you’ll have to note that in this section and also tick the appropriate box on the last page of the paper application. If you’re a bank, insurance company, litigation financier, or trust company, you’ll need to note that in the designation section as well. Tip: Most LLCs aren’t any of these and skip this section.
You can list an individual, such as yourself, or a business that provides registered agent service, such as Northwest. We recommend Northwest.
This Tennessee street address will become a part of the permanent public record of your LLC. When you hire Northwest, our address will go here.
Include the month that your fiscal year ends. Most businesses operate on a normal calendar year and list December as their FY close month.
If you want your LLC to begin on a specific date in the near future (maybe the next tax period is just around the corner), you can list an effective date up to 90 days in the future. Want your Tennessee LLC to start right away? Skip this section.
Tick the box to indicate whether your LLC is managed by members (typical), managers (fairly common), or directors (uncommon—Tennessee allows for “director-managed” LLCs, which are similar in structure to corporations).
Have more than 6 members? You’ll pay a higher filing fee—$50 per each additional member.
Want to put an end date on your LLC? Include that here. Prefer to have your Tennessee LLC continue indefinitely? Choose “perpetual.”
This is the official street address of your Tennessee LLC. Hire Northwest and you can use our Tennessee address as your principal office.
Sure, it’s a Limited Liability Company, but if you want to forgo asset protection and have members held liable for the debts and obligations of the company, you can tick these boxes and register your LLC as an Obligated Member Entity. Tip: This is pretty uncommon; most businesses don’t tick these boxes.
If for some reason you’re forming a Tennessee LLC that is prohibited from engaging in business in Tennessee, you’ll tick this box. Tip: It’d be pretty unusual if you had to tick this box. Nearly all businesses skip this section.
Your organizer signs and submits your Articles of Organization. Organizers don’t have to be anyone in your LLC. When you hire Northwest, we’ll be your organizers.
How much does it cost to start a Tennessee LLC?
The Secretary of State doesn’t just charge a flat fee. Instead, the state filing fee for Tennessee LLC Articles of Organization is $300 for up to 6 members. After that, there’s a $50 per member charge. So, if you have 10 members in your LLC, it’ll set you back $500 to file your Articles. There are also service fees for online filings—2.35% for credit cards and $0.95 for eChecks.
Hire Northwest, and your total, out-the-door cost to form a Tennessee LLC (of 6 members or fewer) is $534, including state fees.
How long does it take to start a Tennessee LLC?
If you really need your Articles the same day, you can drive to Nashville, wait in line at the Division of Business Services, and submit your filing in person during business hours. A much more convenient option? Submit online for 2-3 day processing. Or for 4-5 day processing, print off a paper form and mail it in.
If you hire Northwest to start your LLC, we file online and typically have your Tennessee LLC formed within 3 business days.
Does a Tennessee LLC need a registered agent?
Absolutely—the Tennessee Code requires LLCs to appoint a Tennessee registered agent. You don’t have to hire someone. You could do it yourself—but know that you’d have to publicly list a Tennessee street address that would become part of the permanent record of your Tennessee LLC. Goodbye privacy, hello junk mail. You’d also have to be available at that address during business hours to accept legal notices—and business doesn’t always take place in the office. It’s hard to manage offsite meetings, business travel or even the occasional long weekend when you’re stuck at your desk.
Not keen on publicly listing your address or being tied to the office? When you hire Northwest, you can list our address instead of your own and free yourself up to focus on your business. (Or you know, go to Bonnaroo.)
Create the Tennessee LLC Operating Agreement
Do I need an Operating Agreement?
Yes, yes, yes. It’s true that operating agreements aren’t required by the state, but that’s because they’re not public documents. Operating agreements are private, internal documents—and the most critical documents for your Tennessee LLC.
Why is an Operating Agreement important?
Your operating agreement puts into writing who owns the business and who invested what. It spells out how profits and losses are allocated and what happens if there’s a disagreement. It even outlines what happens if your LLC shuts its doors (knock on wood). You’ll likely need your operating agreement just to open a bank account. Potential members, lenders and investors will want to check out your operating agreement before signing on with you.
Do I have to write the Operating Agreement?
Since your operating agreement is an internal document and not a standard state form, what should it look like? How do you start? You don’t have to start from scratch—at least not when you hire Northwest to form your Tennessee LLC. When you hire us, we give you a free operating agreement, specific to your management style. We’ll give you other free forms too, from membership certificates to resolutions. We hope to work with your business for a long time, so we want you to start out on the right foot. That’s why we’ve spent years refining and improving all of our free forms. We’re proud to say that over 1 million LLCs have used our free LLC forms to help form and maintain their businesses.
Get a Tennessee LLC EIN
Do I have to get a tax ID number (EIN)?
You’re required to get an EIN for your Tennessee LLC if you have employees or file certain federal excise taxes. In Tennessee, your LLC is also required to register for excise and franchise taxes, and registration requires your LLC’s EIN (or your personal social security number—but who wants to hand that out any more than they have to?). Even just to open a business bank account, you’ll most likely need an EIN. You can get an EIN at no cost directly from the IRS. Or, skip the extra application and hire Northwest to get your EIN for you when you sign up for our services.
Open a Bank Account for Your Tennessee LLC
To open a bank account for your Tennessee LLC, you will need to bring the following with you to the bank:
- A copy of the Tennessee LLC Articles of Organization
- The LLC operating agreement
- The Tennessee LLC’s EIN
If there are multiple members in the LLC, you may also want to bring an LLC resolution to open a bank account that states that the person going to the bank is authorized by the members to open the account in the name of the LLC.
We recommend calling your bank ahead of time before going in and asking what their requirements are. Most banks don’t open business accounts nearly as frequently as personal accounts, so some bankers may be unfamiliar with their own bank’s requirements. As frustrating as that may be for you, calling ahead will help save you from being super annoyed when you walk into the bank.
Obtain a Business License
Does a Tennessee LLC need a business license?
While there isn’t a state-level general business license in Tennessee, many counties or municipalities require business licenses. For example, Davidson County requires either a business license or a “minimal activity license” (for businesses with less than $10K in gross receipts).
File Tennessee LLC Reports
What is a Tennessee LLC Annual Report?
A major hit to the wallet. Your Tennessee LLC Annual Report is a form you submit to the Tennessee Secretary of State that comes with a $300-$3000 price tag. You’ll pay $50 for every member of your LLC—but even if your LLC is just you, there’s a minimum fee of $300.
You file this form each year to confirm your LLC’s contact and ownership information. And if you actually need to change information on your report? Add on $20 for the change agent/office fee. And for the convenience of paying online? You’ll also fork over an extra 2.35% for debit or credit card processing or $0.95 for eCheck payments. And if you file late? Surprisingly, there’s no late fee—but the state will dissolve your LLC or revoke your registration if you don’t pay up in 60 days of their delinquency notice.
That’s why Northwest sends you reminder notifications when you sign up for our services. You can even hire us to file your Annual Report for you each year and save yourself the headache.
How much does an LLC in Tennessee cost each year?
At least $400. The fee to file the Tennessee LLC Annual Report is $50 per member ($300 minimum and $3000 maximum). There’s also a $100 minimum for the state’s franchise tax.
Pay the LLC Taxes
What are the Tennessee LLC taxes?
Tennessee has a very limited personal net income tax rate of 5% (the tax only applies to interest and dividend income). Sounds great, right? Before you jump for joy, note that Tennessee has two other fairly hefty business taxes: a franchise tax and an excise tax.
The Tennessee Franchise Tax is a tax ($0.25 per $100) on whichever is larger: your net worth or your real and tangible property in Tennessee. There’s a minimum franchise tax of $100. The Tennessee Excise Tax is a tax on net earnings (6.5%). Both of these taxes affect your LLC no matter how your LLC chooses to be taxed.
There’s also a sort of hybrid state-local gross receipts tax called the Business Tax. There are two separate returns, one for the state business tax and one for the city business tax. Both returns, however, go to Tennessee Department of Revenue. The tax is required for businesses with gross receipts over $10,000. Tax rates vary, but there’s a minimum tax of $22.
On top of all this, the state sales tax rate is 7%. When you add in local city and county sales taxes, the average total sales tax is a whopping 9.379%.