How to Start an LLC in Tennessee (2024 Guide)

How to Start an LLC in Tennessee (2024 Guide)

It’s hardly surprise that Tennessee is seeing an incredible pace of new company openings. With no personal income tax and among of the lowest state and local tax loads in the nation, Tennessee has a pro-business climate. This tutorial will offer you the essential information you need if you’re wondering how to register an LLC in Tennessee.

Pros and Cons of Forming an LLC in Tennessee

Pros

  • Limited liability protection is provided by forming an LLC in Tennessee.
  • There is no state income tax on earned income for individuals in Tennessee.
  • Tennessee is renowned for having an expanding economy, a business-friendly environment, and easy access to large markets.

Cons

  • LLCs are subject to a franchise and excise tax in Tennessee, which is determined by the net worth or net profits of the business.
  • Tennessee LLCs must submit an annual report to the Secretary of State and pay the associated cost.

Tennessee LLC Formation in 5 Simple Steps

Step One: Give Your Tennessee LLC a Name

No other LLC or company in Tennessee may use the same name as your LLC. To find out whether another firm is using the name you want to use for your business, you may utilize Tennessee’s business name availability tool. After deciding on an acceptable name for your business, you must apply to the state for name reservation in order to register your selected name.

  • While naming your new LLC, keep the following guidelines in mind:
  • The terms “limited liability company,” “LLC,” or “L.L.C.” must appear in your name.
  • Words that would suggest your LLC is connected to a government agency (such as the FBI, IRS, Treasury, etc.) cannot be included in your name.
  • Certain terms (such as attorney, university, and architect) must be used with extra permission, processes, and licensing.

While you research how to form an LLC in Tennessee, you may reserve the name of your choice. The name must be held for four months at a fee of $20; this must be done in person or by mail.

Step Two: Select a Tennessee LLC Registered Agent

Choosing a registered agent is perhaps the most surprising step in creating an LLC in Tennessee. The fact that business owners must designate a person or entity to receive official state mail and legal notifications on behalf of their firm may surprise some since this aspect of business operations may not be as widely recognized.

LLC owners in Tennessee have the option to choose any of the following individuals to act as the company’s registered agent:

  • A state citizen
  • A company that keeps its street address in Tennessee
  • An individual or firm from outside the state of Tennessee that has a business office there

Step Three: Submit Your Tennessee LLC’s Articles of Organization

Your “articles of organization” will be the most comprehensive document you need to be aware of while learning how to create an LLC in Tennessee. When submitting your Tennessee articles of organization form, the following details must be included:

  • The LLC’s name and the primary in-state office’s address
  • The quantity of LLC members (owners’ collective word)
  • The LLC’s designated registered agent’s name and address
  • The articles of organization’s effective date, if it is not to go into force right away
  • Information about the LLC’s operations
  • Whether the LLC has an end date or an ongoing existence

Regardless of whether you’re creating a single-member LLC or a multiple-member LLC, you must complete this documentation. You may file this using the state’s online portal or by mail. Each LLC member must pay a filing cost of $50; the minimum charge is $300, and the maximum fee is $3,000.

Inside Scoop: Tennessee does not require LLC members to provide their identities, contact details, or positions within the company, protecting their right to privacy.

Step Four: Secure an IRS Employer Identification Number

Unless you are forming a single-member LLC, your LLC must get an IRS employment identification number (EIN). This number is required for a variety of business-related activities, such as opening a business bank account, creating business credit, and submitting employment tax reports.

An active taxpayer identity number (EIN), Social Security number (SSN), or individual taxpayer identification number (ITIN) is required of the person completing the necessary documentation for this procedure. In addition to being a natural person, the applicant must be the LLC’s owner or manager.

On the IRS website, you may finish your application online. You will get a valid EIN for your company after completing your online application for one.

Step Five: Prepare Your Business for Operations

Upon submitting articles of organization, the next stages in the company formation process should be closely monitored while considering how to incorporate an LLC in Tennessee. As you strive to become operational, you don’t want to lose any ground. Among them are:

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A Tennessee LLC: What Is It?

One kind of corporate entity is an LLC, or limited liability corporation. (Alternative forms consist of partnerships and corporations.) It gives its owners, referred to as “members,” the option to reduce their personal culpability for debts and obligations incurred by the company. However, it does not need to follow numerous corporate procedures, such choosing a board of directors and scheduling frequent meetings.

In the end, state law—not federal law—creates an LLC. Even though LLCs may be similar in many states, there are some significant distinctions, so understanding how Tennessee defines major LLC words is useful. Establishing an LLC in Tennessee is a fantastic method to establish a presence in the Volunteer State.

The Tennessee LLC Formation Cost

Tennessee demands a $300 initial LLC formation cost. You may formally create your limited liability business by paying this charge. Furthermore, Tennessee requires the submission of an annual report, which is subject to a $50 cost. This ongoing cost guarantees that your LLC complies with state laws.

Creating an Operational Agreement

Although drafting an operating agreement is not mandatory for new businesses in Tennessee, it is a good idea to document your company’s management structure, limited liability status, and money distribution protocols. This may provide a procedure for settling conflicts or closing the company and serves to safeguard each member’s interest in the LLC.

Respecting Fiscal Year and Annual Reporting Requirements

You want to get acquainted with Tennessee LLCs’ yearly reporting obligations. For your business to continue operating in Tennessee, you will need to submit an annual report and pay an annual fee. It will be easier to make sure you start tracking that data right away if you are aware of what you will need to report.

Next, ascertain if you need Tennessee Department of Revenue registration. If you want to recruit people to work for you or if your LLC will be involved in a company that collects sales tax, you must do this. To learn what tax forms you may need to submit during or at the conclusion of each fiscal year, you might wish to speak with an accountant or other tax expert.

Inside Scoop: You may reduce your income taxes by learning how to form an LLC in Tennessee. Members of an LLC benefit from the company’s position as a “pass through entity,” which spares them from paying taxes on corporate earnings. Since Tennessee does not have an individual income tax, they may save a large amount of money by reporting their respective portions of the business’s revenue on their personal tax returns.

Getting Your Tennessee LLC Insured

Getting insurance coverage for your new company could be wise or required. You must get workers’ compensation coverage if you want to recruit staff. Depending on the kind of company you run, you could additionally want additional coverage, such as:

  • Insurance for professional liability
  • General liability insurance for businesses
  • Insurance for commercial vehicles
  • covers errors and omissions
  • Insurance against unemployment
  • coverage for cyber liability
  • covering under an umbrella

Marketing and Branding Your Tennessee LLC

The process of establishing an LLC in Tennessee is only the first step. After your business is operating smoothly, you must learn how to market it. Here are some suggestions to get you going.

  • Create an excellent company website. Your website serves as both an introduction to new clients and a means of preserving existing ones. You may create it yourself using a platform such as SquareSpace, or you can hire a web designer. Engage with your audience on social media. Creating a strong online presence for your brand on social media platforms like Facebook, LinkedIn, Twitter, and TikTok may help your company grow in reputation, attract loyal customers, and build trust.
  • Make use of actual connections. You may build relationships with the community and promote your new company by volunteering at or sponsoring festivals, charity drives, church events, and other local gatherings. You can also put your contact information on a QR code, business card, flyer, or item.
  • Consider locally. To find out about local options for cooperation, financing, and marketing, get in touch with your local small business group or chamber of commerce.
  • Establish a connection. Tennessee’s Small company Development Centers provide a wealth of resources to assist you in determining the necessary steps to support the success of your small company and in making connections with other beneficial services.

Inside Scoop: The interactive Smart Start portal from the State of Tennessee may help you find a multitude of public and private services, such as financial assistance, career mentoring, and educational possibilities. Tennessee is among the greatest states in which to form an LLC because of these. You can also discover on Smart Start what licenses and permissions your business could need in order to operate legally.

Funding Your New Business

While marketing is crucial, you may also be considering your options for financing. Low interest loans and small company grants are excellent places to start. You could be eligible for speciality financing options as well.

  • Tennessee LLC is owned by women, veterans, or minorities. You might think about other options that are offered by the Small Business Administration.
  • development in rural areas. Small business owners and entrepreneurs may get cash and technical support from the U.S. Department of Agriculture.
  • Culture and the arts. Nashville is well-known for its music scene, and the state offers a wealth of funds for the arts that may be used to fund various arts and cultural initiatives.

Inside Scoop: There are many of financing choices available in Tennessee for your LLC; just use your imagination and consider all of your possibilities! As an example, Launch Tennessee, which bills itself as a “public-private partnership,” provides special assistance in an effort to make Tennessee the most startup-friendly state in the union.

The Bottom Line: Forming an LLC in Tennessee

In Tennessee, creating an LLC is a very simple procedure that only requires a few steps to finish. To make paperwork easier, the state offers a wealth of materials, including template forms and step-by-step instructions. Examining top LLC formation services may also help to expedite the procedure.

Frequently Asked Questions: Tennessee LLC Formation

What are the ongoing compliance requirements for Tennessee LLCs?

Tennessee LLCs have several ongoing compliance obligations, including:

  • Annual Report: LLCs in Tennessee are required to file an annual report with the Secretary of State and pay the associated fee. The report confirms your LLC’s continued existence and provides updated contact information. The annual report fee is $300. 
  • Franchise and Excise Tax: LLCs in Tennessee may be subject to franchise and excise taxes based on the net earnings or net worth of the company. These taxes are due to the Tennessee Department of Revenue.

Can I be my own registered agent for my Tennessee LLC?

Yes, you can act as your LLC’s registered agent in Tennessee as long as you have a physical address within the state where legal documents can be served during business hours. Alternatively, you can designate a professional registered agent service or choose a trusted individual or business entity to fulfill this role.

Is an operating agreement required for Tennessee LLCs?

While Tennessee does not require LLCs to have an operating agreement, it is highly recommended to create one. An operating agreement is an internal document that outlines the management structure, member roles, voting procedures, and other essential operating rules for your LLC. Even single-member LLCs can benefit from having an operating agreement, as it helps clarify the company’s structure and operating procedures while providing legal protection for members.

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