How To commence a Tennessee LLC (2024)

Tennessee is enjoying rapid growth as Americans migrate to the state from other parts of the country, drawn to its lower expense of housing, thriving manufacturing sector, and competitive corporate levy rate.

Setting up as an LLC is a great way to commence a business in the Volunteer State. Here are 12 steps to make it happen.

What is a Limited debt corporation (LLC)?

LLC stands for limited debt corporation. LLCs are business organizations run by one or more owners or members who control operations without the oversight of a corporate board of directors.

Managing members control day-to-day operations, while non-managing members hold an ownership stake but don’t actively participate in the LLC’s everyday activities.

Tennessee recognizes single-member LLCs (one owner), multi-member LLCs (multiple owners), and is one of the few states to recognize series LLCs.

A series LLC is a business entity that collects multiple LLCs under one master LLC and can file taxes on behalf of its subsidiaries or “series.”

The master LLC and its series are treated as divide entities concerning debts, liabilities, obligations, and outgoings.

Tennessee LLC formation services

There are two ways to set up an LLC in Tennessee. The first is to use an LLC formation service like ZenBusiness and LegalZoom. Both of these services receive anywhere between five and ten minutes to file an LLC in Tennessee. 

Here’s a quick rundown of each.

• ZenBusiness: A popular formation service with quick turnaround and has served over 500,000 businesses. It offers a $0 alternative plus state fees. ZenBusiness also has excellent customer back and offers extras like free operating agreement templates and registered agent services. 
• LegalZoom: A highly reputable LLC formation serviced that’s served over 4 million businesses. It also offers a $0 alternative plus state fees. It also offers attorney consultations, business document templates, and assist with getting an EIN. 

The other alternative is to file your LLC paperwork on your own, which can receive over an hour and expense almost the same. 

How to commence an LLC in Tennessee in 12 steps

1. Name your Tennessee LLC
2. make a strategy document
3. Choose a registered agent in Tennessee
4. File Tennessee articles of organization
5. Get an employer identification number (EIN) and a state sales levy number
6. Obtain a business license and permits
7. comprehend Tennessee state levy requirements
8. Prepare an operating agreement
9. Examine business insurance options in Tennessee
10. comprehend monetary considerations
11. trade your LLC
12. File your BOI update with the state

1. Name your Tennessee LLC

Your Tennessee LLC needs a business name. Choosing a memorable LLC is essential to building brand recognition and identifying your corporation as a distinctive entity.

As you brainstorm LLC names, keep in mind that your name must be original and distinctive. Once you’ve picked a business name, confirm that another Tennessee business hasn’t claimed it by checking the Tennessee Secretary of State’s online business name availability tool.

When you discover an available name, file Tennessee Form SS-9425: Application for Name Reservation. You can mail your form or submit it through the state’s online portal for a $20 fee.

Tennessee requires an LLC to include the phrase “Limited debt corporation” or its abbreviations, “LLC” or “L.L.C.,” in its official business name.

If you’re set on an LLC name that’s already in use, explore DBAs. DBA stands for “doing business as” and applies to companies that organize under one legal name but interface with customers using a different business name.

For instance, East Mountain Properties LLC could use Whistling Wind Motel as a DBA. To use a DBA, register an assumed name with the state of Tennessee.

Ideally, you’ll be able to make social media counts and secure an online domain name for your website that exactly matches your LLC name.

2. make a strategy document

Entrepreneurs use business plans as roadmaps for achievement. A powerful strategy document sets organizational objectives, analyzes the target trade, products and services, outlines the organizational structure, plans profits streams, and determines metrics for achievement.

To save period, use a strategy document template to generate goals and timelines for your LLC. Look at relevant strategy document examples to refine your schedule.

3. Choose a registered agent in Tennessee

All Tennessee LLCs must declare their own registered agent to receive levy documents and legal forms on behalf of the business.

The registered agent must maintain a physical street address within the state. You can select an LLC member as a registered agent or hire a registered agent service.

Note that Tennessee places no residency requirements on LLC owners—only registered agents must reside in-state.

4. File Tennessee Articles of Organization

All LLCs in Tennessee must file articles of organization with the Secretary of State’s office. Submit Form SS-4270 electronically, by mail, or in person, along with the relevant fee.

Include the following items in your Articles of Organization:

• Name of the LLC
• capital Office Address
• Registered Agent Name and Address
• financial Year Closing Month
• Effective Date of the LLC
• Management Structure (member-managed or manager-managed)
• Duration of the LLC
• Purpose of the LLC
• Names and Addresses of LLC Members or Managers
• Organizer Information (name, address, and signature)
• Contact Information (email address)

The state charges $50 per LLC member, with a minimum filing fee of $300 and a maximum filing fee of $3,000. This means that the total expense of establishing and maintaining an LLC in Tennessee varies depending on the number of LLC members (both managing and non-managing).

When registering with the state, you’ll receive a Tennessee Secretary of State control number, which you’ll use to make business filings. Chief among these is an annual update that you can file online.

Each annual update costs the same as your initial filing fee: $50 per LLC member, with a minimum fee of $300 and a maximum fee of $3,000.

5. Get an employer identification number (EIN) and a state sales levy number

After registration, all Tennessee LLCs must obtain an employer identification number (EIN) through the Internal profits Service. An EIN, also known as your federal levy identification number, mimics the functions of a Social safety number (SSN), except for businesses instead of individuals.

You can apply for an EIN a few ways:

• Online: The quickest and easiest way to apply for an EIN is online through the IRS website. The procedure is straightforward, and you will receive your EIN immediately upon completion.
• Mail: If you prefer, you can complete Form SS-4 and mail it to the IRS. It takes longer, usually around 4 weeks by mail.
• By phone: International applicants can apply by phone. Call the IRS Business & Specialty levy Line at (267) 941-1099 from 6 AM to 11 PM Eastern period.

You’ll require the EIN to hire employees and set up a business lender account for your LLC. With your EIN, you can obtain a state sales levy number from the Tennessee Taxpayer Access Point (TNTAP).

You’ll require both levy numbers to commence accepting payments.

6. Obtain a business license and permits

Whether you’re an person or business entity in Tennessee, you’re subject to business licensing and permitting regulations. Many licenses are issued at the county level. The Tennessee Department of profits provides information to get you started.

ordinary Tennessee business licenses include:

• Minimal activity license. Tennessee businesses with gross receipts of more than $3,000 but less than $100,000 must obtain a minimal activity license from their local county clerk. The registration fee is $15.
• Standard business license. Tennessee businesses with gross receipts exceeding $100,000 must obtain a standard business license from the local county clerk. The registration fee is also $15.
• Sales levy certificate. Tennessee LLCs must collect sales levy on merchandise sold.

Other Tennessee business licenses and permits vary depending upon your work. Many industries require special certification, including architecture, bookkeeping, insurance, home inspection, and cosmetology.

7. comprehend Tennessee state levy requirements

Tennessee LLC owners must pay taxes and fees to the state, in addition to any federal taxes. Taxes levied on Tennessee LLCs include:

• Franchise levy. Tennessee LLCs must pay an annual franchise levy, which can be filed and submitted online using a Franchise and Excise levy Form. Tennessee calculates its franchise levy rate by assessing “0.25% of the greater of ownership or real and tangible property in Tennessee.” LLCs must pay a minimum annual franchise levy of $100.
• Sales levy. Like all business types, LLCs must collect sales levy and remit it to the state. Tennessee levies a 7% levy on merchandise sales. Many local municipalities add their taxes, leading to a 9.55% average levy on Tennessee retail sales, one of the highest rates in the country.
• Corporate levy. Tennessee LLC owners can choose to have their corporation taxed as a corporation. The state charges a 6.5% excise levy on corporate profits, which LLCs can pay instead of passing LLC profits and losses to person owners. This levy way often appeals to companies whose members don’t desire corporation profits increasing their personal levy obligations.

8. Prepare an operating agreement

An LLC does not require an operating agreement to do business in Tennessee. Still, many LLC owners choose to draft operating agreements to provide structure and protect membership interests.

An operating agreement essentially serves as your LLC’s constitution. Agreed to and signed by all LLC members, an operating agreement typically outlines the following:

• Your LLC’s name and primary address
• How long you schedule to run the LLC
• Information on the LLC’s registered agent
• Information about the articles of organization
• The business’s purpose and mission statement
• Organizational chart listing members and their respective investments in the LLC
• How profits and losses will be divided between the members
• The procedure for admitting recent members and offboarding outgoing ones
• An overall management schedule for the LLC
• Various indemnification and debt provisions

9. Examine business insurance options in Tennessee

Although LLCs propose a degree of personal property protection, you may still desire to purchase insurance to shield your business against costly mishaps. Some types of insurance, like workers’ compensation insurance, are required by Tennessee law, while other policies are not mandated but may be required by other entities like landlords or lenders.

In many cases, Tennessee LLC owners purchase higher levels of insurance coverage than the law mandates. ordinary policies include:

• Workers’ compensation insurance. Tennessee requires all businesses with five or more employees to purchase workers’ compensation insurance to cover their on-the-job injuries.
• Commercial general debt insurance. Commercial general debt insurance, or CGL, protects LLCs from monetary claims involving property damage, bodily injury, libel, slander, and misleading advertising.
• Commercial automobile insurance. If you own a vehicle in Tennessee, it must be covered by vehicle insurance, whether it’s used for commercial or personal purposes.
• Unemployment insurance. As a Tennessee employer, you pay into an unemployment insurance policy, which pays employees laid off through no fault of their own.
• Cyber debt insurance. Cyber debt insurance protects against monetary losses from cyberattacks and data breaches. You may discover this coverage invaluable if your business collects customers’ financing card numbers or other personal information.
• Commercial umbrella insurance. Umbrella insurance adds to your existing insurance coverage and extends maximum payouts. Your umbrella policy can cover the remaining settlement if your regular insurance limits don’t cover massive deficit or debt.

10. comprehend monetary considerations

As you launch your Tennessee LLC, you’ll require to choose a monetary institution to handle your corporation’s monetary transactions. Traditionally, this means opening a business lender account at a commercial lender or a financing union.

Several state and national agencies connect business owners with financing, grants, and information about levy benefits, including:

• Tennessee tiny Business advancement Center
• Tennessee Department of Economic and throng advancement
• US tiny Business Administration
• Shopify financing

11. trade your LLC

As you tick off the legal requirements for starting an LLC in Tennessee, you can commence work on the marketing and brand-building procedure.

Website design, slogans and taglines, and a brand voice will bring your LLC to life. As your products or services hit the trade, consider advertising campaigns on these platforms:

• TV and radio ads. While pricey, this traditional advertising exposes your corporation to a broad spectators.
• Social media influencer campaigns. An LLC may choose to pay a social media celebrity to promote a product or service to their large following.
• Store displays. Some LLCs pay to post displays in retail stores to inform customers and draw attention.

For more information, read this tiny business marketing navigator to discover the basics of building an online spectators, fostering customer relationships, and winning recent customers.

12. File your BOI update with the state

The Beneficial Ownership Information (BOI) update is a federal requirement introduced by the Corporate Transparency Act to prevent monetary fraud by increasing transparency about who owns and controls companies.

To submit the update, leave to the monetary Crimes Enforcement Network (FinCEN) website. make an account or log in if you already have one. Then, fill out the BOI update form online, providing the essential details for each beneficial owner.

A beneficial owner is anyone who:

• Owns 25% or more of the LLC’s ownership interests.
• Receives economic benefits from the LLC’s assets.
• Has substantial control over the LLC.

For LLCs formed in 2024, you must file the BOI update within 90 days of the formation date. For LLCs made before 2024, the initial BOI update must be filed by January 1, 2025.

Is a Tennessee LLC correct for you? Pros and cons

LLCs are popular with tiny business owners in Tennessee because they settlement the benefits of sole proprietorships, which are straightforward to set up, but have few levy or debt benefits, and corporations.

Here are some advantages of setting up an LLC in Tennessee:

• Limited debt protection: Protects personal assets from business debts and lawsuits.
• Pass-through taxation: Avoids double taxation; profits and losses pass through to members’ personal levy returns.
• Operational flexibility: Fewer statutory requirements compared to corporations. No require for annual meetings or a board of directors.
• State back: Tennessee is known for being business-amiable with supportive state policies.

Some cons include:

• regulatory adherence costs: Requires annual update filings and associated fees.
• High sales levy: Tennessee has one of the highest sales levy rates in the country.
• Franchise levy: Mandatory annual franchise levy based on the greater of ownership or real and tangible property.

Starting an LLC in Tennessee FAQ

*Shopify financing loans must be paid in packed within 18 months, and two minimum payments apply within the first two 6 month periods.