Having an LLC in Tennessee is a better and cheaper option than having other business structures. A limited liability company (LLC) reduces the owners’ personal liability and protects their personal assets. One can start an LLC in two ways, domestic LLCs or foreign LLCs (LLCs in more than one state). By following some basic steps, you can easily form an LLC in Tennessee.
On this page, you’ll learn about the following:
- How to Start an LLC in Tennessee
- After Starting your Tennessee LLC
- Tennessee Foreign LLC
- Why an LLC in Tennessee
- Leading Businesses Operating In Tennessee
- Tennessee LLC Formation Review
How to Start an LLC in Tennessee
An LLC or a 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. This section gives you a step-by-step guide on how to start an LLC in Tennessee.
Step 1: Decide a Name for Your LLC
Deciding on a business name is the first step to start an LLC. In Tennessee, before you name your LLC, it is important to note a few things. Firstly, make sure the name is available to use. If the name is available, then check if the name complies with all the Tennessee business naming requirements. Once you pass through them, you can successfully name your business.
Why do you need a proper business name?
If you want your LLC to have special identification, your company name is essential. However, many people face lots of issues by avoiding focus on choosing a business name for their LLC business formation filings.
Because of this, here are some of the major benefits of choosing the best LLC corporate names.
- To help establish a company’s presence in the market, a proper business entity type will help you. This also creates a new identity that will resemble your LLC.
- After you’ve properly chosen the name for your LLC, you will have no problems finishing the registration process.
- You can only get the EIN number when you have your name registration certificate with you.
Requirements when deciding a name for your LLC
LLC Name Search: A business name search is required to check if the desired name is available or not. If the name is available then the business owner has to fill up a name reservation form and send it to the Secretary of State, Tennessee. To do the name search, one has to visit the Business Entity Search page on the official Secretary of State website. Send the name reservation form to the below address by mail to reserve your LLC name in Tennessee. The cost of a name reservation is $20.
Important Quick Links:
312 Rosa L. Parks Avenue
6th Floor, William R. Snodgrass Tower
Nashville, Tennessee 37243
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Step 2: Assign a Registered Agent in Tennessee
A registered agent, or business entity, is a person that will act or work on your behalf. This person or business will receive significant tax forms, legal forms, formation documents, any internal document, a notice of lawsuits, and other official government correspondence in Tennessee. Choosing a Tennessee registered agent for service of process for your LLC is required.
Make sure your registered agents are residents of Tennessee o have a physical street address. It could also be a business with an office address. Here are the recommended agent service provider list and employees for you:
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Note that availing of the services of professional registered agents would be your best option since you are guaranteed that whoever is handling your legal affairs knows their stuff well. You will enjoy peace of mind and focus only on running your business, as the ‘professionals’ take care of all legal matters.
These LLC formation services are recommended registered agent services as they are authorized to conduct business in Tennessee. Compare them to check the best yet cheapest option for you. Besides, they can guarantee you professional service because they have been in the business for years.
Step 3: File Articles of Organization in Tennessee
A Certificate of Name Reservation is needed to file Articles of Organization, as other states call it. You need to make reports of this certificate with the Tennessee Secretary of State, with a starting fee of $300. LLC cost in Tennessee includes other taxes and fees. You may file them online or by mail.
This Tennessee Certificate of Formation is a legal document needed to form your business officially. It will indicate details about your LLC in Tennessee, like if it is a member-managed or managers-managed. LLCs with employees need to check the Tennessee government portal for guidelines to hire employees.
Before you start filings, you must already have your LLC name and registered agents or employees. You will attach a copy of your Name Reservation Certificate along with a list of the services that your Tennessee LLC will offer.
How to File Online
Go to the Secretary of State Online Service. Select “non-subscriber.” Fill out the online form. The website will alert you if your county does not support online filings after selecting your principal county. Read more about the Tennessee Certificate of Formation for online registration.
How to File by Mail
If you prefer filing real-life forms for your Tennessee LLC registration, then you can download the Tennessee Limited Company Certificate of Formation. Read the form thoroughly, fill it out, and send your application by mail. It will have to fill, among others, your name, city, state, zip code, and signature.
Mail To: Corporate Filings
312 Rosa L. Parks Avenue
6th Floor, William R. Snodgrass Tower
Nashville, Tennessee 37243
Step 4: Create Your Tennessee LLC Operating Agreement
An operating agreement is a document that legally outlines the proprietorship and operating procedures of your LLC. 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 an LLC operating agreement Tennessee does not require you to have a comprehensive operating agreement, but it is ideal to have one that contains all your details of business operation. This document would be useful if you decide to dissolve Tennessee LLC later.
Step 5: Filing a Tennessee LLC EIN
The Employer Identification Number or, simply, the E.I.N. is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify types of business for tax purposes and taxes in general. It is like a Social Security number dedicated to a business’ taxes. The EIN is necessary for any active business or any form of business for that matter.
To obtain EIN (aka FEIN) one has to fill up a form (Online or by mail) and submit it to the IRS. Before sending the form, ask for EIN Assistant. Enter details of your LLC, and finally complete the form and send it to the address given.
Mail to: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999
Fax: (855) 641-6935 | Fee: Free
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.
And that’s all! Congratulation, you are now done with all the necessary steps to form your Tennessee LLC. If you still haven’t used a professional service from here, I strongly recommend having one to handle the remaining tasks.
After Starting your Tennessee LLC
After forming your LLC, there are still some things that you will need. Take note of the following:
- Get a company business bank account
- File Tennessee business permits & licenses
- Get liability for business and professional liability insurance with coverage for employees
- File a Tennessee LLC annual report or biennial report
- Already existing LLCs that wish to operate in Tennessee must register as Tennessee foreign LLC.
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.
Tennessee Foreign LLC
To register a Tennessee foreign LLC, one has to file the foreign LLC formation certificate with the Secretary of State, Tennessee. Forming a foreign LLC allows you to operate your business in more than one state in the USA as a single business entity. Check Tennessee Foreign LLC to know more about having a foreign LLC.
Why 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. 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 kind 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’s side 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.
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 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.
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.
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.
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 $17.79 billion, of which $10 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.
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. You can check out our list of our 5 Best LLC Services in the United States.
- File a formation certificate
Filing a formation certificate is necessary when forming a Tennessee LLC. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
- Create operating agreement
An operating agreement is not a strict requirement, but something encouraged when you start an LLC.
- 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.
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.
Apart from the formation fee of $300 (domestic LLC) and $300 (foreign LLC), LLC costs in Tennessee include $50 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 $100) and excise tax is 6.5%.
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.
Every year all the LLC 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.
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.
LLCs are easier to establish than other business structures. Small businesses, especially start-ups can easily start their LLC in Tennessee at a bare minimum cost. LLCs have a ‘pass-through taxation’ advantage for which they are excluded from certain taxes. The formation of limited liability companies requires much lesser documents and legal processes. Share your queries with us, leave a comment below.