Form LLC in Tennessee: Everything You Need to Know
Form LLC in Tennessee is the process of setting up a limited liability company in the state of Tennessee which is considered ideal for many new businesses.4 min read updated on February 01, 2023
Form LLC in Tennessee is the process of setting up a limited liability company in the state of Tennessee. An LLC is an efficient, flexible business structure considered ideal for many new businesses. It offers limited liability, management flexibility, simpler tax filing, and a host of other benefits. In Tennessee it is both easy and affordable to form. You can do so by taking the following steps.
- Name your LLC.
- Hire a registered agent.
- Submit Articles of Organization
- Make an operating agreement.
- Acquire an EIN.
- Acquire permits and licenses.
- Register for state taxes.
- File the Annual Report.
- File for excise and franchise taxes.
- Separate personal assets from LLC.
- Buy insurance.
- Meet employee hiring compliance demands.
Name Your LLC
For this, you’ll want a name that relates to you or your business and is easily searchable but also adheres to certain conditions, such as:
- It must include some variation of “limited liability company.”
- It should be unique, not identical to another business’s name.
- It can only have some words, like “Bank” or “Attorney,” if it files certain paperwork or has a licensed individual as a member.
- It cannot use some other words, like “FBI” and “Treasury,” because they relate to the federal government.
You can check to see if the name you want is available by using the LLC name search at the state of Tennessee’s website.
Hire a Registered Agent
A registered agent is a business entity or individual that receives and sends legal paperwork on your LLC’s behalf. Your registered agent is required to be a Tennessee resident or a business authorized to exist in Tennessee. Both must have a Tennessee address. You can be your own registered agent, too.
Submit the Articles of Organization
Submitting Articles of Organization with the state of Tennessee registers your LLC with the state. These articles have to include essential business information, including:
- Your LLC’s address and name.
- Your registered agent’s address and name.
- Your management structure.
- Your LLC’s duration, if it is not to be perpetual.
The fee for filing ranges between $300 and $3,000. There is a $50 fee for each member.
Make an Operating Agreement
Tennessee does not require LLCs to have operating agreements, but this is recommended. This document outlines the operating procedures and ownership arrangements of the LLC, as well as the structuring of the LLC’s functional decisions. Such agreements can get rather complex, so having legal help is often recommended.
Acquire an EIN
The EIN, or Employer Identification Number, is a number used by the IRS to identify your company for tax purposes. All multi-member LLCs must have an EIN. Single-member LLCs must have one if they have employees or choose to consider a corporation by the IRS. You can acquire an EIN from the IRS without any filing charge.
Acquire Permits and Licenses
Depending on the business and location of your LLC, acquiring permits and licenses may be necessary. The U.S. Small Business Administration (SBA) guide can help you with federal permits, the state of Tennessee’s website can help you with state permits, and the local Chamber of Commerce can help you with local ones. License details, requirements, and fees vary by state.
Register for State Taxes
LLCs in Tennessee are required to file for a number of taxes, these include:
- The Unemployment Insurance Tax, if you have employees.
- The Tennessee Unemployment Insurance Tax, if you have employees.
- The Tennessee Sales Tax, if you sell taxable services or goods in Tennessee.
Filing for these and other taxes is done through the Tennessee Department of Revenue. Some cities or counties may levy additional local taxes.
File the Annual Report
All LLCs must submit an annual report to the Secretary of State. This report offers basic information about your LLC, such as its name, address, and what services it provides. If you do not file your report, the state could dissolve your LLC.
File for the Excise and Franchise Taxes
Tennessee LLCs must pay annual excise and franchise taxes. The excise tax rate is 6.5% of your LLC’s taxable income. The franchise tax is .25% of either your LLC’s tangible property or net worth, whichever is greater. You can register for these taxes through the Department of Revenue’s Online Tax Registration page.
Separate Your Personal Assets from Your LLC
You can do this by opening a business bank account and getting a business credit card. A business bank account allows you to keep your business assets separate from your personal assets, thus protecting your personal assets. A business credit card separates personal expenses from business expenses and builds your company’s credit history.
If you have five or more employees, you must offer workers’ compensation insurance. If you are in construction or the trades, you must offer this no matter how many employees you have. If you need help getting insurance, the National Council on Compensation Insurance should be consulted.
Meet Employee Hiring Compliance Demands
If you have employees, there are some legal obligations you must meet, such as:
- Making sure any potential employees can legally work in the U.S.
- Reporting new hires to the State of Tennessee.
- Offering workers’ compensation insurance, if required to do so.
- Withholding income tax.
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