Forming an LLC in Tennessee: Everything You Need to Know
Forming an LLC in Tennessee is fairly straightforward and inexpensive and it is regulated under state law.3 min read
Forming an LLC in Tennessee is fairly straightforward and inexpensive. An LLC, or “limited liability company,” is regulated under state law. Tennessee, like a majority of states in the U.S., has specific requirements that all business owners must follow in order to form an LLC in the state. These requirements include filing necessary forms with the Tennessee Secretary of State, paying the required fees, and meeting all of the requirements necessary to form an LLC.
How to Form an LLC in Tennessee
In order to properly form an LLC in Tennessee, there are a handful of steps you must follow.
1.Select a Name for Your Company
Choosing a name for your LLC that is available in Tennessee is one of the first steps you should take. To see if your desired name is available, you should first conduct a search with the Tennessee Secretary of State’s business name database. One of the requirements in Tennessee is that your LLC name be distinguishable from other existing businesses.
Thus, you must know whether there are any existing businesses with the same name or a name substantially similar to your desired name. If there are, the State will reject your name and will require you to modify your name.
Tennessee requires that any LLC registered in the state must have certain identifying terms attached to it. For instance, the name of an LLC must be followed by “LLC,” “Limited Company,” “Ltd.,” or some other word that identifies it as a limited liability company. An LLC cannot have the words “Inc.,” “Bank,” “Attorney,” or “University” attached to it, unless it files additional paperwork and has a required licensed individual as part of the LLC.
2.Designate a Registered Agent
The next step in forming an LLC is to designate a registered agent. A registered agent is simply a person or corporation that accepts and sends legal documents on behalf of the LLC. Tennessee requires that the registered agent be a resident of the state with a physical street address. The registered agent can be a member of the LLC, but it cannot be the LLC itself.
3.File Articles of Organization
For your LLC to formally exist, Articles of Organization must be filed with the Secretary of State. In Tennessee, this is Form SS-4270. The Articles of Organization must include basic information about the business, such as the LLC’s name, the name and address of the registered agent, the name(s) and address(es) of the LLC’s members, and the duration of the LLC.
The Articles of Organization may be mailed in or sent electronically. Tennessee charges a one-time filing fee of $50 per LLC member. However, the minimum fee is $300, and the maximum fee is $3,000. Once you file the Articles of Organization, you can expect the Tennessee Secretary of State to take about four business days to process the Articles of Organization if filed by mail and two days if filed electronically.
4.Create an Operating Agreement
While Tennessee does not require an LLC to create an Operating Agreement, it is highly advisable that an LLC create one anyways, especially if the LLC has more than one member. An Operating Agreement essentially lays out the rules and procedures of the business, including the day to day duties of the LLC’s members, the financial obligations of the members, how much of the LLC each member owns, how to add or remove a member, etc.
It also contains information such as when the annual meetings are and voting procedures. Tennessee will consider an Operating Agreement as a governing, legal document.
5.Obtain an Employer Identification Number
An Employer Identification Number, or “EIN,” is also called a Federal Tax Identification Number and can be thought of as a business’s social security number. It is required for filing state and federal taxes and may even be required if the LLC wants to open up a bank account.
To obtain an EIN, you must submit a form to the Internal Revenue Service (“IRS”) either electronically or by postal mail.
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