How to Start a Small Business in TN
Knowing how to start a small business in TN requires an in-depth understanding of the legal steps needed to register the business and commence operations.3 min read
2. Naming Conventions
3. Designating a Registered Agent
4. Filing the Article of Organization
5. Creating the Operating Agreement
6. Get an EIN
Choose a Business Name
To register your business, you must first choose a name for your LLC. This is an important step and requires some research in order to ensure that the name suits the business and resonates with potential clients. The name must also be unique, available and follow the naming guidelines of Tennessee.
The name of the company must contain the phrase Limited Liability Company or its abbreviation, LLC or L.L.C. If you wish to add restricted words, such as University, Attorney, Bank, or Insurance, it will mean additional paperwork, plus a professional, such as a doctor, or lawyer, may have to be part of the LCC. Your company name may also not contain prohibited words and abbreviations, such as Treasury, Secret Service, or FBI, which can be confused with the name of a state or federal agency.
You can do a name search on the website of the state of Tennessee to determine the availability of your name and reserve it. If you intend to use the company name in the URL of the company's website, it is a good idea to check and reserve the domain name to prevent others from acquiring it.
You can also get a professional email address for your company with Google apps, as well as gain access to cloud storage, business tools, and business-grade security.
Designating a Registered Agent
After choosing a business name, the next step in registering your business in Tennessee requires you to choose a registered agent. A registered agent is a business or person who can receive and send legal documents on behalf of your LLC. These documents include state filings and service of process for legal action. The registered agent you choose must be a corporation or individual residing in the state, and can include yourself or anyone within the company.
Filing the Article of Organization
Individuals who want to register a LLC in Tennessee must file an article of organization with the Tennessee Secretary of State in person, by mail or online. Before filing the article of organization, you must decide if your company will be manager-managed or member-managed.
In a member-managed LLC, each member of the LLC is actively engaged in running the company and has a say in its day-to-day affairs. When an issue demands a decision, it is usually done by voting. This form of managing a company is referred to as decentralized management, since managerial power isn't handled by one or more managers but stays in the hands of all members.
In this form of management, both the company and its members choose managers who they believe can effectively and efficiently handle the running of the company and see to its day-to-day affairs. The managers are empowered to make decisions without interference from the members. This form of management is referred to as centralized management, since managerial power resides in the hands of one or more managers.
You can file the article of organization online, by accessing the following URL: https://tnbear.tn.gov/NewBiz/. The cost is a nonrefundable filing fee of $50 for each member, with a minimum fee of $300 and a maximum of $3,000. You can make the payment by sending a money order, cashier's check, or check to the Tennessee Secretary of State.
Creating the Operating Agreement
Operating agreements are legal agreements that outline the operating procedures and ownership of a LLC. It is very important, because it details how the business is going to operate and how profits will be shared, thus preventing the possibility of conflict in the future.
Get an EIN
Also known as Federal Tax Identification Number, an EIN (Employer Identification Number) is basically the social security number of your company. This number is necessary for filing federal and state taxes. Also, banks may request your company's EIN when you want to open a business checking account.
If you need help with starting a small business in TN, you can post your legal need on the UpCounsel marketplace. UpCounsel accepts only the top 5% of attorneys/lawyers on its site. Attorneys on UpCounsel come from prestigious law schools like Yale Law and Harvard Law and usually have 14 years of legal experience, including work on behalf of or with companies like Airbnb, Menlo Ventures, and Google.