How to Start an LLC In Tennessee: Everything You Need to Know
How to start an LLC in Tennessee is a question pondered by those who wish to set up a limited liability company in that state.3 min read
How to Start an LLC in Tennessee
How to start an LLC in Tennessee is a question pondered by those who wish to set up a limited liability company in that state. The process for this is a multi-step one and entails actions as straightforward as choosing a name for you LLC and as complex as drawing up an operating agreement amongst multiple members.
An LLC is an efficient and flexible form of business that many new business owners find quite useful. Some of its appealing qualities include limiting your liability from lawsuits and debts related to your company, allowing greater ease in filing business taxes, and allowing greater operational flexibility.
If you want to form an LLC in Tennessee or run a foreign LLC therein, you must submit your LLC information to the state and your tax information to the Tennessee Department of Revenue and the IRS.
The process for forming an LLC in Tennessee is as follows:
- Choose an LLC name. This should be original and not easily confused with an existing one. It should also comply with all other state naming restrictions. To see if a name is open, you can search the Tennessee Secretary of State Business Name Database. If you find the name you want, you can claim it or submit an Application of Reservation of Limited Liability Company Name that will hold it for you for four months. At this time, you should also see if the name you want has an email and web address (URL) available. Even if you don’t want them now, you may later, so it's best to get them while you can.
- Pick a registered agent. This is a person or business entity acting as legal representation for your LLC. It must be a Tennessee resident or business authorized to operate in the state with a physical street address therein. You can also act as your own agent, but if you are not from Tennessee or if you want your LLC operations to be anonymous, you must have an agent other than yourself.
- Decide to hire an attorney or not. Forming an LLC on your own is cheaper but time consuming, and if you do it wrong, you could pay more long-term. A good attorney will ensure correct LLC formation, although they may use standardized documents that may not be ideal for your LLC's purposes. Such legal counsel can cost from $500 to $2,000.
- Choose a management structure. You can either have a member-managed or manager-managed LLC. Small businesses and single-owner LLCs are most likely to be member managed while larger LLCs tend to be manager managed. Member management will require you to choose the manager number for your LLC. The larger your LLC, the more managers will be necessary. You can avoid ties by maintaining an odd number of managers.
- File articles of organization. These should be filed with the Tennessee Secretary of State. They must include such information as your LLC’s address and name, your registered agent’s address and name, the type of management, the number of members, and the period of duration, if the LLC is not meant to be ongoing. The filing fee can be as low as $300 and as high as $3,000. A $50 fee is charged for each member of the LLC.
- Set up your operating agreement. This is recommended for multi-member LLCs in Tennessee, but not required. The agreement shows the responsibilities and obligations of every member of the LLC. It also sets out the LLC’s functional and financial decisions. Thanks to the complex nature of some of these agreements, it is recommended that you hire a lawyer for this part.
- Get an employer identification number (EIN). Any multi-member LLC needs this, even if no employees are part of the LLC. A single-member LLC needs this if they have employees or if you wish to designate your LLC as a corporation. No filing fee is required to receive an EIN.
So, in short, there are many issues to consider when forming an LLC in Tennessee, but they may not be as daunting as they may seem if you take each carefully and one at a time. If you need help with setting up an LLC in Tennessee, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.