Updated June 26, 2020:

LLC in Tennessee

An LLC in Tennessee, or a limited liability company in Tennessee, is an efficient, flexible business structure that limits your liability to business-related lawsuits or losses.

LLCs also make filing business taxes easier and enhance your operation flexibility in a partnership. If you live or want to do business in Tennessee, you must submit your LLC information to the state and submit your tax paperwork to both the Tennessee Department of Revenue and the IRS.

To form a Tennessee LLC, you must:

  • Choose a name.
    • The name must be unique and should not be easy to confuse with that of an existing company.
    • LLCs must have “Limited Liability Company” or some variation thereof in their name. Some words are restricted (like “Bank” or “Attorney”) while others are forbidden (like “FBI” or “Treasury”).
    • The Tennessee Secretary of State Business Name Database will show you if your desired name is open.
    • You should also see if your desired name has an email and web address (URL) that can be used. You may not want them now, but you may in the future.
  • Select a registered agent.
    • This is a person or a business that acts as legal representation to your LLC.
    • If you are not a Tennessee resident or wish the operations of your business to remain anonymous, a registered agent is required.
    • Registered agents must be Tennessee residents or a business authorized to conduct business in Tennessee with a physical street address in Tennessee.
    • You may be your registered agent to your LLC.
  • Decide if you should get an attorney.
    • Forming an LLC on your own is cheaper, but if done incorrectly, you could pay more in the long run.
    • An attorney will ensure correct LLC formation, but they may use standardized documents that may not be ideal for your business.
    • Attorney fees can cost between $500 and $2,000.
  • Choose your management structure.
    • You will have to choose between a member-managed or manager-managed LLC, although you can change it at any time.
    • Single-owner LLCs and small businesses are usually member managed. Larger LLCs often are manager managed.
    • If you choose member management, you must choose the number of managers. The larger the LLC, the more managers will be needed. Maintaining an odd number avoids voting ties.
  • File articles of organization.
    • These must include LLC name, LLC address, your registered agent’s address and name, type of management, and the number of members, amongst other information.
    • The filing fee ranges from $300 to $3,000, and a $50 fee applies for each LLC member.
  • Set up your operating agreement.
    • This isn’t required in Tennessee, but is recommended for multi-member LLCs.
    • This agreement sets out the responsibilities and obligations of every LLC member. It also structures the LLC’s functional and financial decisions.
    • Due to the complexity of some agreements, hiring a lawyer is recommended.
  • Get an employment identification number (EIN).
    • Multi-member LLCs need this, even if they have no employees.
    • Single-member LLCs need this if they have employees or you wish to file taxes as a corporation. 
  • Register for all state taxes.
    • Tennessee LLCs must file for taxes with the Tennessee Department of Revenue, and most must pay sales and business tax.
    • If you sell a product or have employees, you must register for your state taxes.
    • If your LLC has employees, you must register for the unemployment insurance tax.
    • You may have additional taxes in certain cities or counties.
  • File an annual report.
    • This keeps the state updated on business information, such as LLC name, address, and services provided.
    • This may be filed by an authorized officer, member, or partner. Original signatures are not necessary.
    • If this is not filed before 60 days after the deadline, the state may dissolve your LLC. 
  • File for franchise and excise taxes.
    • All Tennessee LLCs must pay taxes annually on the value of the LLC.
    • The lowest possible franchise tax payment is $100. This is calculated at a rate of .25% of the tangible property’s or corporation’s net worth.
    • Excise tax is essentially an income tax at a rate of 6.5% of the federal tax earnings of the LLC.
  • File for business permits and licenses.
    • Tennessee LLCs must abide by all local, state, and federal regulations.
    • The U.S. Small Business Administration (SBA) guide for federal business permits and licenses can help with this. 
    • Depending on the location and nature of your LLC, additional permits and licenses may apply. The local Chamber of Commerce can advise you about this.
  • Obtain employee insurance coverage.
    • Workers’ compensation insurance must be offered from LLCs with five or more employees.
    • LLCs that operate in the trade or construction business must offer this insurance regardless of employee number.
    • If you have difficulty obtaining the necessary insurance, the National Council on Compensation Insurance (NCCI) can help.

In sum, there are many steps to forming an LLC in Tennessee, but when taken one at a time, they will not be so daunting. 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.