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With no personal income tax, many established and growing industries, and a strong push to educate its workforce, Tennessee is focused on making the state the No. 1 place in the Southeast to start and grow a business.
In fact, through Launch Tennessee, a large public-private entrepreneurship initiative, the state is working extremely hard to ensure all small businesses and startups can prosper.
So, let’s dive into how to start an LLC in Tennessee step by step.
Table of contents
- Form Your LLC
- Tennessee State Filing Fee
- Create a Business Name
- Tennessee LLC Registration
- Get Your Employer Identification Number or EIN
- Assign a Registered Agent for your LLC in Tennessee
- Open a Business Bank Account
- Tax and Regulatory Requirements
- Annual Report
- Getting Started with Your Tennessee LLC
Form Your LLC
To understand how to start a business in TN, you need to understand entity formation. Limited Liability Companies (LLCs) and Corporations are the most popular business types.
Business formation is important because it sets your company apart as a professional company and not just a hobby.
A corporation is a legal entity created separately from those who own and operate it. A corporation’s debts and taxes are separate from its owners, thereby offering the greatest personal liability protection of all business structures. The two most common types of corporations are S and C corporations.
Limited Liability Company
LLCs are the most popular business structure, blending the aspects of corporations, partnerships, and sole proprietorships into a simple and flexible business entity. Like corporations, LLC formation protects the owner’s personal assets and also shields them from personal liability similar to a corporation. They also possess the “pass-through” tax benefits of a partnership.
There are two types of LLCs. LLC run by just own person (single-member LLC) and LLCs run by multiple people (multi-member LLCs)
Starting a LLC in TN can be difficult and confusing, especially as a first time business owner. But with a company like Inc Authority in your corner, you’ll not only have your LLC formed for you, but you’ll also get expert guidance beyond business formation, so you never have to wonder or worry about what to do next!
What About DBAs?
DBAs (which stands for “doing business as”) grant business owners the ability to conduct business under an assumed name. A DBA is also referred to as a fictitious business name and is an authorization by the state for your business to operate under an assumed name.
For sole proprietors and owners of LLCs, DBAs offer an affordable way to gain legal recognition for the secondary name of your choice.
- Sole proprietors: For sole proprietors starting a new business, DBAs are a budget-conscious way to gain legal status and work under a creative company name.
- LLC owners: If the name on your LLC paperwork and your business name differ, DBAs offer the opportunity to operate as an LLC under a different legal name.
A DBA provides privileges like the ability to open a bank account, create enforceable contracts and establish federal employer tax status (getting an EIN). It’s possible to file multiple DBAs, allowing a single LLC to operate different businesses under the same legal umbrella. If you’re starting a business or expanding your LLC in TN, get the proper legal recognition early on to start off on the right legal footing.
Our entity-setup service is 100% free.
We’ll waive our service charges, labor costs, and overhead. You only pay the state fees and postage, which are mandatory regardless of who incorporates for you. Start now for free!
Tennessee State Filing Fee
The cost to form a Tennessee limited liability company (LLC) is $50 per member (minimum of $300 and a maximum of $3,000). This LLC filing fee is paid to the Tennessee Secretary of State when filing the LLC’s Articles of Organization. A convenience fee will be charged when paying online by credit card.
You also might want to file what most states call a Certificate of Good Standing. This certificate is used to say that a company is authorized and incorporated to conduct business in a certain state. It demonstrates two important things:
- The company has been in existence from the time of incorporation; and
- that no action is currently being undertaken in order to remove the company from the register.
You can order by fax, mail, email, phone, in person, or online, but we recommend online.
|Tennessee State Filing Fee:||$50 / member|
|Tennessee State Filing Time:||6-10 business days|
|Certificate of Good Standing||$20|
312 Rosa L. Parks Avenue
Snodgrass Tower, 3rd Floor
Nashville, TN 37243
Create a Business Name
Forming an LLC in TN requires you to figure out your corporation or LLC name and reserve that name. Name reservation is actually one of the biggest decisions you’ll make. It may not seem as important as choosing the type of business entity, but it is. As a matter of fact, many legal issues can arise from choosing the wrong name for your business startup.
Under Tennessee law, an LLC name must contain the words “Limited Liability Company” or the abbreviations “L.L.C.” or “LLC.”
Your LLC’s name must be distinguishable from the names of other business entities already on file with the Tennessee Secretary of State. Names may be checked for availability on the Tennessee Secretary of State business name database.
You may reserve a name for four months by filing an Application for Reservation of Limited Liability Company Name (Form ss-4228) with the Tennessee Secretary of State. The filing fee for a reservation is $20. The reservation may be filed online or by postal mail.
Using an Assumed Name
You don’t have to use your LLC’s official legal name registered in your Articles of Organization when you do business out in the real world. Instead, you can use an assumed name, also called a fictitious business name, “DBA” (short for doing business as), or trade name.
To do so in Tennessee, you must register your assumed name with the Tennessee Secretary of State. You register by filing an Application for Registration of Assumed Name (ss-4230). You may register online or by postal mail.
Tennessee LLC Registration
Let’s take a look at how to register a business in Tennessee, including payables such as the cost, government fees, and so on.
File an Articles of Organization
A Tennessee LLC is created by filing an Articles of Organization (Form ss-4270) with the Tennessee Secretary of State. The articles must include:
- The LLC’s name
- A name consent if the LLC’s name is similar to an existing name in Tennessee
- An additional designation for the LLC’s name–applicable to certain types of LLCs, such as professional LLCs, series LLC, banks, and others
- The name and address of the LLC’s registered agent
- The end month of the LLC’s fiscal year—usually December
- The effective date of the articles, if not effective upon filing
- Whether the LLC will be member-managed or manager-managed
- The number of LLC members on the date of filing
- The LLC’s duration, if not perpetual
- The address of the LLC’s principal office
- Say if LLC is a non-profit LLC, professional LLC, or series LLC
- Check box if LLC is an obligated member entity–members will be personally liable for LLC’s debts (rare)
- Check box if LLC is prohibited from doing business in Tennessee, and
- The signature of a member, organizer, or other authorized person.
The articles may be filed online or by postal mail. The filing fee is $50 per LLC member. The minimum fee is $300, and the maximum fee is $3,000. An additional convenience fee must be paid for online filings paid by credit card.
Tennessee LLC Operating Agreement
An LLC operating agreement is not required in Tennessee, but it is highly advisable. This is an internal document that establishes how your LLC will be run. It sets out the rights and responsibilities of the members and managers, including how the LLC will be managed. It can also help preserve your limited liability by showing that your LLC is truly a separate business entity. In the absence of an operating agreement, state LLC law will govern how your LLC operates.
Issues that should be defined by your LLC Operating Agreement include:
- Member powers
- Rules for meetings
- Members’ voting rights
- How your LLC will be managed
- Guidelines for losses and profits
- Buyout provisions
Once the operating agreement has been adopted, it will provide protection for the members of your LLC. When the members of your LLC have agreed on the terms of your operating agreement and have signed the document, you should keep the agreement in a secure location.
Inc Authority can remind you to do or do for you if you choose to have us handle the paperwork.
Get Your Employer Identification Number or EIN
The next step you’ll want to tackle is getting your EIN or Tax ID number (TIN). This number is like your business’s social security number, separating you from your business. This protects you from fraud and identity theft.
Additionally, an EIN is required by your bank to open a Business Checking Account, file tax returns, obtain payroll services and credit cards, and pay for any LLC cost that TN laws require.
To apply for your EIN, you’ll need to complete form SS-4, which can be found on the IRS website.
Assign a Registered Agent for your LLC in Tennessee
There are an estimated 38 million home-based businesses in the U.S., so if you’re thinking about starting a business in your home, you’re definitely not alone.
But did you know that all businesses are required by law to have an address where they can accept service of legal documents (like a service of process) from the state or government agencies during normal business days and hours? Without an office, that would be your street address or P.O. box.
As you can imagine, that’s not always possible (or advisable) with a home-based or foreign-filed business. That’s where a registered agent comes in.
A registered agent is a responsible third-party in the same state as your business who receives official government notifications (usually tax forms and notice of lawsuits) on behalf of your LLC in TN.
Even if you aren’t planning on starting a home-based business or foreign LLC, having a registered agent is still advisable because it will:
- Limit third party access to your personal information
- Ensure that you never miss important documents
- Protect the privacy of owners
- Eliminate junk mail
- Ensure you’re never served with legal papers in front of your clients
- And more!
Setting up a Registered Agent Service
Every Tennessee LLC must have an agent for service of process in the state. This is an individual or business entity that agrees to accept legal papers on the LLC’s behalf if it is sued. The registered agent may be a Tennessee resident or a business entity authorized to do business in Tennessee. The registered agent must have a physical street address in Tennessee.
Learn more about our registered agent services here.
Open a Business Bank Account
To keep your personal and business expenses separate and to stay in good standing with the Internal Revenue Service (IRS), you need to open a business bank account for your LLC or corporation.
Setting up a separate bank account for your company makes it easier to for you do business, manage a cash balance, complete, and file your income tax returns with the Tennessee Department of Revenue, deduct business expenses for taxes, conduct proper accounting, and execute employee payroll. Bank accounts also provide better protection in the event of legal action.
Additionally, business bank accounts create historical relevance through the relationship established with the bank, and can create unrestricted access to long-term funding options, business credit cards, and other financial solutions
At Inc Authority, we make getting a business bank account easy. How so? Well, when you form your business with us, you gain access to a free Bank of America business checking account. So, don’t wait! Form your LLC in TN today!
Tax and Regulatory Requirements
Additional tax and regulatory requirements may apply to your Tennessee LLC. These may include:
EIN: If your LLC has more than one member, it must obtain its own IRS Employee Identification Number (EIN), even if it has no employees. If you form a one-member LLC, you still need to obtain an EIN or elect to have it taxed as a corporation instead of a sole proprietorship (disregarded entity). You may obtain an EIN by completing an online EIN application on the IRS website. There is no filing fee.
Business Licenses: Most Tennessee businesses are required to have business licenses, which are issued by the local county clerk. A city business license may be required as well. Check with the county and city clerks for the location of the LLC’s primary place of business. For state license information, check the Tennessee Smart Start guide.
Department of Revenue: In some cases, for example if you will be selling goods and collecting sales tax, you will need to register with the Tennessee Department of Revenue. Tennessee also imposes a franchise tax and an excise tax on most LLCs. You can register online or complete a paper form (Application for Registration).
All Tennessee LLCs and foreign LLCs authorized to do business in the state of TN must file an annual report with the Tennessee Secretary of State and pay a $50 filing fee per member (minimum of $300 and maximum of $3,000).
Annual reports are due on or before the first day of the fourth month following the LLC’s fiscal year closing. For example, if your LLC’s fiscal year closes on June 30, your annual report is due by October 1. If your fiscal year is the calendar year, the report is due by April 1. Annual reports may be filed online or by postal mail.
Getting Started with Your Tennessee LLC
Forming a professional LLC or corporation in Tennessee is an exciting opportunity, but like starting any business it can be overwhelming. Why not let the business experts at Inc Authority do all the heavy lifting for you?
We’ll form your LLC or corporation, run a business name check, get your EIN, and make sure you have all the licenses and permits needed to run your business. We can also advise you on the things you need to pay, such as LLC cost, TN state fees, and other payables.
Not to mention we offer a ton of free management and report tools to help make running your business as simple as possible. Please contact us or visit our website today to get started!
Incorporating is the most powerful thing you can do to legitimize your business. And at IncAuthority.com, our setup LLC services are 100% free. Always. So, don’t wait. Form your free LLC today and enjoy the protection due to you and your business under the law.