How to Start an LLC in Tennessee | 2024 Guide

Start a LLC in Tennessee

How to Start an LLC in Tennessee: If you’re looking to launch a business in Tennessee, starting a Limited Liability Company (LLC) may be the right choice for you. An LLC provides personal liability protection for its owners while giving them flexibility in managing and taxing the business. This guide provides a step-by-step process for starting an LLC in Tennessee. From choosing a unique name to registering with the state and obtaining necessary licenses and permits, Webinarcare Editorial Team will walk you through setting up your new business entity. So grab a pen and paper, and let’s get started!

What is a Limited Liability Company?

A Limited Liability Company (LLC) is a type of business entity that combines a corporation’s limited liability protection with a partnership’s tax benefits. LLCs are popular among small business owners for their flexibility and ease of formation. In Tennessee, an LLC must have a unique name and file Articles of Organization with the Secretary of State. Depending on their business needs, LLCs may also elect to be taxed as a corporation or an S-corp. Owners of an LLC, called members, are not personally liable for the company’s debts and losses, and the company’s profits and losses are passed through to the member’s personal tax returns. This makes an LLC an attractive option for those seeking personal liability protection and simplified taxation.

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Steps on How to Start an LLC in Tennessee

To form an LLC for your business, you must follow the guidelines that include naming your LLC, hiring a Registered Agent, filing your Articles of Organization, creating your LLC operating agreement, getting an employer identification number, opening a bank account and getting business licenses and permits.

Step 1: Name your LLC in Tennessee

After you have decided on the idea to form an LLC in Tennessee, deciding the name for your LLC is significant. There is a complete guide on LLC name guidelines for you to have a proper LLC business name. Here are some regulations you must follow while naming your LLC,

  • The name should not be confused with a government entity.
  • The name should be unique.
  • The name should be available to use.
  • Any other business does not use the name.
  • The new name must include “LLC” if it is a limited liability company.

In Tennessee, if you do not wish to file your LLC right away but want to hold the name that you have decided on, then you can reserve your LLC name for 4 months. You must file a name reservation application in Tennessee Secretary of State to keep the name.

Recommended: We recommend a professional service that can offer you unlimited name search, trademark and copyright registration at a reasonable price. We recommend using –

LegalZoom($0 + State Fees for LLC Formation)

You can register your business under a different legal name if your preferred name isn’t available. Once you have chosen a name, you can submit an application for filing Tennessee DBA (doing business as). In this manner, you can choose any name you desire for your business. A DBA allows a company to operate under the name of the person or entity who owns it. If you have decided to file for a DBA, you can file it in two methods, by mail, and in person. However, before filing a DBA, you should know that you need to renew your DBA for up to five years, which costs varies by county.

Step 2: Hire a Registered Agent in Tennessee

Hiring a Registered Agent in Tennessee is a must since a Registered Agent is a person or business entity responsible for receiving important legal documents on behalf of your Tennessee LLC. Most states require you to designate a Registered Agent when forming your LLC.

The qualifications of a Registered Agent vary depending on the jurisdiction. Still, generally, a Registered Agent must meet the following criteria:

  • Availability: A Registered Agent must be available during regular business hours to receive and process legal documents and official correspondence.
  • Physical Address: A Registered Agent must have a physical street address within the state where the LLC is registered. This address, known as the registered office, cannot be a P.O. Box.
  • Residency or Authorization: For individuals serving as Registered Agent, they must be residents of the Tennessee where the LLC was formed. A business entity acting as a Registered Agent must be authorized to do business within that state.
  • Age: A Registered Agent must be at least 18 years old.
  • Good standing: A Registered Agent should not have any legal or financial issues that impede their ability to fulfill their duties.

Choosing a reliable and responsible Registered Agent is essential, as failure to receive and respond to legal documents can seriously affect your business. Some businesses use professional Registered Agent services to ensure compliance and proper handling of legal matters.

However, if you would like to have an easier process in filing the necessary documents, you can get Tennessee Registered Agent Services.

Step 3: File your Articles of Organization in Tennessee

The Articles of Organization for an LLC is an important document to start your limited liability company (LLC). Tennessee Articles of Organization is a simple document that contains the business name and address as well as the name and address of the person who received lawsuits on behalf of the organization.

Here are the guidelines and specific requirements in filing your Articles of Organization in Tennessee.

1. Obtain the Necessary Forms: Visit the Tennessee’s business filing office website, usually the Tennessee Secretary of State’s office, to download the required forms or file online.

2. Provide the Required Information: Fill in the necessary details in the form, which typically include:

  • The name of your LLC (must include an LLC designator such as “LLC,” “L.L.C.,” or “Limited Liability Company”)
  • The purpose of your LLC (a general statement or specific business activities)
  • The address of your LLC’s principal place of business
  • The name and address of your registered agent (the person or business entity responsible for receiving legal documents on behalf of your LLC)
  • The management structure of your LLC (member-managed or manager-managed)
  • The duration of your LLC, if not perpetual
  • The names and addresses of the LLC’s organizers or members

3. Sign and File the Form: Submit the completed form in the {state} state office, either by mail, in person, or online. You may mail it at Corporate Filings, 312 Rosa L. Parks Avenue, 6th Floor, William R. Snodgrass Tower, Nashville, Tennessee 37243.

4. Pay the Filing Fee: When you submit your Articles of Organization, you’ll need to pay a filing fee of $300. Make sure to check and include the correct payment with your submission.

5. Receive Confirmation: After your Articles of Organization have been filed and processed, you’ll receive a confirmation from Tennessee, typically a stamped and approved copy of the document or a Articles of Organization.

Recommended: Filing formation papers is easy and hassle-free if you hire a professional service. We recommend using –

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Once you have successfully filed your Articles of Organization and it has been approved, your Tennessee LLC is officially formed. However, remember to complete additional steps, such as creating an Operating Agreement, obtaining an EIN, and registering for any required licenses and permits.

Step 4: Create Your Tennessee Operating Agreement

An operating agreement is a document that contains all of your company’s organizational details. Drafting an operating agreement in most states is not required. Yet, having one as an internal document is strongly advised. An operating agreement includes information like-

  • About Business
  • Members and management
  • Capital contribution
  • Profit Distribution
  • Change of membership
  • Dissolution

To understand how an operating agreement works, you should check out how to create an operating agreement in Tennessee.

Recommended: Get oprating agreement drafts ready on your table with a help of a professional service. We recommend using –

LegalZoom($0 + State Fee for LLC formation)

Step 5: Get an EIN

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN) in Tennessee. An EIN will serve as the tax ID for your professional corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Tennessee can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

In obtaining an EIN for your LLC, you should be aware to ensure that your LLC is eligible for an EIN. You need an EIN if you have employees, operate as a corporation or partnership, or meet other specific IRS criteria. Before applying, gather the required information, including your LLC’s name, mailing address, and the responsible party’s Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). Also, you can apply for an EIN through various methods, including online, by fax, mail, or telephone (for international applicants).

Recommended: Professional services have the EIN included in their LLC formation package. We recommend using –

LegalZoom($0 + State Fee for LLC formation)

Step 6: Open a Bank Account and Prepare for Taxes

After you have filed for and received your Employer Identification Number, you should open a bank account because you will use this account for yourself, your clients, and your employees.

Your business dealings in Tennessee might be simpler with a US business bank account because it boosts your company’s legitimacy and liquidity. Most banks demand an EIN to create a business bank account for firms other than sole proprietorships. Also, having an EIN makes tax preparation easier. You can anticipate paying employment and corporate taxes with Tennessee LLC.

Opening a bank account is necessary for Tennessee business. If you are still wondering where to open an account in your Tennessee, you should check the Best Bank for Small Business in Tennessee.

Step 7: Get a Business and License Permit

You must get a business license in Tennessee before establishing your LLC. A business license is a legal document granted by a state government body that permits you to conduct business within the area under its jurisdiction. The price of business licenses and permits in Tennessee ranges from $50 – $300. If there is a requirement for a specific license or city-based permit, you must inquire with the Tennessee Secretary of State.

Cost to Form an LLC in Tennessee

Even if you have a business name and structure in mind, you should consider whether you can afford the costs of forming an LLC in Tennessee. Articles of Organization costs around $300. The initial filing fee is $300, and the annual fee is $50 per member.

If you forget to pay the annual fee for your Tennessee LLC, you will have a penalty of $300. However, you can check the Tennessee LLC Cost for additional information.

Advantages of Creating Tennessee LLC

Even though some people decide on what to do with their businesses, some choose to put it in their own individual name, while others still choose to set it up via LLC in Tennessee. Important benefits will help you set up an LLC in Tennessee.

  • Pass-Through Taxation: The pass-through structure will make the company not pay twice the tax. Most start-ups and entrepreneurs in Tennessee apply for an LLC because of this structure. Pass-through taxation refers to how income and losses from an LLC (Limited Liability Company) are passed through to its members (owners) for tax purposes rather than being taxed at the business entity level. This means the LLC does not pay federal income taxes; the members’ profits and losses are allocated based on their interests. Each member then reports their share of the LLC’s income or losses on their personal tax returns and pays taxes at their individual tax rates.
  • Ownership Flexibility: If you need sole and primary control over your company’s operations, a sole proprietorship will allow you to do so. If you apply for an LLC in Tennessee with flexibility, you will have default rules set by law and need an operating agreement.
  • Personal Liability Protection: Personal Liability Protection protects your business from damage, debts, or legal obligations. In personal liability protection, the company’s profits and earnings will stay as is even if your company is about to be sued. This protection of having an LLC in Tennessee can also be extended to the company’s properties and assets. Many start-up companies will benefit from this since most are starting to build a company. Even if liability exists, the LLC in Tennessee will protect its assets.

FAQs

What is an LLC, and how is it different from other business entities?
LLC stands for Limited Liability Company. Tennessee law allows for a single-person LLC, making it similar to a sole proprietorship. However, an LLC offers personal liability protection, which sole proprietorships do not.
Do I have to live in Tennessee to start an LLC there?
No, you do not have to be a resident of Tennessee to start an LLC in the state.
How do I choose a name for my Tennessee LLC?
To choose a name for your LLC in Tennessee, you must ensure that it is unique and does not match an existing business name on the state’s records.
Can multiple people own an LLC in Tennessee?
Yes, LLCs can have multiple owners or “members,” and all members are protected from personal liability.
Is there a formation fee to start an LLC in Tennessee?
Yes, the fee to register an LLC in Tennessee is $300.
How long does it take to complete the LLC formation process in Tennessee?
Typically, it takes approximately seven to ten business days to complete the LLC formation process in Tennessee.
What are the state requirements to start an LLC in Tennessee?
To start an LLC in Tennessee, you will need to choose a unique name and file Articles of Organization with the Secretary of State.
How do I file Articles of Organization for my Tennessee LLC?
You can file Articles of Organization online at the Tennessee Secretary of State’s website.
Can I file Articles of Organization for my Tennessee LLC by mail?
Yes, you can submit your Tennessee LLC’s Articles of Organization by mail with a check made payable to the Secretary of State.
Do I need to obtain any special permits or licenses to operate a Tennessee LLC?
Depending on your industry and location, you may need to obtain other local and state licenses or permits to operate your Tennessee LLC.
Do I have to hold annual meetings for my Tennessee LLC?
No, Tennessee law does not require LLCs to hold annual meetings, although bylaws may prescribe them.
Do I need a registered agent for my Tennessee LLC?
Yes, all Tennessee LLCs must have a designated registered agent who can accept legal and official documents on behalf of the company.
Can I be my own registered agent for my Tennessee LLC?
Yes, you can designate yourself as the registered agent for your Tennessee LLC, although this can be problematic if it interferes with your responsibilities to run your business efficiently.
What is an operating agreement, and is it required for Tennessee LLCs?
Operating agreements for LLCs are optional under Tennessee law, but they are highly recommended. Bylaws can provide guidelines established between co-owners about company operations save legality issues arising in unique demands.
Can my Tennessee LLC convert to an S corporation in the future?
Yes, your LLC can transition to an S corporation structure in Tennessee if you choose to, depending on your business goals and circumstances.
Are there any benefits to having an LLC taxed as an S corporation in Tennessee?
There may be tax advantages to having your LLC taxed as an S corporation in Tennessee, share your financial situation with your tax provider or attorney before registration.
How much does it cost to file an annual report for my Tennessee LLC?
The filing fee for annual reports for Tennessee LLCs is currently $50 payable to the Secretary of State.
What happens if I don’t file an annual report for my Tennessee LLC?
If your Tennessee LLC fails to submit its annual report, it can be administratively dissolved by the state.
Can I change my Tennessee LLC’s name in the future?
Yes, you can file for a name change with the Tennessee Secretary of State and make specific changes after categorization.
Can an LLC engage in multiple different business activities in Tennessee?
Yes, LLCs in Tennessee can engage in various activities, but always it is important to stick with your original business plan.
Can an LLC be owned by another company in Tennessee?
Yes, Tennessee LLCs can be owned by other businesses; it is called another entity to control the operation’s members and operations.
Are foreign LLCs allowed to operate in Tennessee?
Yes, as long as the foreign LLC follows state registration laws, it can operate in Tennessee.
Do I need to maintain separate business bank accounts for my Tennessee LLC?
Yes, account management transparency concerns usually require maintaining separate business bank accounts while starting an LLC in Tennessee.
Are there any personal liability risks as a Tennessee LLC member?
No, LLC members in Tennessee aren’t personally liable for company debts, making LLC registration a wise choice for aspiring business-persons.
How do I dissolve my Tennessee LLC?
To dissolve your Tennessee LLC, you need to file Articles of Dissolution with the Secretary of State then make sure all obligations are complete for your LLC.
Are Tennessee LLCs required to file a tax return?
An LLC in Tennessee is a pass-through tax entity or may be treated as a corporation
Do I need to obtain business liability insurance as a Tennessee LLC owner?
Even though Tennessee LLC’s members are relieved of liability financially, if your LLC has large operations then extra income; acquire ample liability and coverage insurance will positively impact any compelling business process to give the best outcomes.
Can one Tennessee LLC shareholder avoid taxes if the company structure deepens debt liability?
While an LLC doesn’t pay taxes, in particular Louisiana company structures, LLC shareholder will still face respective taxation obligations in the future, but this strategy may not always mitigate liabilities.
What’s the difference between registered offices and business headquarters?
While a business office acts as the center of operations, registered office refers to representation that clears up corresponding matters at particular sites (suitable to comply with applicable communications of an LLC when there is no specific detected address). Where required official documents are kept and bureaucracy to operate, it decompresses any technical and operational complexities of business transactions.
What is an LLC in Tennessee?
An LLC is a limited liability company registered in Tennessee.
How do I start an LLC in Tennessee?
You can start an LLC in Tennessee by filing documents with the Tennessee Secretary of State.
What documents do I need to file to register an LLC in Tennessee?
You need to file Articles of Organization with the Tennessee Secretary of State.
How much does it cost to start an LLC in Tennessee?
It costs $300 to file Articles of Organization with the Tennessee Secretary of State.
How long does it take to start an LLC in Tennessee?
It usually takes about 2-3 business days for the Tennessee Secretary of State to process the Articles of Organization.
Who can start an LLC in Tennessee?
Anyone can start an LLC in Tennessee, including individuals, partnerships, and corporations.
Can a Tennessee LLC have more than one member?
Yes, a Tennessee LLC can have multiple members.
How is an LLC taxed in Tennessee?
An LLC in Tennessee is usually taxed as a pass-through entity.
What is a pass-through entity in Tennessee?
A pass-through entity is a type of business structure that allows profits and losses to pass through to the owners’ personal tax returns in Tennessee.
What are the benefits of starting an LLC in Tennessee?
Tennessee LLCs offer limited personal liability, protection of personal assets, and flexibility.
Do I need an attorney to start an LLC in Tennessee?
No, you don’t need an attorney to start an LLC in Tennessee, but it might be helpful to consult one.
What is an operating agreement for an LLC in Tennessee?
An operating agreement is a legal document that outlines how an LLC will be managed in Tennessee.
Is Tennessee a good state to start an LLC?
Yes, Tennessee is considered a business-friendly state with low taxes and a low cost of living.
Can a foreign entity start an LLC in Tennessee?
Yes, a foreign entity can register an LLC in Tennessee.
Can I have an LLC in Tennessee and live in another state?
Yes, you can have an LLC in Tennessee and live in another state.
How often do I need to file annual reports for my Tennessee LLC?
Tennessee LLCs need to file an annual report with the Tennessee Secretary of State each year.
Is there a deadline for filing annual reports for a Tennessee LLC?
Yes, annual reports for a Tennessee LLC are due by the first day of the fourth month after the end of the company’s fiscal year.
How can I dissolve my Tennessee LLC?
You can dissolve a Tennessee LLC by filing Articles of Dissolution with the Tennessee Secretary of State.
What happens when an LLC is dissolved in Tennessee?
When an LLC is dissolved in Tennessee, its assets are liquidated and its debts are paid off.
Can I convert my Tennessee LLC to a corporation?
Yes, you can convert a Tennessee LLC to a corporation by filing documents with the Tennessee Secretary of State.
Can I convert my Tennessee corporation to an LLC?
Yes, you can convert a Tennessee corporation to an LLC by filing documents with the Tennessee Secretary of State.
Can an LLC be taxed as an S corp in Tennessee?
Yes, an LLC in Tennessee can choose to be taxed as an S corp.
Can I change my LLC’s name in Tennessee?
Yes, you can change your Tennessee LLC’s name by filing an amendment with the Tennessee Secretary of State.
Can I use a PO box as my LLC’s address in Tennessee?
No, you need a physical address to start an LLC in Tennessee.
What is a registered agent in Tennessee?
A registered agent is a person or entity that is designated to receive legal and other official documents on behalf of an LLC in Tennessee.
Does my Tennessee LLC need a registered agent?
Yes, all Tennessee LLCs need a registered agent.
Can a registered agent be an LLC in Tennessee?
No, a Tennessee LLC cannot be its own registered agent.
Can I change my Tennessee LLC’s registered agent?
Yes, you can change your Tennessee LLC’s registered agent by filing a change of registered agent form with the Tennessee Secretary of State.

Also Read

How Fast Can I Form an LLC in Tennessee

First and foremost, it is crucial to understand the requirements for forming an LLC in Tennessee. The state of Tennessee has specific guidelines and regulations that must be followed when establishing a business entity. It is important to familiarize yourself with these requirements and ensure that you meet all necessary criteria before beginning the application process.

One way to expedite the formation of your LLC is to have all necessary paperwork and documentation ready to submit. This includes completing the Articles of Organization, which is the legal document that officially establishes your LLC. By preparing these documents in advance and having them ready for submission, you can help streamline the process and avoid any unnecessary delays.

Additionally, it is recommended to use online filing services or work with a professional service provider to assist you in forming your LLC. These resources can help you navigate the complex requirements and regulations involved in establishing a business entity. By leveraging their expertise and experience, you can ensure that your LLC is formed quickly and accurately.

Furthermore, it is essential to have a clear understanding of the fees associated with forming an LLC in Tennessee. Depending on the type of business entity you are establishing and the services you require, there may be different costs involved. By researching and budgeting for these fees ahead of time, you can avoid any last-minute surprises and expedite the formation process.

Another key factor in forming an LLC quickly is maintaining open communication with the Tennessee Secretary of State’s office. By staying informed and proactive in regards to any updates or changes to the process, you can ensure that your LLC is established in a timely manner. Additionally, being responsive to any requests for additional information or documentation can help prevent any unnecessary delays.

Overall, forming an LLC in Tennessee can be a straightforward and efficient process if you take the necessary steps to educate yourself and prepare in advance. By understanding the requirements, having all necessary documentation ready, utilizing online filing services or professional assistance, budgeting for fees, and maintaining open communication with state authorities, you can establish your LLC quickly and effectively. While the exact timeline can vary depending on individual circumstances, following these guidelines can help you navigate the process with ease.

Conclusion

In conclusion, starting an LLC in Tennessee is a strategic choice for entrepreneurs seeking a flexible, straightforward business structure with limited liability protection. By following the essential steps, including choosing a business name, filing Articles of Organization, appointing a Registered Agent, creating an Operating Agreement, obtaining an EIN, and securing the necessary licenses and permits, you can successfully establish your LLC. This business structure offers numerous advantages, such as pass-through taxation and ownership flexibility, making it an attractive option for small business owners looking to grow and protect their ventures. As always, consult legal and business professionals for guidance specific to your situation and state requirements.

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