LLC Cost in Tennessee | How Much Does It Cost to Start an LLC

LLC Costs in Tennessee

Forming a Limited Liability Company (LLC) in Tennessee is a popular choice for entrepreneurs and small business owners who want to protect their personal assets and enjoy flexibility in their business operations. LLC formation costs vary from state to state, and it is essential to understand the costs involved in forming and maintaining an LLC in Tennessee.

If you would like to know more about the Tennessee LLC Cost, read the whole article until the end. Webinarcare Editorial Team will help you gain knowledge on how much an LLC Costs in Tennessee. You must be guided by all the factors gathered in this article.

How to Start an LLC?

Before we dive into the LLC Cost in Tennessee, you should know the step-by-step process of starting an LLC, including selecting a unique business name, appointing a Registered Agent, filing the necessary documents, and fulfilling any additional requirements, such as obtaining licenses or permits that are specific to your industry or location.

Here are the steps in starting an LLC in Tennessee:

  • Step 1: Choose a Unique Business Name
    The first step in starting an LLC in Tennessee is to select a unique business name for your company. The name should be distinguishable from any other registered businesses in the state. You can check the availability of your desired business name by searching the state’s business name database. Once you’ve found an available name, you may need to include “LLC” or “Limited Liability Company” at the end of the name to comply with state requirements.
  • Step 2: Appoint a Registered Agent
    A Registered Agent is someone who will receive official legal and tax documents on behalf of your LLC. The Registered Agent must have a physical address in Tennessee and be available during normal business hours. You have the option to appoint yourself as the registered agent or hire a professional registered agent service.
  • Step 3: File the Articles of Organization
    To officially form your LLC, you need to file the Articles of Organization with the Tennessee Secretary of State or the appropriate state agency. The Articles of Organization typically requires basic information about your LLC, such as its name, address, Registered Agent details, and the name and address of the LLC’s members or managers.
  • Step 4: Create an Operating Agreement
    Once your LLC is formed, it’s highly recommended to create an operating agreement in Tennessee. Although not required by Tennessee law, an operating agreement is a crucial internal document that outlines the ownership, management, and operating procedures of your LLC. It helps establish clear guidelines and expectations among members, and it can be especially useful in the event of disputes or disagreements in the future. The operating agreement can be customized to fit the specific needs and goals of your LLC.
  • Step 5: Obtain Required Licenses and Permits
    Depending on the nature of your business, you may need to obtain specific licenses or permits at the federal, state, or local level. Research the licensing requirements in Tennessee and apply for business licenses in Tennessee related to your industry or activities. Common examples include professional licenses, health or safety permits, and sales tax permits.
  • Step 6: File for an Employer Identification Number (EIN)
    An Employer Identification Number (EIN) is a unique nine-digit number issued by the Internal Revenue Service (IRS) that is used to identify your LLC for tax purposes. Even if you don’t have employees, obtaining an EIN is typically required if you plan to open a business bank account, hire contractors, or file certain tax forms. You can easily apply for an EIN in Tennessee through the IRS website.
  • Step 7: Comply with Ongoing Requirements
    Once your LLC is established in Tennessee, it’s important to stay in compliance with any ongoing requirements. This may include filing periodic reports, paying Annual Report fees, and renewing licenses or permits. Familiarize yourself with the specific obligations for maintaining your LLC’s good standing in Tennessee.

Remember, starting an LLC in Tennessee involves some specific steps and requirements that may differ from other states. It’s advisable to hire an LLC Services in Tennessee that specializes in business formation to ensure that you follow all the necessary procedures accurately and efficiently. We reviewed the Best LLC Services for you to check out.

LLC Cost in Tennessee

It is crucial to consider the costs associated with the formation and maintenance of your business. The costs of establishing and operating an LLC in Tennessee can vary based on several factors, including the initial formation fees, ongoing compliance requirements, and optional expenses.

Initial LLC Costs

When starting a limited liability company (LLC), knowing the initial costs associated with forming and registering your new business entity is essential. Understanding and preparing for these expenses can help you budget effectively and set your Tennessee business on a path to success. Some common initial costs associated with forming an LLC include Articles of Organization filing fees, Registered Agent fees, and additional services, such as business name reservation fees.

Articles of Organization Filing Fee

The first step in forming an LLC in Tennessee is to file the Tennessee Articles of Organization with the Tennessee Secretary of State. This document officially creates the LLC and includes essential information about the business, such as its name, address, and Registered Agent.

This document includes essential information about your LLC, such as:

  • The name of your LLC
  • The address of your LLC’s principal office
  • The name and address of your Registered Agent
  • The purpose of your LLC (optional in some states)

You can typically file the Articles of Organization online, by mail, or in person. A filing fee is associated with this process, which costs around $300. You can also file by mailing it to Tennessee Secretary of State, which is located at Corporate Filings, 312 Rosa L. Parks Avenue, 6th Floor, William R. Snodgrass Tower, Nashville, Tennessee 37243.

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Registered Agent Fee

An LLC in Tennessee must designate a Registered Agent who will be responsible for receiving legal and government documents on behalf of the business. You can act as your own Registered Agent or appoint someone you know. Professional Registered Agent in Tennessee typically charge an annual fee ranging from $50 – $150.

In Tennessee, your Registered Agent must:

  • Be a resident of Tennessee or a business entity authorized to do business in the state.
  • Have a physical address in Tennessee (P.O. boxes are not acceptable)

Choosing a reliable and responsible Registered Agent is essential, as failure to receive and respond to legal documents can seriously affect your business.

We reviewed some of the Best Registered Agent Services in Tennessee and provided features as an add-on with their packages for you to check out.

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Business Name Reservation Fee

If you have a specific business name in mind and want to ensure it is available when you are ready to file your Articles of Organization, you can reserve the business name with the Tennessee Secretary of State.

In Tennessee, your LLC name must:

  • Include the words “Limited Liability Company,” “LLC,” or “L.L.C.
  • Not contain any words or phrases that are prohibited by state law
  • Be distinguishable from the names of other businesses registered in the state

However, 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 the Tennessee Secretary of State to keep the name.

The online name reservation fee is $20, while the mail name reservation fee is $20. 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 a DBA (doing business as). If you have decided to file for a DBA, you can file it in two methods, by mail and in person. However, before filing Tennessee DBA, you should know that you need to renew your DBA for up to five years, which cost varies by county.

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Ongoing LLC Costs

After you know the initial costs of forming an LLC in Tennessee, you should also know the ongoing costs once you have filed for an LLC. Here are the involved costs that you need to know.

Annual Report Filing Fee

To keep your LLC in good standing, you must file Annual Report with the Tennessee Secretary of State. The Annual Report provides updated information about your LLC, such as changes in address, members, or Registered Agent.

In Tennessee, the Annual Report fee costs $50 per member which can be paid every 1 year.

Franchise Tax or Annual LLC Tax

Some states require LLCs to pay an annual franchise or LLC tax, separate from the Annual Report filing fee. Franchise tax, or annual tax, is a fee imposed by Tennessee on businesses, including LLCs and Tennessee Corporations, for the privilege of operating within their jurisdiction. This tax is separate from income taxes and is usually based on factors such as the company’s net worth, assets, capital, or a fixed dollar amount, depending on the Tennessee’s specific tax regulations.

Tennessee LLC Taxes To Be Paid

The State of Tennessee is one of those rarest states in the United States that does not levy any personal income tax on businesses. However, the business LLCs must file other taxes with the State authorities.

  • Sales Tax: A sales tax is a government-imposed tax on the sale of goods and services. It is generally added to the price of a product or service at the point of sale and paid by the consumer. The tax is collected by the retailer or service provider, who then remits the collected tax amount to the relevant government authority. In Tennessee, the sales tax rate is 7.00%.
  • State Income Tax: Considering other taxes in Tennessee, you should pay for the state income tax, with a rate of 6.50%.
  • LLC Federal Self-Employment Tax: Federal self-employment tax rates are the same across all states. Self-employment taxes are imposed on self-employed individuals or members of a Limited Liability Company (LLC) taxed as a sole proprietorship or partnership.
  • Property Tax: The property tax is fixed at 0.74% of industrial, commercial, residential, agricultural, and all other properties.

Business Licenses and Permits

Depending on the nature of your Tennessee business and the location of your operations, you may need to obtain permits and business licenses in Tennessee. The costs of these licenses and permits will vary based on your specific business and location. In Tennessee, the business license ranges from $50 – $300. However, research the requirements for your LLC in Tennessee and budget for these expenses accordingly.

Optional LLC Costs

Here are the optional costs you must consider if you will form an operating agreement or hire a professional service.

Operating Agreement

Although not required by law, it is highly recommended that LLCs create an operating agreement in Tennessee. This document outlines the LLC’s ownership structure, management, and operating procedures. Hiring a business attorney to draft an operating agreement can cost anywhere from $500 to $2,000, or you can use online resources and templates to create one yourself.

Professional Services

You may hire professionals such as attorneys, accountants, or business consultants to help you establish and run your Tennessee LLC. These services can provide valuable expertise and guidance but come at an additional cost. Consider the potential benefits and weigh them against the costs when hiring professional assistance.

You may check out the Best Business Attorney Services in Tennessee that offer their professional services to form your business.

Can I Set Up an LLC For Free?

It’s impossible to set up an LLC entirely for free, as state filing fees and other costs are associated with establishing an LLC. However, you can save money by handling the formation process instead of hiring a professional service. Here are some steps to help you minimize the cost of setting up an LLC:

  • Choose your LLC’s name and check for availability in your state. This can generally be done through the Secretary of State’s website.
  • Prepare and file the Articles of Organization yourself. Tennessee offer an online filing option or downloadable forms on their websites. By completing this process independently, you can avoid paying additional fees for a professional service.
  • Act as your own Registered Agent if permitted within Tennessee. It allows the business owner to serve as the Registered Agent, saving you the cost of hiring a professional registered agent service.
  • Create your own Operating Agreement using online resources and templates. Although not required in every state, an Operating Agreement is highly recommended to outline your LLC’s ownership structure and management. By drafting this document yourself, you can save on legal fees.
  • Research and apply for any required licenses and permits on your own. Depending on your business type and location, you may need specific permits or licenses. These costs can vary, but handling the application process yourself can save you the expense of hiring a professional service.

While you can’t set up an LLC for free, taking a do-it-yourself approach and minimizing the use of professional services can help you save money during the formation process. However, handling these tasks requires time and effort, and there may be additional legal or financial risks if mistakes occur.

FAQs

What are the filing fees for starting an LLC in Tennessee?
The filing fee for starting an LLC in Tennessee is $300.
What is the annual report fee for LLCs in Tennessee?
The annual report fee for LLCs in Tennessee is $50.
Are there any additional fees associated with registering an LLC in Tennessee?
Yes, there may be additional fees if the business requires certain licenses or permits.
Do I need a lawyer to form an LLC in Tennessee?
No, you don’t need a lawyer to form an LLC in Tennessee.
How long does it take to file for an LLC in Tennessee?
It typically takes around 3-5 business days for your LLC to be approved in Tennessee.
Can I file for an LLC online in Tennessee?
Yes, you can file for an LLC online in Tennessee.
Are there any residency requirements for registering an LLC in Tennessee?
No, there aren’t any residency requirements for registering an LLC in Tennessee.
Is there a minimum capital requirement for LLCs in Tennessee?
No, there isn’t a minimum capital requirement for LLCs in Tennessee.
How many members are required to form an LLC in Tennessee?
There isn’t a minimum or maximum number of members required to form an LLC in Tennessee.
Can a foreign LLC do business in Tennessee?
Yes, a foreign LLC can do business in Tennessee if it registers with the state.
Does Tennessee require LLCs to have a registered agent?
Yes, LLCs in Tennessee are required to designate a registered agent.
Can anyone be a registered agent for my Tennessee LLC?
No, the registered agent must be a Tennessee resident or a company that is authorized to do business in Tennessee.
Can an LLC in Tennessee elect to be taxed as an S corporation?
Yes, an LLC in Tennessee can elect to be taxed as an S corporation.
Are Tennessee LLCs required to have an operating agreement?
No, LLCs in Tennessee aren’t required to have an operating agreement, but it is highly recommended.
Can an LLC change its name in Tennessee?
Yes, an LLC in Tennessee may change its name by filing an amendment with the state.
How often do LLCs in Tennessee need to renew their registration?
LLCs in Tennessee need to renew their registration every year by filing an annual report.
Are Tennessee LLCs required to hold annual meetings?
No, LLCs in Tennessee aren’t required to hold annual meetings.
Can a Tennessee LLC operate under another name?
Yes, a Tennessee LLC can operate under a different name by filing for a fictitious name.
Can I change the ownership structure of my Tennessee LLC?
Yes, the ownership structure of a Tennessee LLC can be changed by amending the operating agreement.
What happens if I don’t file an annual report on time for my Tennessee LLC?
If you don’t file an annual report on time, your LLC will fall out of good standing with the state.
How much does it cost to file an amendment with the state for my LLC?
It costs $20 to file an amendment with the state for your LLC in Tennessee.
Is there a deadline for filing an amendment with the state for my LLC?
No, there isn’t a specific deadline for filing an amendment with the state for your LLC in Tennessee.
Can an LLC in Tennessee have multiple DBAs?
Yes, an LLC in Tennessee can have multiple DBAs, but each one needs to be registered with the state.
What is the difference between an LLC and a corporation in Tennessee?
An LLC is considered to be a more flexible entity than a corporation in Tennessee.
Can a single-member LLC in Tennessee be liable for the owner’s personal debts?
No, the owner of a single-member LLC in Tennessee is generally not liable for the LLC’s debts.
What is the process for dissolving an LLC in Tennessee?
To dissolve an LLC in Tennessee, you need to file a Certificate of Dissolution with the state.
How long does it take for an LLC in Tennessee to be dissolved?
Once the Certificate of Dissolution is filed, it can take up to 60 days for the LLC to be dissolved in Tennessee.
Can I issue stock for my LLC in Tennessee?
No, LLCs in Tennessee aren’t authorized to issue stock.
Does Tennessee offer any tax incentives for forming an LLC?
No, Tennessee doesn’t offer any specific tax incentives for forming an LLC.
What are the state filing fees for forming an LLC in Tennessee?
The state filing fee for forming an LLC in Tennessee is $300.
Can I file my LLC documents online in Tennessee?
Yes, you can file your LLC documents online in Tennessee through the Tennessee Secretary of State website.
What is the cost to file an LLC operating agreement in Tennessee?
There is no fee to file an LLC operating agreement in Tennessee.
Are there annual fees for maintaining an LLC in Tennessee?
Yes, there is an annual fee of $50 to maintain an LLC in Tennessee.
How long does it take to form an LLC in Tennessee?
It typically takes 1-2 weeks to form an LLC in Tennessee.
What other legal paperwork might I need to file to form an LLC in Tennessee?
You may need to file a name reservation application and publish a notice of intent to form a business in a local newspaper.
What is the publication requirement for Tennessee LLCs?
Tennessee LLCs are required to publish a notice of intent to form a business in a local newspaper for 3 weeks.
Is a registered agent required for Tennessee LLCs?
Yes, a registered agent is required for Tennessee LLCs.
Cost to change registered agent?
The cost to change a registered agent for an LLC in Tennessee is $20.
Are there any additional taxes or fees I may need to pay after forming an LLC in Tennessee?
Yes, you may need to obtain a business license and pay state and local taxes.
Can I file a foreign LLC in Tennessee?
Yes, foreign LLCs can file in Tennessee for a $300 fee.
What are the annual franchise fees for LLCs in Tennessee?
LLCs in Tennessee do not pay an annual franchise fee.
How do I dissolve an LLC in Tennessee?
To dissolve an LLC in Tennessee, you must file Articles of Dissolution with the Secretary of State.
What are the costs associated with dissolving an LLC in Tennessee?
The cost to dissolve an LLC in Tennessee is $20 for filing the Articles of Dissolution.
How long does it take to dissolve an LLC in Tennessee?
It typically takes 3-5 business days to dissolve an LLC in Tennessee.
Can I change the name of my LLC in Tennessee?
Yes, you can change the name of your LLC in Tennessee by filing an amendment to the Articles of Organization for a $20 fee.
Do I need an operating agreement for my Tennessee LLC?
Operating agreements are not required by Tennessee law, but they are highly recommended.
Do Tennessee LLCs have different tax classifications?
No, all Tennessee LLCs are classified as pass-through entities for tax purposes.
Can I change my LLC’s tax classification in Tennessee?
Yes, you may elect to have your Tennessee LLC taxed as a corporation by filing IRS Form 8832.
Can non-residents form LLCs in Tennessee?
Yes, non-residents can form LLCs in Tennessee.
Can I form an LLC with just one member in Tennessee?
Yes, Tennessee LLCs can have just one member.
Can I be the registered agent for my Tennessee LLC?
Yes, you can be the registered agent for your Tennessee LLC if you have a physical address in the state.
Can I form an anonymous LLC in Tennessee?
No, anonymous LLCs are not allowed in Tennessee.
Can I form a professional LLC in Tennessee?
Yes, professional LLCs are allowed in Tennessee.
Are there any restrictions on what types of businesses can form LLCs in Tennessee?
No, any type of business can form an LLC in Tennessee.
Can I register my LLC with Tennessee’s Department of Revenue at the same time as forming my LLC?
Yes, you can register your LLC with Tennessee’s Department of Revenue at the same time as forming your LLC through the online application process.
Does Tennessee require that LLCs have officers or a board of directors?
No, Tennessee does not have requirements for LLCs to have officers or a board of directors.

Also Read

How to Save Money While Starting Your Business LLC in Tennessee

One of the first ways to save money when starting your business in Tennessee is to do your own research and legwork. Instead of hiring expensive professionals to handle every aspect of starting your business, take the time to educate yourself on the process. There are plenty of resources available online and at local libraries that can help guide you through the steps of forming an LLC in Tennessee. By doing as much as you can on your own, you can cut down on costly fees.

Another way to save money while starting your business in Tennessee is to shop around for the best deals on necessary services. From legal and accounting services to office space and supplies, it pays to compare prices and negotiate for the best rates. Don’t be afraid to ask for discounts or payment plans, especially when dealing with service providers who are eager for your business.

Consider starting your business from home to save money on rent and other overhead costs. With the rise of remote work and online businesses, more and more entrepreneurs are finding success by running their businesses from the comfort of their own homes. By cutting out the need for costly office space, you can funnel those savings back into your business, helping it grow faster and stronger.

When it comes to marketing your new business in Tennessee, focus on low-cost options such as social media, email marketing, and word-of-mouth referrals. Building a strong online presence through platforms like Facebook, Instagram, and LinkedIn can help you reach a wider audience without breaking the bank. Networking with other local businesses and leveraging your existing contacts can also help jumpstart your marketing efforts without draining your budget.

Finally, don’t overlook the power of DIY when it comes to starting your business in Tennessee. From creating your own website using tools like WordPress or Squarespace to designing your own marketing materials with Canva or Adobe Spark, there are plenty of ways to save money by taking a hands-on approach. While it may take more time and effort, the cost savings can be significant in the long run.

Starting a business in Tennessee doesn’t have to be a budget-busting endeavor. By taking a proactive and cost-conscious approach to launching your LLC, you can save money and set your business up for success from the very beginning. With these tips in mind, you can start your business on a solid financial footing, giving it the best chance to thrive and grow in the competitive Tennessee market.

Conclusion

Forming and maintaining an LLC in Tennessee involves various costs, including initial filing fees, ongoing annual report fees, and taxes. Understanding and planning for these costs is essential when establishing your LLC. Additionally, consider any optional expenses, such as hiring professional services or drafting an operating agreement, to ensure the success and longevity of your LLC in Tennessee.

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