How to Form an LLC in Tennessee

Starting an LLC in Tennessee is Easy

To start a Limited Liability Company in Tennessee you will need to file the Articles of Organization with the Tennessee Secretary of State, with a starting fee of $300 to file. You can apply online, in-person, or by mail. The Articles of Organization is the legal document that officially creates your Tennessee LLC.

Follow the steps below to form your Tennessee LLC today and get your business up and running.

STEP 1: Name your Tennessee LLC

Choosing a company name is the first and most important step in setting up an LLC in Tennessee. Be sure to choose a name that complies with Tennessee naming requirements and is easily searchable by potential clients.

1. Follow the naming guidelines for a Tennessee LLC:

• Your name must include the phrase “limited liability company” or one of its abbreviations (LLC or L.L.C.).
• Your name cannot include words that could confuse your LLC with a government agency (FBI, Treasury, State Department, etc.).
• Restricted words (e.g. Bank, Attorney, University) may require additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.

2. Is the name available in Tennessee? Make sure the name you want isn't already taken by doing a Tennessee LLC name search on the Secretary of State website.

3. Is the URL available? We recommend that you check to see if your business name is available as a web domain. Even if you don't plan to start a business website today, you may want to buy the URL in order to prevent others from acquiring it.

After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free

FAQ: Naming a Tennessee LLC

STEP 2: Choose a Tennessee Registered Agent

You are required to appoint a Registered Agent for your Tennessee LLC.

What is a Registered Agent? A registered agent is an individual or business entity responsible for receiving important tax forms, legal documents, notice of lawsuits, and official government correspondence on behalf of your business. Think of your registered agent as your business' point of contact with the state.

Who can be a Registered Agent? a Registered Agent must be a resident of Tennessee or a corporation, such as a registered agent service, authorized to conduct business in the state of Tennessee. You may elect an individual within the company including yourself.

TIP

Recommended: ZenBusiness provides the first year of registered agent service free with LLC formation ($39 + State Fees)

FAQ: Nominating a Tennessee Registered Agent

STEP 3: File the Tennessee LLC Articles of Organization

To register your Tennessee LLC, you will need to file the Articles of Organization with the Tennessee Secretary of State. You can apply online or by mail. Some states refer to the Articles of Organization as the Certificate of Formation or Certificate of Organization.

The Tennessee Articles of Organization for an LLC (limited liability company) is a legal document to officially form your business. You’ll be expected to include the name of your LLC, choose a registered agent, list the services your LLC will offer, and pay the state filing fee. We also recommend you obtain an Employer Identification Number (EIN) if you plan to hire employees and open a business bank account.

When filing your Articles of Organization, you will need to state whether your Tennessee LLC will be member-managed or manager-managed. Before you file, read our member-managed vs manager-managed guide to help you choose the best management structure for your LLC.

If you’re expanding your existing LLC to the State of Tennessee, you will need to form a Foreign LLC.

FAQ: Filing Tennessee LLC Documents

STEP 4: Create Your Tennessee LLC Operating Agreement

In Tennessee, LLCs are not required to have an operating agreement, but it's a good practice to have one.

What is an operating agreement? An operating agreement is a legal document outlining the ownership and operating procedures of an LLC.

Why are operating agreements important? A comprehensive operating agreement ensures that all business owners are on the same page and reduces the risk of future conflict.

For more information on operating agreements, read our Tennessee LLC operating agreement guide.

FAQ: Creating a Tennessee LLC Operating Agreement

STEP 5: Get an EIN for Your Tennessee LLC

What is an EIN? The Employer Identification Number (EIN), Federal Employer Identification Number (FEIN), or Federal Tax Identification Number (FTIN), is a nine-digit number issued by the Internal Revenue System (IRS); an Employer ID Number is used to identify a business entity and keep track of a business’s tax reporting. It is essentially a social security number (SSN) for the company.

Why do I need an EIN? An EIN number is required for the following:

• To open a business bank account for the company
• For Federal and State tax purposes
• To hire employees for the company

Where do I get an EIN? An EIN is obtained from the IRS (free of charge) by the business owner after forming the company. This can be done online or by mail.

NOTE

FOR INTERNATIONAL APPLICANTS: you do not need an SSN to obtain an EIN. For more information, read our guide on how to obtain an EIN as a foreign LLC.

FAQ: Getting an EIN

Protect Your Business & Personal Assets

Business Banking for Personal Asset Protection

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your Tennessee LLC is sued. In business law, this is referred to as piercing your corporate veil.

You can protect your Tennessee LLC with these two steps:

1. Opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

2. Getting a business credit card:

• Helps you separate personal and business expenses.
• Builds your company's credit history, which can be useful to raise capital later on.

Get Business Insurance

Business insurance helps you manage risks and focus on growing your LLC. The most common types of business insurance are:

• General Liability Insurance: A broad insurance policy that protects your business from lawsuits. Most small businesses get general liability insurance.
• Professional Liability Insurance: A business insurance for professional service providers (consultants, accountants, etc.) that covers against claims of malpractice and other business errors.
• Workers' Compensation Insurance: A type of insurance that provides coverage for employees’ job-related illnesses, injuries, or deaths.In Tennessee, businesses with five or more employees, including LLC members and corporate officers, are required by law to have workers' compensation insurance. Get a free quote with ADP.

Properly Sign Legal Documents

Improperly signing a legal document as yourself and not as a representative of the business can leave you open to personal liability. When signing legal documents on behalf of your Tennessee LLC, you could follow this formula to avoid problems:

1. Formal name of your business
2. Your signature
3. Your name
4. Your position in the business as its authorized representative

See the image below for an example.

This ensures that you are signing on behalf of your Tennessee LLC and not as yourself.

Keep Your Company Compliant

Tennessee Business Permits and Licenses

To operate your Tennessee LLC, you must comply with federal, state, and local government regulations. For example, restaurants likely need health permits, building permits, signage permits, etc.

The details of business licenses and permits vary from state to state. Make sure you read carefully. Don't be surprised if there are short classes required as well.

Fees for business licenses and permits will vary depending on what sort of license you are seeking to obtain.

Find out how to obtain necessary Tennessee business licenses and permits for your LLC or have a professional service do it for you:

• Federal: Use the U.S. Small Business Administration (SBA) guide.
• State: Use the State of Tennessee Licenses and Permits website.
• Local: Contact your local county clerk and ask about local business licenses and permits.

Tennessee LLC Tax

Depending on the nature of your business, you may be required to register for one or more forms of state tax.

Sales Tax

If you are selling a physical product, you’ll typically need to register for a sellers permit through the Tennessee Department of Revenue website.

This certificate allows a business to collect sales tax on taxable sales.

Sales tax, also called "Sales and Use Tax," is a tax levied by states, counties, and municipalities on business transactions involving the exchange of certain taxable goods or services.

Read our sales tax guide to find out more.

Employer Taxes

If you have employees in Tennessee, you will have to register for Unemployment Insurance Tax on the State of Tennessee's Workforce website.

Federal LLC Tax Requirements

Most LLCs will need to report their income to the IRS each year using:

• Form 1065 Partnership Return (most multi-member LLCs use this form)
• Form 1040 Schedule C (most single-member LLCs use this form)

File Your Tennessee LLC Annual Report

Tennessee requires LLCs to file an annual report. This form can be submitted online.

FAQ: Additional Taxes

Franchise & Excise Tax

Tennessee LLCs are required to pay an annual Franchise Tax.

FAQ: Tennessee Franchise & Excise Tax

Avoid Automatic Dissolution

LLCs may face fines and even automatic dissolution when they miss one or more state filings. When this happens, LLC owners risk the loss of limited liability protection. A quality registered agent service can help prevent this outcome by notifying you of upcoming filing deadlines and by submitting reports on your behalf.

Make Running Your Business Easier

After starting a business, two of the most important things you can do are get professional accounting and hire the right employees. Streamlining these processes can save you time and money as your business grows.

Hiring Employees

If you plan to hire employees for your Tennessee LLC, stay compliant with the law by following these steps:

• Verify that new employees are able to work in the US
• Report employees as "new hires" to the State
• Provide workers' compensation insurance for employees
• Withhold employee taxes
• Print compliance posters and place them in visible areas of your work space

Find more information at the Tennessee Department of Labor and Workforce Development.

FAQ: Hiring Employees

Accounting For Your LLC

It’s critical to get your books in order-- even if you haven’t officially opened for business. A well-managed accounting system will help you:

• Track your business finances, including bills, expenses, and income.
• Simplify your annual tax filings.

The right software makes accounting easy. Look for software that:

• Syncs with your bank automatically.
• Matches transactions to invoices, bills and purchase orders.
• Can be accessed from your phone.

Women in Business Tools and Resources

If you have a woman-owned business, many resources are available to help you concentrate on your business’s growth:

• Funding - (ie. grants, investors, loans)
• Events - (ie. conferences, meetups)
• Guides - (ie. business formation, personal growth)
• Support - (ie. advice, communities, business strategies)

Our information and tools will provide educational sources, allow you to connect with other women entrepreneurs, and help you manage your business with ease.

More Information

Register a Foreign LLC in Tennessee

Forming a foreign LLC allows your company to operate as one entity in multiple states. If you have an existing LLC and want to do business in Tennessee, you will need to register as a foreign LLC. This can be done by mail.

How to Obtain a Certificate of Good Standing

A Certificate of Good Standing, known in Tennessee as a Certificate of Existence, verifies that your LLC in Tennessee was legally formed and has been properly maintained. Several instances where you might need to get one include:

• Seeking funding from banks or other lenders
• Forming your business as a foreign LLC in another state
• Obtaining or renewing specific business licenses or permits

You can order a Tennessee LLC Certificate of Existence online.

Dissolve Your LLC

If at any point in the future you no longer wish to conduct business with your LLC, it is important to officially dissolve it. Failure to do so in a timely fashion can result in tax liabilities and penalties, or even legal trouble. To dissolve your LLC, there are two broad steps:

• Close your business tax accounts
• File the Articles of Dissolution

When you are ready to dissolve your LLC, follow the steps in our Tennessee LLC Dissolution Guide.