How to Start an LLC in Tennessee

For the past three years, Tennessee has consistently been breaking records for new business filings. This shouldn’t come as a surprise: The Volunteer State’s low-tax structure, strong labor market, and supportive business environment make it a place for businesses to thrive. 

The state has a streamlined limited liability company formation process that can turn your big dream of being a business owner into a reality. 

How to get an LLC in Tennessee in 7 steps 

A limited liability company (LLC) offers liability protection and tax advantages, among other benefits for small businesses. LLC formation in Tennessee is easy. Just follow these seven steps, and you'll be on your way. 

1. Name your Tennessee LLC

The name of your Tennessee LLC sets the stage for what your business is all about. Imagine finding the perfect business name only to find out someone else has the legal authority to use it. Use these strategies to brainstorm a few business names and then use the Tennessee Secretary of State business name availability tool to see if they are available. 

While you can see a complete listing of Tennessee's naming rules, a few state-specific naming guidelines to keep in mind are: 

• Have an appropriate identifier like  “Limited Liability Company,” “L.L.C.,” or “LLC.” For instance, if a company is a professional limited liability company, the correct designations are “Professional Limited Liability Company” or "PLLC."
• Shouldn’t imply affiliation with any federal or local government agency like “Treasury,” “FBI,” or “Homeland Security.” 
• Be distinguishable from existing business names. 
• Restricted words such as "bank" or "credit union" require approval from the Tennessee Department of Financial Institutions.
• Use of words like “Engineer," "Attorney," and "CPA" need prior approval from the appropriate licensing board.
• Can’t imply association with a charity or religious organization without a written certification. 

Reserving a business name is the best way to “save” your chosen business name while you get all other formation paperwork ready. Names may be reserved for up to 120 days by paying a filing fee of $20.

2. Choose your registered agent 

Tennessee requires you to appoint a registered agent for your business entity. A Tennessee registered agent is the person or entity authorized to receive service of process and other official legal documents and notices from the government on behalf of your Tennessee LLC.

A registered agent can be a person (including yourself or an employee of your LLC) or an entity that meets the following criteria:

• Be 18 or older. 
• Be on-site and available to accept documents during regular business hours.
• Must have a physical address in Tennessee (P.O. boxes don't count).

If your business entity involves irregular hours and extensive travel or you value privacy, LegalZoom’s Registered Agent Service is a good solution. Our Registered Agent Service includes digital document storage and alerts on compliance deadlines, so you can run your business stress and penalty-free. 

3. Prepare and file articles of organization

The articles of organization—aka certificate of formation—is a document that officially establishes your LLC with the Tennessee Secretary of State. 

It’s best to file your Tennessee LLC articles of organization through the Business Services Division online registration portal. However, in some cases, you will have to print, complete, and submit Form SS-4270 by mail to the Tennessee Secretary of State’s office at 6th Floor,  Snodgrass Tower ATTN: Corporate Filing, 312 Rosa L. Parks Ave., Nashville, TN 37243. 

For online applications, you’ll need a credit or debit card ready to pay the minimum state filing fees of $300+ $50 per member r if you have more than six member. The maximum fee is $3,000. 

To prepare your Tennessee articles of organization, you'll usually need the following information:

• Your LLC name with additional designation
• Name and address of registered agent
• Fiscal year close month
• LLC effective date
• Management structure: Will managers or members manage the LLC?
• The person forming the LLC is required to sign the articles
• The number of LLC members on the date of filing
• The period of duration, which may be perpetual
• The address of the LLC's principal office, and if different, the mailing address.
• A reason why you formed the LLC. This can be a general statement.
• A name consent if the LLC's name is similar to an existing name in Tennessee

Once you file your articles and pay the state filing fees, the Tennessee Secretary of State will review the filing. If the articles of organization are approved, you will receive a certificate of formation and state business entity number that confirms the LLC formally exists.

4. Create an operating agreement

Tennessee doesn’t require an operating agreement. However, having a readily accessible, written operating agreement is helpful for various reasons, including settling disputes that may arise over financial agreements and other potential litigation. 

Without a written agreement in place, the judges make decisions on disputes based on Tennessee law (Tenn. Code Tit. §§ 48-201-101) and not necessarily what’s in the best interest of the LLC and its members.

Your Tennessee LLC operating agreement helps maintain a clear separation between you and the business, providing increased liability protection. It can include, but not be limited to, the following: 

• LLC's name and principal address
• Management and business structure of LLC—single-member LLC, multiple-member LLC, professional LLC, or series LLC
• Name and address of the Tennessee registered agent
• Information about the articles of organization
• Purpose of the business
• Members’ interests, roles, and responsibilities 
• Protocol for how profits and losses will be divided
• Procedure for admitting new members, as well as outgoing members
• Indemnification and liability clauses
• Succession and dissolution plans

Online templates may not fit your business’s needs and purpose. LegalZoom’s network of experienced business lawyers can draft a customized operating agreement that sets clear rules and operating protocols for your business. 

5. Get an employer identification number (EIN) and open a business bank account 

The nine-digit employer identification number (EIN) is assigned by the Internal Revenue Service to identify your LLC for state and federal taxes. You can obtain your EIN by mail or online from the IRS or have LegalZoom handle this task. 

This federal tax identification number, while protecting your SSN from identity theft, can assist with the following:

• File and manage taxes at the state and federal level.
• Open a business bank account.
• Hire employees.

Open a business bank account

A business bank account for your Tennessee LLC establishes a clear separation of personal and business assets, resulting in stronger personal asset protection. It further improves brand image and makes tracking sales and profitability a whole lot easier. 

Fortunately, opening a business bank account is a fairly straightforward process. Once you have a separate bank account, you can also acquire a business credit card, which is a quick way to cover small to medium-sized startup expenses.

6. Register for taxes and Tennessee business licenses 

The main taxes for Tennessee LLCs are franchise and excise taxes, federal taxes, state taxes, and sales and use taxes. A tax attorney can help you understand the taxes your business can be subjected to.

You can register your business for appropriate state business tax, such as alcohol and tobacco tax, via the Tennessee Taxpayer Access Point (TNTAP). You will need your North American Industry Classification System (NAICS) code for all business and sales tax registrations. The Tennessee Department of Revenue takes around 10 days to process the tax registration.

Get the right licenses and permits 

Don’t forget to obtain permits or licenses necessary to operate your business. It adds credibility and demonstrates to customers, vendors, and investors that you are running a legally compliant business. The correct licenses and permits also serve as a first line of defense against legal issues and fines. 

Tennessee requires a general business license or minimum activity license for businesses with gross receipts of between $3,000 and $100,000. You can secure this license directly from your county or municipality’s office for $15. If your gross receipts exceed $100,000, you will need to get a standard business license from TAP. 

You may require additional licenses and permits based on your business model, size, and location. Some common include health department permits, zoning permits, home occupation permits, professional licenses, and more. The Tennessee Department of Commerce and Insurance (TDCI) has an insurance lookup service that you can use, but it doesn’t handle all professions or occupations. It’s best to delegate this job to LegalZoom’s Business License Service.

7. File the Beneficial Ownership Information Report (BOIR)

As of 2024, there is a new requirement for all LLC owners. The federal government mandates all newly formed business entities to report information about their LLC's beneficial owners and main decision-makers (CEO or top-level management that has substantial control over the company) via a BOIR report. 

Tennessee LLCs formed in 2024 have 90 days after their formation date to file the information with the Financial Crimes Enforcement Network (FinCEN). However, starting Jan. 1, 2025, the deadline for submitting the report cuts to 30 days. All LLCs formed before 2024 have till Jan. 1, 2025, to submit their initial report. 

There’s no fee to submit this report, but the ramifications of not filing include criminal penalties and potential jail time. If administrative tasks are not your strong suit, consider using LegalZoom’s BOIR filing service to keep your business safe and compliant. 

Next steps after forming your Tennessee LLC

After you have gotten your official authorization from the Tennessee Secretary of State, take a few more steps to keep your limited liability company operating efficiently. 

Obtain a domain name

In today’s digital economy, you'll need a small business website. And even if you don't think you don’t need one, at the very least, you should reserve the option of having one in the future by buying your domain name now. A matching domain name can be obtained from domain registrars like Wix or Google Domains. 

Get a certificate of existence

Commonly known as a certificate of good standing in other states, it’s an excellent way to establish trust and present your company in a truly professional manner. Investors, clients, or vendors often require this certificate before they engage in business with you. 

A certificate of existence is also required in states where you wish to register as a foreign LLC. Let's say you wish to open a branch of your laundromat business in Louisiana. Louisiana will need to see your certificate of existence from Tennessee, the state where your business was originally formed.

It’s possible to get your certificate of existence online, in person, or via mailing a paper form. There’s a $20 filing fee for each copy. 

Consider a foreign LLC

A foreign LLC or foreign authorization is any LLC that does business outside their original state of formation. Suppose you open an office in Louisiana to cater to heavy customer demand; you will need to register as a foreign LLC in Louisiana. 

Foreign authorization is mandatory for every state outside of Tennessee that you conduct business in. Foreign authorization gives you legal authority to operate in the new state. The cost of filing as a foreign LLC varies as you cross state borders, but a business formation company can assist you with the latest filing requirements and fees. 

Familiarize yourself with federal and state taxes

When you form a Tennessee LLC, you need to understand your tax obligations. This will help you manage your money better. Some common taxes that your business might have to report and pay include:

• Federal income and employment taxes. At the federal level, you have to report and pay federal income tax and self-employment tax of 15.3%.
• Tennessee business taxes. If your business grosses $100,000 or more in Tennessee, you need to register for state business tax. The Tennessee business tax consists of a state tax and city business tax. You can find cities that impose a separate business tax here.
• State franchise and excise taxes. As per the Tennessee Department of Revenue, any LLC in Tennessee must register and pay franchise and excise taxes. The minimum franchise tax is $100. Excise taxes are calculated based on business income.
• Sales and use taxes. The state sales tax rate is around 7%, but for some goods and services, there are special rates that go as high as 8.25%. Businesses can use the Tennessee Department of Revenue's Lookup Local Tax Rates search to identify rates in each jurisdiction.

Purchase business insurance

Increase your Tennessee LLC’s protection from injury, workers’ compensation, and damage claims by purchasing appropriate business insurance. Common insurances you should consider getting include: 

• Business liability insurance. General insurance is used to cover legal hassles due to claims of negligence. 
• Workers’ compensation. Used to pay for medical expenses and lost wages of any employee injured at work. For most Tennessee employers, workers’ compensation coverage is required for employers that employ five or more persons who are not exempted.
• Product liability insurance. Commonly purchased to protect any product-based LLC from injury claims that result from defective products.

Annual filing requirements for Tennessee LLCs

All Tennessee LLCs must file an annual report to remain in the state’s good books. The annual report updates the state authorities with your business’s latest information. If your address has changed, the annual report needs to mention it. 

The annual report is due on the first day of the fourth month following the LLC's fiscal year closing. So, if your Tennessee LLC formation date is June 15, 2024, the LLC's fiscal year will end on June 14, 2025, and the annual report will be due on April 1, 2025.  

The annual report filing fee is a minimum of $300 and increases by $50 for every member over six members. So, if you have a two-member LLC, the filing fee will be $300. But if you have a seven-member LLC, the filing fee will be $350 (base fee of $300 + additional member fee of $50). If you need to change your registered agent information, you'll be charged an extra $20.

Filing an annual report with LegalZoom can save you time and effort of researching the filing requirements for your state and help you avoid the risk of filing incorrectly.

The cost of forming an LLC in Tennessee

The minimum cost of forming an LLC in Tennessee is $300, but it can be much higher depending on your business's license, permit, and insurance needs.

• Filing fees. Tennessee articles of organization have a minimum fee of $300. 
• DBA (doing business as) certificate. It's required if you decide to operate an LLC under a name other than what’s listed on formation documents. The cost is $20. 
• Business licenses and permits. The minimal activity license costs $15 in most cities. Other licenses and permits, including professional licenses, range between $30–$250 but can go as high as $500 or more. For instance, the fee for liquor-by-the drink license for a caterer is $625. 
• Annual report filing. Annual report filing fee is a minimum of $300. If you have more than six members, you have to pay an extra $50 per member. 
• Insurance. General liability insurance can cost between $29–$49 per month for a small LLC. 
• Registered agent. Registered agent services can cost anywhere from $50–$300. 

How to start your Tennessee LLC with LegalZoom

While forming an LLC in Tennessee is relatively simple, it’s easy to miss a few steps or checks. That’s where an experienced business formation company like LegalZoom comes in—-we can speed things up and make this administrative process more accurate. 

Our professional services handle crucial tasks, such as filing the articles of organization and drafting an operating agreement. We can also serve as your registered agent. LegalZoom has been the trusted partner for millions of small business owners in their LLC formation journey, and we can do the same for you.

FAQs

What are the benefits of registering an LLC? 

Tennessee has a lot going for it when it comes to launching a small business, and you can easily set up a thriving business. Registering your LLC in Tennessee gives you a legal foundation to conduct business while offering flexibility in management and tax filings. An LLC provides personal liability protection from business debts and liabilities. 

Do I need a business license for my LLC in Tennessee?

If you have gross sales of under $3,000, you don’t need a business license. However, you need a minimum activity license if your LLC’s gross sales are between $3,000-$100,000 per year. The cost for that is $15, and this can be secured through your local county’s office. 

If the sales are above $100,000, you need to get a standard business license through the state’s taxpayer access point. 

How long does it take to form an LLC in Tennessee?

Processing times vary based on the type of filing method used and the state’s workload. Online applications are generally processed faster than mailed-in and in-person filings. Currently, the approval time for online filings is one business day. For mailed applications, the state takes around five to seven business days. 

How do I correct filing errors in TN?

To make changes to your certificate of formation, you need to file Articles of Correction and pay the $20 processing fee. You can do this online, in person, or via mail. 

How do I dissolve an LLC in Tennessee?

Dissolving and terminating an LLC is a two-step process—filing a Notice of Dissolution (a $20 fee) with the Division of Business Services and clearing any outstanding business taxes and debts with the Department of Revenue. After this, you will receive your Certificate of Tax Clearance. The last step is filing the Articles of Termination.

Dissolving your LLC involves a few steps, which, if it’s not done properly, will lead the state and creditors to assume your business is still operating. You’ll be on the hook for reports and taxes. When your LLC reaches its end, you can use LegalZoom to make sure the dissolution steps are done correctly and efficiently. 

Rudri Bhatt Patel contributed to this article.