How to Form an LLC in Tennessee: A Simple Step-by-Step Guide

Are you thinking about forming a limited liability company (LLC) in Tennessee? We’ll cover all the steps and even tell you about more things you’ll need to do after your LLC filing. If you have more questions, you can always ask a lawyer for small business advice.

Tennessee’s business climate is favorable. The Volunteer State doesn’t have a personal income tax, and its state and local taxes are some of the nation’s lowest. The cost of living is lower than the national average. It’s also a right-to-work state. Tennessee’s location is a plus, with major interstates running through it. 

As a Tennessee LLC owner, you’ll enjoy very strong personal liability protections. If you are ready, let’s find out how to start an LLC in Tennessee.

Step 1: Choose a name for your Tennessee LLC

The first step for forming your Tennessee LLC is choosing a name. That might sound simple, but you have to follow the Secretary of State’s naming rules. You always have to include “Limited Liability Company” or “LLC” in the name. You also have to be sure the name you choose is distinguishable from other active or reserved business names in the state.

To find out if the name you want to use is already taken, just follow these simple steps:

• Go to the Tennessee Secretary of State’s website and find the business entity search tool.
• Enter the name you’ve chosen to see if it’s already in use. If it is, keep trying other names until you find one that’s available.
• If the name you want is available but you’re not quite ready to file your LLC formation paperwork, you can use the state’s form SS-9425 to reserve the name. You’ll pay a $20 fee along with your application, and the state will reserve the name for 120 days.
• After you’ve submitted your LLC paperwork or name reservation request, the state will accept or reject your name using the "distinguishable upon the record" standard. Your LLC’s name has to be completely unique. Adding an “s” or “the” to a name already in use isn’t enough. Changing punctuation or capitalization isn’t either.  

Helpful tip: You’ll probably want a website for your new business, and you may want social media accounts for advertising. When you’re thinking about a name for your LLC, also check domain names and social media platforms for availability.

Step 2: Appoint a registered agent

An LLC’s registered agent is a person or company that’s the official point of contact between the state and the business. They might receive tax forms, legal notices, and other government mail. Your LLC has to have a registered agent who meets certain requirements, which are:

• Must have a physical Tennessee address (not a P.O. box)
• Has to be available during normal business hours
• Can be either an adult resident or a company that’s authorized to operate in Tennessee
• They have to agree to be your registered agent

One of the LLC’s owners can be its registered agent, or you might hire another person or company for the position. Let’s look at the pros and cons of those choices.

Step 3: File your Articles of Organization

Now, you’re ready to file your Articles of Organization with the Tennessee Secretary of State. You can check online for up-to-date business forms.

Tennessee has an Articles of Organization for LLCs fillable form (SS-4270) online. LegalShield members can ask a provider lawyer to review the document before submitting it.

When you get ready to file, you have to pay a filing fee. The minimum fee is $300, with each additional member (LLC owner) adding another $50; $3,000 is the maximum filing fee to start an LLC in Tennessee.

You can file your Articles of Organization online, by mail, or in person.

You’ll have to say in your Articles of Organization whether your LLC is member-managed or manager-managed. Let’s look at the differences between these operational structures.

Step 4: Draft an LLC operating agreement

Tennessee doesn’t require LLCs to have operating agreements, but they’re still recommended because they help to protect your limited liability status. This document is like a handbook for your LLC — it explains how you operate and lays out the LLC’s rules and financial structure. If questions or arguments come up, just refer to your operating agreement.

You can customize your operating agreement as much as you want, but most include:

• Basic LLC details: Name, address of the main location, and business purpose
• Member information: Names and contact information for all members
• Ownership percentages: How much of the LLC each member owns (usually depends on the members’ contributions)
• Voting: Which decisions require a vote, and the percentage of votes needed to pass
• Profits, losses, and distributions: How you’ll handle these among the members
• Management scope of authority: What a manager can do on his/her own 
• Membership changes: When and how you can add or remove members
• Dispute resolution: How you’ll handle situations if members can’t agree
• Dissolution: When and how to handle a planned LLC closure  

Banks and lenders will probably ask for a signed operating agreement.  You might not be able to open accounts or apply for a loan without it.

Every LLC is different. Yours may have specific needs. A lawyer can give you advice about how to customize your operating agreement and review it when you’re done. You do not have to pay expensive consultation fees if you’re a LegalShield Small Business Plan member. Your membership includes consultations, document reviews, and more.

Step 5: Obtain a Federal Employer Identification Number (EIN)

A federal Employer Identification Number (EIN) is a nine-digit number that identifies your business. You’ll use it when you file taxes, open business bank accounts, hire employees, and apply for business licenses.

You can get your EIN in minutes using the IRS EIN Assistant tool. It’s free, and the IRS will issue your EIN immediately, if approved. All you have to do is answer a few questions and submit your application.

Step 6: Register for state taxes and local business licenses

Tennessee LLCs have to pay different kinds of taxes. Review your requirements and, if needed, register with the county and state governments to open accounts. The Tennessee Department of Revenue handles tax accounts for the state:

• Franchise & Excise tax
• Sales and use tax
• Unemployment insurance tax
• Business tax (if the LLC’s gross income is $100,000 or more)

At the county level, you may have to pay tangible personal property tax.

You may also need business licenses. Counties require them, and some cities do, too. You can apply for them with your county clerk, and it's recommended that you check with your city government to see if you need a city business license. Depending on your industry or profession, you might need more licenses or permits. Construction contractors, medical providers, and retail alcohol sellers are examples.

You’ll need to pay your taxes and renew your licenses regularly. Check the requirements for each of your accounts carefully. Track the reporting and renewal deadlines and be ready to pay fees.

All this may seem overwhelming, and that’s understandable. A lawyer or CPA can be of assistance when you are figuring out which accounts you need to open. 

What to do after forming an LLC

Now that you’ve formed and registered your LLC, you may have a few additional things to do before you begin  operations. Your needs are as unique as your business is, so you can make changes to this checklist. It’s a good place to start, though:

• Open business bank accounts (and keep your personal finances separate)
• Get business insurance
• Set up systems for accounting, inventory tracking, vendor and customer management, etc.
• Set up shipping accounts (if you’ll be sending goods to customers)
• Hire employees (if needed)
• Register your “doing business as (DBA)” name, if needed
• Create a master list of your tax accounts, permits, and licenses (include filing and reporting deadlines and fees)
• Remember to follow the Tennessee LLC annual report requirements 
• Consider joining your county and the Tennessee Chambers of Commerce for networking opportunities
• Get your LLC’s website and social media accounts ready to go

If you hire employees, be ready to report and pay employment taxes to the IRS.

Get your small business legal questions answered with LegalShield

Congratulations on deciding to form your LLC in Tennessee! Of course, you’ll have plenty of legal questions as your small business grows. With a LegalShield membership, you’ll get the legal guidance you need at a price you can afford. 

Our members get access to a provider law firm for document reviews, tax advice, debt collection assistance, and consultations. Choose your LegalShield Small Business Plan today. 

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