✨ ZenBusiness ✨

If you’re looking for an excellent Tennessee LLC service then choose ZenBusiness. We’ve already formed 500,000+ businesses since 2015!

  • Free LLC Service: We’ll form your LLC for free (plus your state’s required fee), while some competitors charge hundreds of dollars for similar services.
  • $5,000 Grant Program: As a ZenBusiness customer you’re eligible to enter our grant program which includes $5,000 and other special resources to help start your business. In 2023, 40 grants will be awarded. As a Public Benefit Corporation (PBC) we’re focused on more than just profits – we strongly believe in giving back.
  • Stellar Reviews: With more than 12,900 ZenBusiness reviews available online and high average ratings, it’s clear that our customers are typically quite pleased with our services.
  • Quality Guarantee: We offer a 60-day money-back guarantee on our services. While some competitors have steep service charges or short windows of availability for refunds, our 100% satisfaction guarantee provides significant peace of mind.

If you want a socially conscious Tennessee LLC service with excellent overall value, choose ZenBusiness.

Northwest

Northwest Registered Agent charges $225 (plus state fee) for LLC filing services. That said, Northwest’s personalized customer support is a feature that could make their prices worth paying for some entrepreneurs.

  • Higher Prices: Northwest charges $225 + state fee to form an LLC in Tennessee. However, that $225 package does at least include a year of registered agent service.
  • Customer Reviews: Northwest receives mostly positive customer feedback, but with several hundred reviews instead of the thousands you’ll find with the other companies in this guide, they can’t match competitors like us for review volume.
  • Known for Service: While some competitors outsource customer service to third-party call centers, Northwest keeps its support team in-house.

Overall, Northwest does have some points in its favor. However, keep in mind that it charges $225 (plus your state’s required fee) for its LLC filing services.

Want to learn more? See this Northwest LLC review.

LegalZoom

LegalZoom is one of the biggest names in the industry, with millions of customers served and frequent advertising efforts. LegalZoom provides an LLC filing package for free (plus the state’s fee).

  • Higher Average Prices: While LegalZoom charges $0 (+ your state fee) for LLC service, it has higher price points for some other services. For instance, it typically charges a rate of $199 per year for registered agent service and at least $149 to form a corporation.
  • Features: LegalZoom sometimes excludes valuable features from its LLC filing service packages. For instance, its Basic LLC service package includes only a digital welcome packet and a trial for a third-party web design service.
  • Service Guarantee: Much like ZenBusiness, LegalZoom offers a 60-day, 100% satisfaction guarantee that is among the best in the industry.

LegalZoom is a huge company, so while it offers extended support hours, the quality of its customer support may vary a bit from representative to representative.

Want to learn more? See this LegalZoom LLC review.

Incfile/Bizee

Incfile/Bizee offers LLC formations for free, as long as you pay your state’s fee. Incfile and ZenBusiness have some similar characteristics, but there are also some significant differences that set the two apart.

  • Lots of Reviews: Incfile/Bizee has tens of thousands of customer reviews with strong average rating scores.
  • Customer Support: If you prioritize responsive customer support, Incfile/Bizee may not be your best option. At times, their responses can be slow and some customers complain that they don’t get a response at all to emailed support inquiries.
  • Upsells: Incfile/Bizee can also pile on the upsells, with lots of suggested add-on services sprinkled throughout the order form.

If you’re looking for a cheap LLC formation service in Tennessee and ZenBusiness doesn’t feel right for some reason, Incfile/Bizee could be worth a closer look.

Want to learn more? See this Incfile/Bizee LLC review.

Tennessee LLC Fast Facts

  • LLC Formation Speed: Online filings are processed immediately, paper forms take about two business days
  • Cost to File a TN LLC: Varies; $50 per member of the LLC, with a $300 minimum fee
  • How to File Your Articles of Organization: Online or by mail
  • Annual Reports: Due four months after your fiscal year ends; the filing fee is dependent on the number of members your LLC has, but there is a minimum fee of $300
  • State General Business License: General business licenses are not required, but many cities and counties require business tax licenses; industry licenses may also apply
  • PLLCs: Permitted for professional service businesses in TN

What Is a Tennessee LLC?

LLCs are formal legal entities that are typically taxed similarly to sole proprietorships and general partnerships, in that the owners include any company profits or losses into their personal returns — the LLC itself does not owe income taxes.

An LLC may also elect to be taxed like a corporation, although this is not a very common option.

There are similarities to corporations too, especially when it comes to financial responsibilities. In an LLC, the owners or members are not usually personally accountable for the financial status of the business. This means that if someone sues your LLC, your personal assets are not at risk.

Tennessee does not require LLCs to create an operating agreement, although it is still strongly recommended. This document can help clear up any disagreements between your owners, and it’s also just generally convenient to have a roadmap of your LLC’s operational aspects.

The state of Tennessee has very high fees for LLC formations, as you’ll pay $50 per member, with a minimum of $300 and a maximum of $3,000. You can pay by check, money order, or credit/debit card. The state typically processes online submissions immediately, while paper forms can take up to two business days after receipt.

The ongoing LLC maintenance requirements in Tennessee include the annual report. It’s due each year by the fourth month of your LLC’s fiscal year, and it has the same high fees as LLC formation: $50 per member, with a minimum of $300 and a maximum of $3,000.

The Total Cost of Forming and Maintaining an LLC in Tennessee

In addition to the costs of a business formation service or hiring an attorney (which are optional, as we’ve discussed), there are quite a few other required and optional expenses when forming and maintaining a Tennessee business. You cannot form an LLC in Tennessee without filing the Articles of Organization, the document that officially registers your business within the state. Tennessee has a relatively hefty filing fee for this document. The base fee starts at $300, but it rises by $50 for each member you have (beyond the first six). This fee maxes out at $3,000.

Your LLC will also need to apply for one of Tennessee’s business licenses: the general business license or the minimal activity license. The minimal activity license applies to businesses with gross receipts totaling between $3,000 and $10,000; all other businesses are subject to the general business license. Both business licenses cost $15.

Next, all businesses will need to file annual reports. This filing is pretty simple, but it keeps the state up-to-date about some basic but vital information about your business, such as your registered agent and business address. For LLCs, the filing fee ranges between $300 and $3,000, following the same fee structure as the Articles of Organization.

Then, of course, you will have to pay taxes every year. Tennessee requires LLCs categorized as corporations to pay corporate income tax, while pass-through LLCs pay personal income tax rates. Also, both types of entities must pay the business excise tax and the business franchise tax. But you’ll also have to pay federal taxes, along with several others.

For instance, if you have employees, you’ll pay unemployment insurance tax. If you sell goods or services, you’ll pay sales and use tax. Depending on the nature of your business, there could be other taxes required, so check with the Tennessee Department of Revenue to make sure.

Other than that, the other potential expenses only apply to certain businesses. These include things like professional or industry-specific business licenses and business insurance.

Pros and Cons of Creating a Limited Liability Company

An LLC is one of the most popular entity types nationwide. But it isn’t the right type for everyone.

Only you can pick which entity type best fits you and your business; after all, you understand your business idea better than anyone. You have a clear vision for your products and services, both present and future.

To truly determine whether an LLC is right for you, it’s helpful to consider the advantages and disadvantages of LLCs.

Pros

  • Easier to form and maintain than a corporation
  • Personal asset protection
  • Flexible taxation structure; can pay as a partnership or a corporation
  • Business name is protected for exclusive use within state boundaries

Cons

  • No authority to issue stock, so opportunities to raise capital are limited
  • Fees are higher than partnerships or sole proprietorships
  • Requires more paperwork than some entrepreneurs are comfortable with

Should You Form a Tennessee LLC or Corporation?

Common characteristics

There are some common aspects of the LLC and the corporation, starting with the personal asset protection they both provide. Also known as limited liability, this personal asset protection ensures that if your business is sued, only the business assets are at risk. Meanwhile, your personal assets — like your house, car, personal bank accounts, investments, etc. — are protected by your LLC or corporation’s business structure.

In addition, LLCs and corporations both provide their owners with business name exclusivity. If you own and operate a sole proprietorship or general partnership, you will not have exclusive rights to your business name. Instead, if another company decides to use your name as its own, you won’t be able to stop them. In fact, they could even register your business name and gain exclusive rights to it, forcing you to come up with a new one.

Advantages of the LLC

In general, an LLC is quicker and easier to form than a corporation. LLCs usually need to provide less information for their formation documents than corporations do, and there are fewer steps in the process as well. For instance, LLCs don’t need to draft corporate bylaws, name officers or board members, hold initial board meetings, or issue stock. On the other hand, corporations need to do all of these things and more.

The LLC is also a less rigid business structure that allows its owners greater flexibility. The business structure of a corporation is inflexible, with many regulations dictating how the business should look and function. Meanwhile, LLCs have options for business management structure and ownership responsibilities that corporations simply don’t have.

Another even more valuable option LLCs have is that they can choose how they want to be taxed. Most LLCs are taxed as pass-through entities, which means the business itself does not pay taxes, but the profits are passed through the LLC itself to its owners, who pay taxes on this money on their personal returns. However, LLCs can also opt to be taxed like corporations (either as a C corporation or an S corporation), giving them more options for taxation than a corporation has.

Advantages of the corporation

Corporations have some advantages too, like the ability to sell stock. It’s quite difficult for an LLC to attract outside investments because it cannot issue stock. The vast majority of investors prefer stock as their investment medium, and it’s also very rare to see venture capitalists investing in LLCs. For these reasons, the corporation is a much better option for businesses looking to attract investments.

In addition, the corporation has been around for hundreds of years, while the LLC is a newer addition to the American business landscape. This means that the corporation has more established legalities and also that it’s easier to expand into other states because the corporation’s structure is essentially the same no matter where you form it.

How to Set Up a Tennessee LLC on Your Own

Technically speaking, you don’t have to use an LLC formation service like ZenBusiness or LegalZoom. These services are incredibly helpful, but you can save money by completing the process yourself.

You can read our complete guide to DIY an LLC setup in Tennessee, but here’s a quick look at the process:

Choose a business name

Every LLC in Tennessee needs a name that’s memorable and gives potential clients a good idea of what goods or services are available. The name also needs to be unique — both for legal reasons and so your business stands out from the competition.

Appoint a TN registered agent

As we’ve mentioned in this guide, every LLC needs an agent who can accept service of process on your behalf. In all states, you can act as your own registered agent as long as you have a physical address in the state. That said, we generally recommend that you appoint someone else (like an online service) to act as your agent.

File the Articles of Organization

This document, once filled out and filed, officially forms your business in the state of Tennessee. You’ll need to provide some important information, including your contact information, your business address, signatures for your LLC’s members, and more. Tennessee has a $300 minimum filing fee, but LLCs with 7 members or more will pay $50 per member.

Setting up the LLC is as easy as 1-2-3; it’s the maintenance requirements that are a bit more complicated:

Register for and pay taxes

If you have employees, you’ll need to get an Employer Identification Number from the IRS. Then there are state-specific taxes, too. In Tennessee, LLCs will typically be subject to two types of income-based taxes. First, there’s the business enterprise tax, which acts like an income tax of 6.5%. Then there’s the business franchise tax, which is a tax on your company’s net worth. Many businesses will also need to account for the sales tax (7%). You can learn more about these and other miscellaneous business taxes at the Tennessee Department of Revenue.

Get licenses and permits

Every business in Tennessee will need to obtain one of two general business licenses: the standard business license or the minimal activity license (businesses with $10,000 or less in gross receipts). Beyond that, there’s a good chance that you’ll also need to obtain some industry-specific professional licenses, such as those included in Tennessee’s One-Stop Licensing App.

Create an operating agreement

Even single-member LLCs should create a “master document” that sets out how the business will operate, both now and in the future.

File your annual report

Each year, your LLC will need to file an annual report to update the state about the standing of your business. It is due every year within 4 months of the end of your fiscal year. Technically, the fee for this document is $50 per LLC member, but there is a minimum fee of $300.

Obtain business insurance

Every business with employees needs to maintain workers’ compensation insurance and a commercial vehicle policy for company-owned vehicles. You may also want to get a general business liability policy, too.

Get a business bank account

You should sign up for a business bank account so you can write checks and make purchases in the name of the business instead of pulling from your personal accounts (a legal no-no).

This is just the tip of the iceberg, though. For more detailed guidance, we recommend contacting an attorney or checking out the full Tennessee LLC Formation Guide.

FAQ's

  • We invite you to take a look at our comprehensive guide to forming a limited liability company in Tennessee. This article walks you through the LLC formation process in this state step by step, ensuring that you don’t miss any crucial elements.

  • One of the most important steps in forming a Tennessee LLC is choosing a business name. Once you come up with ideas for your name, you should search through the Secretary of State’s name availability search to make sure your desired name is available. For more information on conducting a business name search in Tennessee, check out our full article on the topic.

  • You can fill out or download the Articles of Organization on the Secretary of State’s website.

  • In Tennessee, an LLC’s ongoing maintenance requirements include the annual report. This filing is due by the fourth month of your LLC’s fiscal year, and it costs $50 per member, with a minimum of $300 and a maximum of $3,000.

  • Chances are, you’ll require at least one license or permit to operate your LLC in compliance with Tennessee state law. For more information about business licenses and more in this state, check out Tennessee’s helpful Licenses and Permits webpage.

  • The Secretary of State should be able to process your LLC’s formation immediately if you file online. Documents submitted on paper forms will take roughly two business days to process.

  • If you want more details about what these companies can offer in this state, or you’d like to take a look at some other options, check out our complete guide to Tennessee registered agents.

  • Unfortunately, not all businesses last forever. If the time comes when you need to close your LLC’s doors, you’ll need to do so in a manner consistent with the state’s regulations. That’s why we wrote our guide to Tennessee LLC dissolutions, so you can complete the process in a compliant manner.

  • If your LLC already exists in another state, you don’t actually need to “form” it in Tennessee. Instead, you’ll need to foreign qualify the business in this state. This process is somewhat similar to LLC formation, but there are some crucial differences as well. Take a look at our guide to foreign qualifications in Tennessee for more information.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

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Written by Team ZenBusiness

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