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If you have been thinking about launching a Tennessee LLC, you might feel overwhelmed by the amount of information and paperwork necessary to do it right. The Tennessee Secretary of State provides a helpful SmartStart platform that enables you to set up a digital canvas for your new business, allowing you to visualize the whole process and connect with relevant mentors and resources from across the state.
ZenBusiness can fill in the gaps by ensuring that all of the components that go into forming your LLC are done to your specifications and with a professional degree of accuracy at an affordable rate. This comprehensive guide will walk you through the mandatory steps to getting your business set up swiftly and correctly.
1Name Your Tennessee LLC
Appoint a Registered Agent in Tennessee
File Tennessee Articles of Organization
Create an Operating Agreement
Apply for an EIN
At the outset of your Tennessee LLC formation, it is important to know the major steps that you will have to navigate to get your business properly set up. The first of these steps will be filing your Tennessee Articles of Organization with the Secretary of State’s office. This filing creates a public record of your business and is when the state government first recognizes your business entity in the eyes of the law.
However, before submitting your Articles of Organization, make sure to give thorough consideration to some key features that the document will require. Details such as your business name, who will serve as your registered agent, and what kind of Operating Agreement you want your business to thrive under should all be heavily weighed between you and any other members (owners) of the LLC. There might also be additional licenses and permits required of your LLC, depending on the type of business you will be doing.
This section breaks down the essential steps to forming an LLC in Tennessee and allows you to understand the process as a simple list.
One of the most long-lasting and powerful aspects of forming your LLC in Tennessee is choosing the right name. You want to steer away from names that are too generic or vague, but also not veer too far into complexity and puns. Think about a name that announces your business’s services, attitudes, or general persona.
Start your naming process by conducting a business name search with the Tennessee Secretary of State to ensure that another company has not already taken your chosen LLC name. Tennessee allows you to search by existing names and business information, so you have multiple options to prevent name overlap.
As with most states, Tennessee requires that the names of new businesses be distinguishable from existing companies and not be named in such a way as to be confused with state or federal agencies. Check up on Tennessee’s official business naming guidelines before making your final decision.
Be aware that certain words in your business name could be restricted by state law or come with additional approvals required. For instance, any LLC that plans to utilize words like “bank” or “insurance” in its title will need to acquire written permissions from the Tennessee Department of Financial Institutions and/or the Department of Commerce and Insurance, respectively, before such a name can be registered with the Department of Business Services.
All LLC names must include the appropriate “designator,” which are words or abbreviations indicating the business entity type. You have the choice of “limited liability company” or one of two abbreviations, “LLC” or “L.L.C.” Your Articles of Organization will further highlight applicable word restrictions and prompt you for the appropriate permissions if your company name contains a restricted designator.
If you are not planning to file your Articles of Organization right away, you may want to consider reserving your chosen business name ahead of time. You can reserve your business name with the Tennessee Secretary of State for up to four months with a fee of $20 and a completed name reservation application. ZenBusiness also has an article to help you name your business in a unique and appropriate way that lends itself to your company’s best interests.
You will need to mail your name reservation application to:
Department of State
312 Rosa L. Parks Ave.
6th Floor, William R. Snodgrass Tower
Nashville, TN 37243
Some companies may wish to install an assumed name for their Tennessee LLC, also known as a “doing business as” (DBA) name elsewhere. An assumed name allows your company to separate services under various titles or to advertise your business without the mandated “LLC” designator. This process requires completing the application to register an assumed name and a filing fee of $20. You can file this online.
Another item you might want to consider is your potential business domain name. As most businesses thrive with a successful website, nothing could be worse than coming up with the perfect name and then realizing all of the web domains that would best apply to it are already gone. Let ZenBusiness help you register your domain name early to maximize your company’s visibility and potential.
One final consideration in the naming portion of your Tennessee LLC formation is making sure your desired name isn’t trademarked and whether you care to trademark any part of your company. This could be the name, a logo, or a particular image or phrase. Start by searching the trademark database of the U.S. Patent and Trademark Office (USPTO) to see if your business name is federally trademarked and/or see about trademarking it yourself.
Federal trademarks grant you protection outside of Tennessee, but they’re more costly and time-consuming to obtain. A state trademark applies only within the boundaries of your state, but it’s easier and less expensive to get. First, check the Tennessee trademark database to make sure your name isn’t already claimed. If not, you have the option of trademarking it by submitting an Application for Registration of Trademark or Service Mark and a filing fee of $20.
The successful formation of your Tennessee LLC will require you to name a registered agent. The registered agent receives all legal notices (such as notification of a lawsuit) and official government correspondence pertaining to your company.
The resident agent must be a resident of Tennessee or a business authorized to do business in Tennessee. The agent must have a physical street address in the state; you cannot use a P.O. Box or something similar. The agent must also be available during normal business hours.
Some business owners believe it is easier to be their own registered agents. While this is certainly legal, it is not advisable for several reasons. Two of the major advantages of hiring an outside registered agent service include:
The Articles of Organization officially register your Tennessee LLC in the eyes of the state. The date of your filing of the Articles of Organization will be recognized as your company’s true starting date. This date may vary depending on your method of filing (digital or paper).
To successfully file your Articles of Organization, you will need key information about your business ready and available. Make sure your chosen name has been researched and cleared and double-check that you have all contact information for your members and registered agent handy.
The Tennessee Secretary of State offers the following methods for filing your Articles of Organization:
The filing fee for Tennessee LLC Articles of Organization is $50 per member in existence on the filing date, with a minimum fee of $300 and a maximum fee of $3,000.
For your Tennessee LLC to function smoothly with a unified purpose, you need a strong Operating Agreement. An LLC Operating Agreement is a kind of set of written bylaws that lays out and governs the company’s goals, expectations, and practices.
While Tennessee doesn’t require you to file or even create an Operating Agreement, it is highly advisable for a multitude of reasons. Having the right Operating Agreement helps protect and inform your LLC members throughout the life of the company.
ZenBusiness can provide you with an Operating Agreement template and help ensure that every aspect of your company culture is included. Our template is highly malleable and able to be tailored to the individual specifications of any business. Allowing a professional LLC service like ZenBusiness to help you generate this vital document allows you the comfort of knowing that the purpose and regulations you want in place for your company are made properly.
To ensure that your Tennessee LLC is set up to accommodate all applicable local, state, and federal taxes, you will likely need to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The only LLCs that do not require an EIN are those that are single-member entities with no employees.
An EIN operates for your business in much the same way that your Social Security number operates for your individual taxes. The EIN allows the IRS to identify your business category and determine what kind of taxes you will owe. It also allows you to get things like a business bank account. Filing the EIN application online, by mail, or by fax is a simple process free of charge.
Forming a Tennessee LLC comes with an expected list of upfront costs. The exact amount that you will owe will depend on several factors about your business, such as whether you will use a DBA, your company’s size, and what kind of professional licenses you may require. The basic fees for getting your LLC off the ground are as follows:
Check out the complete fee schedule for LLCs in Tennessee to determine if other fees may apply to your new business.
ZenBusiness is pleased to offer business formation services. Included in that price are all of your business filing documents, registered agent services, and a professional Operating Agreement template. Our extended plans also cover items such as obtaining an EIN and our Worry-Free Compliance service to help you stay compliant with Tennessee regulations.
Let us take care of the unpleasant paperwork, allowing you to stay focused on your business’s future. With our business formation services, you won’t have to worry about mailing in documents: We’ll handle each step with the state, and let you know when your LLC becomes official. Our work is quick and affordable, saving you a lot of headaches at an extremely low price.
Responsibly forming an LLC in Tennessee means knowing what to expect in the tax department. Tennessee imposes a basic state business tax on all entities conducting business or incorporated in the state. Even out-of-state businesses will be subject to this tax if it is determined that they have a “substantial nexus” within the state lines of Tennessee. You can review the Tennessee Business Tax Guide to find further information about specific taxes that may apply to your LLC.
Your state business tax is calculated from the gross receipts associated with your LLC, which must be reported annually. All companies grossing between $3,000 and $10,000 need to obtain a minimal activity license from their resident county and/or municipal clerk. Companies grossing over $10,000 annually must obtain a standard business license from the county/municipal clerk. You can register for the business tax with the Tennessee Department of Revenue.
Your business tax due date is the 15th day of the fourth month after your fiscal year ends. Tennessee LLCs must also pay a franchise tax of 0.25% of the greater of net worth or real and tangible property in Tennessee, with a minimum payment of $100.
Along with the aforementioned state business tax, many cities have implemented a similar city business tax. If your Tennessee LLC will reside in an urban location, you may want to check this comprehensive city tax list provided by the Secretary of State to see if the additional city business tax will apply to your company.
LLCs in Tennessee are also subject to an excise tax based on net earnings or income for the tax year. The excise tax rate is 6.5% of Tennessee taxable income.
Whether filed by mail or in person, most paper applications will require six to 10 business days to be recognized by the Secretary of State. Expedited service is available for a three-day turnaround. Online filings are typically recognized as having officially formed on the same day that the application is correctly completed and submitted.
The Tennessee government does not require a copy of an Operating Agreement for a new business entity to form. However, this step is considered among the most crucial.
A Tennessee LLC can be formed under several possible tax structures. Most of the time, the differences in the tax treatment of various structures can lead many new business owners to opt for setting up under the default status. This permits profits to pass through the LLC directly to the members. Under a structure like this, business owners would only pay taxes on the business profits on their own personal tax returns.
You also have the option of having your LLC taxed as a corporation. In this structure, both the business and the owners are taxed on the company’s profits. Although most LLC owners prefer to avoid this double taxation, it can be advantageous for some. A qualified tax professional can help you decide what structure is best for your company.
A Series LLC is an LLC that is split into multiple compartments, each with its own protections against liabilities from the others. Many states do not allow the formation of a Series LLC, but Tennessee does. The rules and guidelines associated with forming a Series LLC in Tennessee stipulate different taxation and registration requirements that should be carefully considered.
Most Tennessee LLCs will require a business license to conduct sales or transfers within the state. These general business licenses are issued by the local county clerk. Depending on the city in which you locate your offices, you may also be required to obtain a city/municipality license unique to your town. Requirements for professional licensure will vary by trade.
Determining what licenses and permits are required for your business will take some research on your part. Licensing can be specific to your industry and can be federal, state, and local.
The Tennessee Department of Labor and Workforce Development mandates that nearly all employers with five or more employees carry workers’ compensation insurance. Every employer in the state is required to register for Unemployment Insurance Tax. If you have any business-owned vehicles, you’ll be required to have commercial auto insurance.
Already a Tennessee small business owner? Learn more about ZenBusiness can help you run or grow your Tennessee small business today!
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