If you want to start and run a Tennessee limited liability company (LLC), you need to be aware of your business's filing and tax obligations. In addition to filing an annual report, your LLC could be responsible for various business taxes as well as employer and sales taxes.
Tennessee requires LLCs to file an annual report every year. You can submit your report online or print and mail your report to the Secretary of State. To complete the annual report, you'll need to provide some basic information, such as:
The annual report is due by the first day of the fourth month following the close of the LLC's fiscal year. For example, if your LLC's fiscal year closes on June 30, your annual report is due by October 1. If your fiscal year is the calendar year, the report is due by April 1.
As of 2023, the filing fee is $300 for LLCs with up to six members. The filing fee increases by $50 for every additional LLC member past six. The maximum fee is $3,000.
Regarding income taxes, most LLCs are pass-through tax entities. In other words, the responsibility for paying income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves don't pay income taxes, only their members do. Tennessee, unlike most other states, doesn't treat LLCs as pass-through entities. Instead, LLCs are subject to the same taxes as corporations.
Must pay a franchise and excise taxes. Tennessee imposes a franchise tax and an excise tax on most LLCs. Your franchise tax is based on either the net worth or the book value of your property (real and personal) owned or used in Tennessee, whichever is greater. The excise tax is based on net earnings or income for your tax year (effectively making it an income tax). The minimum franchise tax is $100. You can register online with TNTAP to pay these taxes to the Department of Revenue (DOR). Check the DOR website for more details.
Might pay business tax. If you do business within a Tennessee county or municipality and your business grosses more than $100,000, you need to register and pay the Tennessee business tax. The business tax includes a state and city business tax. You can register with the DOR through TNTAP. You must pay the tax every year by the 15th day of the fourth month after your fiscal year ends. (For most businesses, this date is April 15.)
Might pay gross receipts tax. Some types of businesses must pay a gross receipts tax. If your business pays the gross receipts tax, you don't need to pay the business tax. The gross receipts tax includes multiple types of taxes such as a bottlers tax, utilities privilege tax, vending gross receipts tax, and mixing bars tax. The DOR's gross receipts taxes webpage provides additional information on due dates, tax rates, registration, forms, and tax guidance.
For more on how Tennessee taxes business income, read our article about Tennessee state income tax.
Business taxes in Tennessee can be confusing. If you need help determining which taxes apply to your business, talk to a business attorney. They can help you determine your tax obligations, including how and when to register, how often to pay and file returns, and the applicable tax rate.
If your LLC has employees, then you'll likely need to pay employer taxes. Some employer taxes are paid to the federal government. Tennessee employers are also responsible for state employer taxes.
No withholding of employee wages. Tennessee is one of the few states that doesn't tax personal income. So, there's no need for your business to withhold income tax from employees.
Unemployment insurance (UI) tax. If you have employees, you'll probably need to register to pay state UI taxes. Tennessee's Department of Labor and Workforce Development (LWD) administers UI tax. You can register for these taxes using Form LB-0441. Then, each quarter, you must submit wage and premium reports. You can file these reports through the Tennessee Premium and Wage Reporting System (TNPAWS) or through third-party upload. For more information, check the UI tax section of the LWD website.
If your LLC will sell taxable goods or services to customers in Tennessee, you'll need to collect and pay sales tax. You can register with the DOR through TNTAP to pay this tax.
After you've registered, you'll receive a sales tax permit. Then, on a periodic basis—for example, monthly, quarterly, or annually—you must submit sales tax returns to the DOR. Pay sales tax using Form SLS 450. For more information, check the sales and use tax section of the DOR website.
In addition to state sales and use tax, you might be responsible for reporting and paying sales and use tax to your city or county. Make sure you check with your local taxing authorities for your reporting responsibilities.
If you formed your LLC in Tennessee but plan to conduct business outside the state, you might need to register in the states where you plan to do business. Each state has criteria for which business activities require foreign (out-of-state) registration. If a state requires you to register, you'll need to follow the appropriate procedure. Typically, you'll be responsible for initial and ongoing requirements as if you formed your LLC in that state.
For more guidance, check out our state guide to qualifying to do business outside your state.