If you own a business that was created in a state other than Tennessee, you will need to qualify or register that business in Tennessee if you want to do business there. Here is an overview of the rules on how to qualify your foreign (non-Tennessee) limited liability company (LLC) to do business in Tennessee.
For Tennessee purposes, if your LLC is formed in another state, then it is known as a foreign LLC in Tennessee. In other words, foreign doesn't mean from another country. Instead, it means your business was organized under the laws of another state. A domestic LLC, on the other hand, is one that is formed in the state where it is doing business. This is common usage throughout the United States. For example, an LLC formed in North Dakota is a foreign LLC in South Dakota.
According to Tennessee's LLC Act, you are required to register your foreign company with the state of Tennessee if you are "transacting business" in Tennessee. What does this mean? Well, like most states, Tennessee's LLC Act does not specifically define what the phrase "transacting business" means in relation to foreign registrations.
However, state laws governing when foreign companies must collect state sales tax in their state provide some guidance on the issue. Under these laws, a business must have a physical presence in—or nexus with—the state in order to be required to collect state sales tax on sales to that state's residents. Generally speaking, physical presence and nexus are synonymous, and mean having:
Certain exceptions may apply and the rules get more complicated with things like Internet sales. Nevertheless, in general, if you have an office, a store, a warehouse, or employees in another state, you will need to qualify your LLC as a foreign company in that state.
For more details, including some possible distinctions between physical presence and nexus, check Nolo's articles on Internet Sales Tax: A 50-State Guide to State Laws.
Like most states, Tennessee's LLC Act specifies certain activities that do not constitute transacting business in the state. The items listed include:
For the actual legal description of each of these items, check this Tennessee Secretary of State (SOS) FAQ page or Section 48-246-102 of the Tennessee Code. If your LLC's only activity in Tennessee is one or more of the listed items, you should not need to register with the state.
To register your foreign business in Tennessee, you must file an Application for Certificate of Authority: Limited Liability Company with the SOS. You can download a copy of the form from the SOS website.
To complete the form, you must provide more or less the same information that you need to create an LLC in your home state. However, since every state is a little different, there may be items that Tennessee asks for that you did not need to provide when you first organized your LLC. More specifically, for a Tennessee Certificate of Authority, you need to provide:
Your LLC's name must be distinguishable from other business entities already registered in Tennessee. You can submit the application by mail or by walk-in at the Secretary of State's office. The filing fee is $50 per member based on the number of members on the date of the filing, with a minimum fee of $300 and a maximum fee of $3,000.
If your LLC transacts business in Tennessee without a Certificate of Authority, it cannot bring a lawsuit in the state. Moreover, if your LLC transacts or conducts business in Tennessee without authority, it is liable for fines, and no Certificate of Authority will be accepted until the fines are paid. However, not having a valid Certificate of Authority does not invalidate any of your LLC's contracts or stop your LLC from defending a lawsuit in the state.
If your business is organized as a corporation rather than an LLC, the rules and requirements for foreign qualification in Tennessee are similar. You will, however, have to use a different application form,Application for Certificate of Authority For-Profit Corporation(SS-4431). See theTennessee Secretary of State websitefor forms, information, and filing instructions for registering a foreign corporation in Tennessee.