A limited liability company (LLC for short) is a way to legally structure a business. It combines the limited liability of a corporation with the flexibility and lack of formalities provided by a partnership or sole proprietorship. Any business owner who seeks to limit his or her personal liability for business debts and lawsuits should consider forming an LLC.
Here are the steps you need to take to form an LLC in Tennessee. For more information on how to form an LLC in any state, see Nolo's article How to Form an LLC.
Under Tennessee law, an LLC name must contain the words "Limited Liability Company" or the abbreviations "L.L.C." or "LLC."
Your LLC’s name must be distinguishable from the names of other business entities already on file with the Tennessee Secretary of State. Names may be checked for availability at the Tennessee Secretary of State business name database.
You may reserve a name for four months by filing an Application for Reservation of Limited Liability Company Name (Form ss-4228) with the Tennessee Secretary of State. The filing fee for a reservation is $20. The reservation may be filed online or by postal mail.
Every Tennessee LLC must have an agent for service of process in the state. This is an individual or business entity that agrees to accept legal papers on the LLC’s behalf if it is sued. The registered agent may be a Tennessee resident or a business entity authorized to do business in Tennessee. The registered agent must have a physical street address in Tennessee.
A Tennessee LLC is created by filing Articles of Organization (Form ss-4270) with the Secretary of State. The articles must include:
The articles may be filed online or by postal mail. The filing fee is $50 per LLC member. The minimum fee is $300; the maximum fee is $3,000. An additional convenience fee must be paid for online filings paid by credit card.
An LLC operating agreement is not required in Tennessee, but is highly advisable. This is an internal document that establishes how your LLC will be run. It sets out the rights and responsibilities of the members and managers, including how the LLC will be managed. It can also help preserve your limited liability by showing that your LLC is truly a separate business entity. In the absence of an operating agreement, state LLC law will govern how your LLC operates.
All of the paperwork and procedural steps to start a limited liability company can be done online using Nolo's Online LLC Formation service.
Additional tax and regulatory requirements may apply to your LLC. These may include:
EIN: If your LLC has more than one member, it must obtain its own IRS Employer Identification Number (EIN), even if it has no employees. If you form a one-member LLC, you must obtain an EIN for it only if it will have employees or you elect to have it taxed as a corporation instead of a sole proprietorship (disregarded entity). You may obtain an EIN by completing an online EIN application on the IRS website. There is no filing fee.
Business Licenses: Most Tennessee businesses are required to have business licenses, which are issued by the local county clerk. A city business license may be required as well. Check with the county and city clerks for the location of the LLC's primary place of business. For state license information, check the Tennessee Smart Start guide. For more information, see Nolo's article How to Get a Small Business License in Tennessee.
Department of Revenue: In some cases, for example if you will be selling goods and collecting sales tax, you’ll need to register with the Tennessee Department of Revenue. (Tennessee also imposes a franchise tax and an excise tax on most LLCs.) You can register online or complete a paper form (Application for Registration). For more information on Tennessee LLC tax registration, see Nolo's article Tennessee LLC Annual Filing Requirements.
All Tennessee LLCs and foreign LLCs authorized to do business in the state must file an annual report with the Tennessee Secretary of State and pay a $50 filing fee per member (minimum of $300 and maximum of $3,000). Annual reports are due on or before the first day of the fourth month following the LLC's fiscal year closing. 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. Annual reports may be filed online or by postal mail.
If you are just starting your business or have already been operating as a sole proprietor, you should consider forming an LLC. LLCs limit an owner's personal liability for business debts and lawsuits and offer a lot of flexibility when it comes to ownership, management, and taxation of the business. To learn more about LLCs and decide if it is the right business structure for you, see What is a Limited Liability Company (LLC)?
It is important to make sure that your LLC's name is distinguishable from the names of other existing businesses on file with the Tennessee Secretary of State. You can conduct a name search for free on the Tennessee SOS website to make sure your proposed name is available.
Filing on your own is often the cheapest option, but completing all of the forms and filing them yourself can be complicated. Hiring a lawyer is another option, but will often cost you hundreds, if not thousands, of dollars in the process. Nolo's Online LLC formation service can complete all of the paperwork and filings for you, with packages starting at just $49.00. To learn more about the costs associated with forming and running an LLC, see How Much Does It Cost to Form an LLC?
Tennessee does not require LLCs to have operating agreements, but it is highly advisable to have one. An operating agreement will help protect your limited liability status, prevent financial and managerial misunderstandings, and ensure that you decide on the rules governing your business instead of state law by default. For more information, see The LLC Operating Agreement.
To do business in Tennessee, all LLCs organized outside of the state must register with the Tennessee Secretary of State. Foreign LLCs must appoint a registered agent for service of process. The agent may be a Tennessee resident or a business entity authorized to do business in Tennessee.
To register, file an Application for Certificate of Authority (Form ss-4233). The application must be filed by mail. The filing fee is $50 per LLC member. The minimum fee is $300, the maximum fee is $3,000. The completed application must be accompanied by a certificate of legal existence or good standing from the foreign LLC’s home state issued not more than two months before the application is filed.
Before filing the application, make sure the LLC’s name is available in Tennessee by checking the Tennessee business name database. If the name is not available, the foreign LLC must adopt an assumed name for use in Tennessee. The LLC must file an Application for Registration of Assumed Limited Liability Company Name (Form ss-4230).
For most formation purposes, a Tennessee single-member LLC is considered the same as a multi-member LLC. The steps to form a single-member LLC in Tennessee are the same as those listed above.
Single-member LLCs do have additional flexibility when it comes to filing a tax return. To learn more, see Nolo’s article, How Single-Member LLCs Pay Federal Income Tax.
If you provide a licensed professional service in Tennessee and want to form an LLC, you will be required to form a professional limited liability company (PLLC). Examples of professional services include architects, attorneys, dentists, certified public accountants, and more. Generally, if you provide a service that requires you to obtain a Tennessee state license before practicing, then you are a professional service. Each member of the company must be licensed in order to form a PLLC. To learn more about forming a Tennessee PLLC, see our article, How to Form a Professional LLC in Tennessee.
If you reach the point where it is time to close your business and cease all operations, then you will want to properly dissolve your LLC to limit your liability for lawsuits and government fees. Learn about the steps you will need to take in How to Dissolve an LLC in Tennessee.