How to form an LLC in Tennessee in 6 easy steps
Tennessee entrepreneurs eager to get their business off the ground need to make a few strategic decisions first—including organizing their small business in a way that fits their goals. Depending on your priorities, a Limited Liability model could be the best type of business for your unique needs. Forming an LLC in Tennessee is manageable if you follow state and federal guidelines, including submitting required forms and paying fees to the Tennessee Secretary of State by certain deadlines.
Sound complicated? No worries, Huckleberry has your back. Below, we break down how to start an LLC in Tennessee.
1) Check if your LLC business name is available
Before doing anything else, you’ll need to pick your LLC name. The ideal moniker grabs the attention of potential clients, yes—but it also distinguishes you from the competition and (for legal reasons) isn’t too similar to another business.
To ensure your top choice doesn’t match another Tennessee LLC, run a name search, checking through:
- Domain names and social media handles
- The Tennessee Secretary of State’s Business Name Availability search engine
- Tennessee Trademark Search
- Federal Trademark Search
Once you’ve decided on the perfect identity for your brand, there are just a few more rules to remember:
- Indicate your business entity is a Limited Liability Company somewhere in the title, whether through the complete spelling of the phrase or an abbreviation (LLC, L.LC.).
- Avoid any words that could cause the public to mistake you for a government entity (Department of Health, EPA, CIA).
- Avoid legally-restricted titles (like Credit Union, College, Hospital) unless you’ve filled out the required paperwork and/or have an LLC member with the appropriate professional credentials to back it up.
Need more time to think it over? You can retain a company name by filing an Application for Name Reservation with the Tennessee Secretary of State for 120 days. You’ll need to pay a $20 fee, but this is a good option for those who want to keep rights to a name until they feel 100% certain.
Finally, decide if you need a DBA (or “Doing-Business-As”). A DBA is an alternate name you can conduct business under without starting an additional LLC. You might use this if you’d like to expand your business under two different brands for two different products. For example, if your plant nursery LLC would like to start offering lawn care services under a different name, a DBA could come in handy. You may file for a DBA with the Tennessee Secretary of State for $20.
2) Claim your name
Now that you’ve named your LLC, it’s time to make your LLC official by filing the Tennessee Articles of Organization through the Tennessee Secretary of State, Business Services Division. You can file online for approval within a 24-hour window or by mail for a 7-10 business day wait.
(Note: If you hail from a different state but would like to do business in Tennessee, you may need to set up a foreign LLC. A foreign LLC is simply an LLC based in a state different from where it’s conducting business. You’ll have to fill out an application for a Foreign Limited Liability Company Registration with the Secretary of State.)
How much you pay will depend on the number of members you have, costing a minimum of $300 for 6 or fewer members and $50 for each additional member. So, if your LLC has 8 members, your state fees will be $400, and so on—maxing out at $3,000.
When filling out the Articles of Organization, you’ll need to include several details about your LLC, including:
- Your business's street address and mailing address
- Your official start date. You can delay your effective date up to 90 days from your application date if you need a little extra time getting your business organized.
- The name of your Tennessee registered agent. The registered agent accepts mail from state and federal government entities for your LLC. Whoever you choose must have a physical address in the state of Tennessee, must be 18 years of age or older, and must be available during business hours to accept correspondence.
- The structure of your Tennessee business. Now is the time to decide if you’d like your Tennessee LLC to be member-managed (with members sharing equal voting power) or manager-led (with a manager holding more sway over business decisions). In your LLC's operating agreement, you can lay this out in finer detail.
Speaking of which...
3) Write your operating agreement
While there’s no state law requiring your business to have an operating agreement, it’s still a great idea to have one.
Not only does an iron-clad operating agreement provide a clear directive for member responsibilities, profit distribution, voting rights, and power balance, it could serve as evidence supporting the legitimacy of your LLC in the face of a lawsuit. Also, without your input through an operating agreement, the state of Tennessee automatically defaults to its base LLC operating structure. So, you might as well spell out exactly how you’d like things to function.
When nailing down the finer details, it helps to consider why you chose an LLC business model from all other business models. Was it the autonomy of a sole-proprietorship or the convenience of sharing the load with a multi-member LLC? Here is where you can make your priorities front-and-center—in black and white—so there’s no confusion down the line.
4) File your Annual Report
As a Tennessee LLC owner, you’ll need to complete an annual report and turn it into the Tennessee Secretary of State’s Business Services. The information is due 4 months after the close of your LLC's fiscal year. So, if your fiscal year ends in January, this report is due in May.
Keep in mind that the pricing for this yearly report is relatively expensive—just as expensive as the Articles of Organization. So, if you paid $300 as a sole-proprietor or $600 for 12 members, that’s what you’ll pay when you submit your annual report.
5) Pay your taxes
Another essential step in establishing your LLC is applying for your Employer Identification Number (or EIN). Having an EIN simplifies taxes by allowing the Internal Revenue Service to easily ID your business and industry while also enabling you to open a business account and hire employees. The EIN serves as a social security number for your LLC—preventing you from having to use your social security number in business dealings. You can apply for your LLC’s EIN at the IRS website.
Suppose you have a single-member LLC with no employees. In that case, you might not need an EIN if you don’t want to open a business bank account—but that isn’t advisable if you want to maintain a strict separation between your personal assets and business assets.
From here, you can decide how you’d like your LLC to handle business taxes. Federally, your LLC can be taxed as a sole-proprietorship, corporation, or partnership. To keep things simple, many LLC owners elect for a “pass-through” taxation model—meaning that members pay federal tax out of their individual tax returns. Additionally, LLC owners will likely need to pay the self-employment tax (15.3% of business profits).
When it comes to state taxes, all Tennessee LLCs must pay a franchise and excise tax. The franchise tax is .25% of the LLCs net worth, while the excise tax is 6.5% of the LLC’s net income. Depending on your LLC's industry and whether or not you have employees, your LLC might also need to pay sales tax and Unemployment Insurance Tax.
6) Wrap up other regulation and sales tax requirements
You’re so close to being open for business—let’s just make sure you have all the required licenses and certifications.
First, depending on your LLC’s location, industry, and size, you might need to secure specific business licenses, certifications, or insurance coverages. For example, if you’re a restaurant owner in Tennessee, the “person-in-charge” of your location will likely need to get certified as a food protection manager. Or, if you have more than 5 employees, the state requires your business to have workers’ compensation insurance.
Check the Tennessee Department of Revenue Registration and Licensing and federal and local government websites to ensure your LLC is up-to-date on all required licenses and certifications.
Second, all entities “engaged in business”—which would include your LLC—must get a sales tax certificate, otherwise known as a seller’s permit. You'll only need to pay a $15 filing fee.
Finally, as long you receive all required federal, state, and local licenses, pay your taxes and turn in your annual report on time, you may apply for a Certificate of Good Standing. A Certificate of Good Standing (also referred to as a Certificate of Existence) shows that your LLC has turned in all its legal documents and paid its fees. Having this certification makes it a lot easier to get loans, work with out-of-state businesses, and open business bank accounts.
The application fee is $20 and can be completed online at the Tennessee Secretary of State’s website.
Get LLC insurance in minutes by following these steps
You’re in the home stretch now—after all your hard work establishing your LLC, the last decision to make is the easiest. It’s time to protect your business from any curveballs life could throw its way by investing in the best small business insurance.
Unlike traditional insurance providers, Huckleberry makes getting the protection you need fast, simple, and entirely online.
- Head to Huckleberry.com and click the “Instant Estimate” button. In just a few minutes, you’ll get quotes for multiple insurance types that fit your business needs.
- Type in your industry to pull up insurance options that serve you best.
- Answer a few quick questions (like your location and how many employees you have). Don’t worry—we won’t make you fill out any forms or lengthy questionnaires.
- And that’s it. In the time it takes to enjoy a quick cup of coffee, you’ll get quotes for different insurance coverages. No commitment necessary.
- Only have a few seconds to spare? Check out our quick estimator to get a ballpark figure of your workers’ compensation insurance needs.
Tennessee LLC formation is achievable as long as you fill out the forms and acquire the licenses you need. Still, it’s an accomplishment to start a new business—we commend you and want to help your company thrive. Like the protective perks an LLC business structure offers, the best small business insurance helps safeguard your hard work from litigation and life's unexpected circumstances.
Whether you need to protect your shiny new storefront with business property insurance, or you’d like the wide-ranging benefits of general liability insurance, Huckleberry is here to help. Small business owners like yourself can get no-nonsense quotes in minutes, at affordable rates, with zero headache (we promise!). Since there’s nothing to lose and only peace of mind to gain, complete your business’s safety plan with Huckleberry.