How to Set Up an Llc in Tennessee
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If you've been wanting to launch a limited liability company (LLC) in Tennessee, you might feel overwhelmed by the information, legal advice, and paperwork involved. You'll want to start your limited liability company on the right foot, and that means registering it with the state. Of the many business entity types, one of the most popular is the limited liability company. LLCs are easier to form and maintain than corporations and can offer their members personal liability protections.
If you think a Tennessee LLC is right for you, then we're here to help. Our LLC formation service can register your business entity and provide the tools and support to keep it running smoothly. There are many Tennessee LLC articles out there, but ours provides a step-by-step process on forming one. Let's take a closer look at how to start an LLC in Tennessee, the Volunteer State!
To form a Tennessee LLC, you'll need to file Tennessee Articles of Organization with the Tennessee Secretary of State's office. This filing creates a public record and the state government will legally recognize your business.
Before submitting, consider some key features that the document will require. This includes your business name, listing your resident agent, and what to put in an operating agreement to avoid conflict and legal issues. There might be additional steps depending on your industry. Let's dig in and understand how to set up an LLC in Tennessee.
Step 1: Name your Tennessee LLC
One of the most important aspects of forming your LLC in Tennessee is choosing the right name. Steer away from generic or vague names, but don't use something too similar to other businesses in the state.
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Start by conducting an LLC name search. Tennessee requires that new business names be distinguishable from existing ones in the state. Avoid an LLC name that can be confused with state or federal agencies. Not sure where to start? Take a look at our guide to conducting a Tennessee business name search.
Be aware that certain words in your business's name could be restricted by state law or come with additional approvals. For example, any LLC that plans to use words like "bank" or "insurance" in its title will first need to acquire written permissions from the Tennessee Department of Financial Institutions and/or the Department of Commerce and Insurance, respectively.
All LLC names must include the appropriate "designator," which are words or abbreviations indicating the business 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 detail applicable word restrictions and point out appropriate permissions if your company name contains a restricted designator.
If you aren't planning to file your Articles of Organization right away, consider reserving your business name. Tennessee allows potential business owners to reserve an available name for up to four months. Check out our business name reservation service.
File a DBA in Tennessee
Some companies may want to use an assumed name for their Tennessee LLC. This is known as a "doing business as" (DBA) name. This allows your company to separate services under various titles or to advertise without the mandated "LLC" designator. This is something else we can take care of for you. Learn more about Tennessee DBAs.
Another item you might want to consider is your business domain name. It can be frustrating to come up with the perfect domain name and learn it isn't available. Let us help you register your domain name early to maximize your company's visibility and potential.
Step 2: Appoint a resident agent in Tennessee
Successfully forming your Tennessee LLC will require naming a resident agent, or registered agent in other states. A registered agent receives legal service (like lawsuit notifications) and official government correspondence involving your company.
The registered agent must be a resident of Tennessee or a business authorized to do business in Tennessee. They must have a physical street address in the state and not a P.O. box or something similar. The agent must also be available during normal business hours.
Some business owners prefer to be their own resident agent, but there are drawbacks. You must be available during business hours at that address, which isn't always convenient or possible. This is especially true when a business is first formed. This is where a registered agent service can help. Thankfully, we have your back. We can put you in contact with our commercial resident agent partners in Tennessee. This service allows you the peace of mind in knowing you are legally compliant while keeping certain matters discreet.
Step 3: File Tennessee Articles of Organization
Articles of Organization officially register your Tennessee LLC in the eyes of the state. To file to the Tennessee Secretary of State, you'll need to make key information about your business ready and available. Make sure your chosen name has been researched and cleared. Double-check that you have all contact information for your members and resident agent handy. The Tennessee Secretary of State accepts filings online, by mail, and by hand-delivery, along with the relevant fee.
If you're having trouble doing this by yourself or don't have the time, that's okay! Filing official government documents to the Tennessee Secretary of State can be intimidating and complicated. With our business formation plans, we can handle it for you to make sure it's done quickly and correctly.
We can take care of filing your Articles of Organization with the Tennessee Secretary of State. Once your LLC is approved, your paperwork will be available from your ZenBusiness dashboard. You can keep it and other important paperwork digitally organized.
Keep your LLC's documents, like operating agreements, member certificates, contracts, compliance checklists, transfer ledger, etc. in a safe location. We offer a customized business kit to help you keep these important documents organized and looking professional.
Step 4: Create an Operating Agreement for your Tennessee LLC
To keep your LLC in Tennessee running smoothly, you should draft and adopt a comprehensive operating agreement. This is a set of rules that lays out and governs the LLC's management structure, best practices, how to resolve conflicts, naming the members' rights and responsibilities, and more.
While Tennessee doesn't require operating agreements, create one anyway. Having the right Tennessee operating agreement can protect and inform your LLC members (owners) about the company. Luckily, we can help here as well. Our operating agreement template can be customized for your business to help all LLC members.
Step 5: Apply for an EIN for your LLC in Tennessee
To ensure that your Tennessee LLC follows all local, state, and federal taxes, you will likely need an Employer Identification Number (EIN) from the Internal Revenue Service. The only LLCs that sometimes don't require one are single-member entities with no employees. It's still a good idea to have one.
This tax ID number serves your business similarly to a Social Security number for an individual. It allows the Internal Revenue Service 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.
You can get your Tennessee LLC's EIN through the Internal Revenue Service website, by mail, or by fax. We can also get it for you with our EIN service.
Open a Business Bank Account for your Tennessee LLC
Once you have an EIN, you'll be able to open a business bank account. Having separate accounts for your business and personal banking is crucial for sorting out your finances at tax time. It also helps ensure that you aren't commingling funds. This could also be used against you if someone takes you to court to challenge whether you and your LLC are truly separate entities.
We offer a discounted bank account for new businesses. It offers unlimited transactions, online banking, a debit card, and more. If you want to let others in the business use the account, then we offer a banking resolution template to make it easier. Try the ZenBusiness Money App to create invoices, receive payments, transfer money, and manage clients all in one place.
Tennessee LLC FAQs
- How much does it cost to start an LLC in Tennessee?
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. You can expect typical state fees to range from $300 to around $340.
Check out the complete fee schedule on the Secretary of State's website.
- What are the benefits of an LLC in Tennessee?
Tennessee's business landscape is overwhelmingly composed of small businesses. This means that the state is particularly hospitable toward understanding the needs of new small business owners. To that end, Tennessee has installed several key pieces of infrastructure to help new LLCs get off the ground. A few of the major benefits of forming a Tennessee LLC include:
- Business Enterprise Resource Office. Advocating statewide for economic inclusion, this entity provides best practices and a voice for disadvantaged businesses that may need extra community support.
- Smart Start Program. This launching guide connects new business owners to local mentors and resources immediately.
- Tennessee Small Business Development Center (TSBDC). This network of certified professional business counselors is set up throughout the state to offer specialized support.
- How is a Tennessee LLC taxed?
Responsibly forming an LLC in Tennessee means knowing what to expect in the tax department. On the federal level, LLCs can elect to be taxed as a sole proprietorship, a partnership, or a corporation. Most elect one of the pass-through taxation options of the former two, meaning that profits will only be federally taxed on the member's individual tax returns. This is unlike most corporations, in which profits are taxed twice, first at the business level and again at the individual shareholder level.
LLCs can also choose to be taxed as a corporation instead. This is sometimes advantageous to larger LLCs with high profits. A tax professional can tell you whether this tax setup is right for your business.
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.
- What is the processing time to form my Tennessee LLC?
Most applications will require 6 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.
If you're in a hurry to form your LLC and don't want to jump through the hoops of the state's expedited filing processes, we can handle it for you with our faster filing speeds service .
- Do I need to file my operating agreement with the state of Tennessee?
The Tennessee government does not require a copy of an operating agreement for a new business entity to form.
- What tax structure should I choose for my Tennessee LLC?
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.
- Does Tennessee allow a Series LLC?
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.
- Which licenses and insurance are required for an LLC in Tennessee?
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.
If you don't have the time or inclination to do all this research, or if you just want the peace of mind to know that your business has all the licenses and permits it's legally required to have, our business license report service can do the work for you.
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.
- How to dissolve a Tennessee LLC?
Before starting the dissolution process, the members of an LLC should vote to dissolve it. For the subsequent steps please refer to our Tennessee business dissolution guide.
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How to Set Up an Llc in Tennessee
Source: https://www.zenbusiness.com/tennessee-llc/
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