Tennessee LLC Guide

Table of Contents

The first step in creating your LLC is picking a unique entity name. Each state has specific requirements for naming a new LLC.

Here are the basic guidelines for naming your new LLC:

• The entity name must be distinguishable from an existing domestic or foreign entity registered within the state. In other words, if someone has already registered the entity name within Tennessee, you cannot use the same entity name.
• The name of the LLC must contain either the words “limited liability company” or the abbreviations “LLC” or “L.L.C.”.
• The name of the LLC cannot include any words or phrases that indicate or imply it is engaged in a trade or business that the entity is not authorized to pursue. In addition, the name should not create a false implication of government affiliation. For example, your LLC name shouldn’t include “insurer” or “insurance company” unless licensed and registered to do business as an insurance company within the state. The LLC name shouldn’t include “college” or “university” unless the entity obtains the proper state authorization and licensing.

Like many states, Tennessee has no stated restrictions on the length of the entity name. However, the IRS does have some limitations on the entity name when applying for an employer identification number (EIN).

The IRS’ online EIN application limits the number of characters to less than 70, so consider using an entity name with less than 70 characters to ensure your entity name matches the name on your CP 575 (EIN Confirmation Letter). In addition, the IRS does not allow the use of a period (.) or many other special characters. The only characters the IRS system can accept are 1) alpha (A-Z), 2) numeric (0-9), 3) hyphen (-), and 4) ampersand (&).

For example, assume you create a company using the legal name “Company ABC, Inc.” and file an EIN application the same day. The IRS will process your EIN and send you a CP 575 confirmation with the entity name “COMPANY ABC INC”. Note how the IRS does not allow the period (.) or the comma (,).

Tennessee does not require you to reserve an LLC name before filing the Articles of Organization. However, you can reserve an entity name by filing an “Application for Name Reservation” with a $20 processing fee. The name reservation is valid for 120 days.

Your LLC must have a registered agent in the State of Tennessee. The registered agent is a person or company that agrees to receive any process, notice, or demand required or permitted by law and other official government communications on behalf of the LLC.

The registered agent is not to be used to receive regular mail or other correspondence, such as bank statements. If you don’t have a physical office location to receive mail, consider using a virtual office and mail forwarding service. Some of the most popular providers include Northwest Registered Agent & Bizee.

The registered agent must have a physical address in Tennessee and be available during regular business hours (i.e., 9 am to 5 pm, Monday through Friday). Most registered agent service providers charge between $25 and $125 annually for this service.

If you live in Tennessee and want to save money, you can act as your own registered agent. Read our blog “Can I Be My Own Registered Agent” for more information.

Although you may be able to serve as your LLC’s registered agent, we recommend hiring a third-party professional service provider as your registered agent. Some of the most popular registered agent providers are Northwest Registered Agent, Bizee, and Registered Agents Inc.

To officially open your LLC, you must file the necessary organizational documents with the State of Tennessee. States refer to this document as either the Certificate of Formation or the Articles of Organization.

Tennessee identifies this document as the Articles of Organization. You can find templates and other forms in the Business Forms & Fees section of the Tennessee Secretary of State website.

Under Tennessee statutes, the following information is mandatory with your Articles of Organization:

• Name of the Limited Liability Company: Include the full legal name of your LLC, which includes the words “Limited Liability Company” or a permitted abbreviation.
• Registered Agent: Provide the full name and physical address of the registered agent in Tennessee. The registered agent must formally agree to act as your LLC’s registered agent; otherwise, the appointment is invalid.
• Principal Address: Enter the street address for the LLC’s principal place of business. You cannot use a P.O. Box as the principal office address. If you hire a registered agent service provider, you should use a different address from the registered agent. If you don’t have a physical office location or don’t want to use your home address for privacy reasons, consider using a mail forwarding service that allows you to purchase a designated address for a low monthly fee.
• Management: The Articles should include a statement as to whether the LLC will be member-managed, manager-managed, or director-managed.
• Number of Members: If the LLC will have more than six members at the date of filing the Articles, include a statement of the number of members.
• Limitation on Liability: If one or more members are to be personally liable for all of the company debts, specifically identify each member in the Articles. Each member must sign the Articles of Organization to accept personal responsibility for company debts.
• Delayed Effective Date: By default, an LLC becomes effective upon filing the Articles with the Secretary of State. If you want the LLC to have a delayed effective date, include an article that specifies a future date and time. The future date cannot be more than 90 days after the filing of the Articles.
• Business Activity Limits: If the entity will be prohibited from conducting business within Tennessee, include a statement to that effect in a separate article. This detail is important because it impacts the amount of your LLC filing fees. See the discussion on filing fees below.
• LLC Duration: The Articles must include a statement that confirms the duration of the entity. If you want your LLC to exist until it is formally dissolved, enter “perpetual” for the term of existence. The term of the LLC should be limited to a specific period of time, specify such limitation and the future date on which dissolution should occur.
• Signature from LLC Organizer: The Articles should be signed by the LLC organizer. The signature block should include the person’s name, title, and signature.

Adjustments Required for a Series LLC or a PLLC

In addition to a standard LLC, Tennessee allows you to form a Series LLC or a professional limited liability company (PLLC). Read our blog posts “LLC vs. PLLC – Which One Do You Need?” and “What is a Series LLC” for more information. If you form either of these two entities, some additional changes are required to the Articles of Organization.

• Naming the LLC: If forming a PLLC, replace the “LLC” with “PLLC” in the entity name.
• PLLC Provisions: If forming a PLLC, include a separate article stating the company has the additional designation of a Professional Limited Liability Company. A separate article should also state that the purpose of the PLLC is to render specified professional services and that the PLLC has one or more qualified persons as members and no disqualified persons as members.
• Series LLC Provisions: If forming a Series LLC, include a separate article stating the company has the additional designation of a Series LLC. A separate article should confirm the LLC meets the requirements to be a Series LLC under T.C.A. § 48-249-309(a) & (b).

How to Send Your Form to the State

There are several ways to file your documents with Tennessee.

Online: For the fastest and most reliable processing, file your Articles of Organization online through the TN Secretary of State website.

By Mail: If you prefer to paper file the document, you can complete the filing and mail it to the address below with the required fees:

Business Services Division
312 Rosa L. Parks Ave, 6th Floor
Nashville, TN 37243-1102

In Person: If you prefer to deliver the documents in person, do so at the following address:

Business Services Division
312 Rosa L. Parks Ave, 3rd Floor
Nashville, TN 37243-1102

Remember that mailing addresses and in-person locations are often subject to change, so check the Secretary of State’s website for current addresses and other information.

LLC Filing Fees

Like many states, Tennessee charges a filing fee to open an LLC. The filing fee for a domestic LLC is $50 per LLC member, with a minimum fee of $300 and a maximum fee of $3,000. If the Articles prohibit the LLC from doing business within Tennessee, the filing fee is $300 regardless of the number of LLC members.

Most states do not require an LLC to have an operating agreement; however, it is highly recommended, even in cases where the LLC has only one member.

The LLC operating agreement is a business agreement between the members and managers that lays out the operating rules for the business. The operating agreement usually includes provisions that address ownership, member rights and responsibilities, member ownership percentages, tax considerations, allocation of profits and losses, distribution of capital, and the dissolution of the LLC.

Under Tennessee statutes, an LLC operating agreement is not mandatory for LLCs. However, it is highly recommended for all LLCs, particularly for multi-member LLCs with more than one member.

Your LLC needs an entity taxpayer identification number (TIN) called an employer identification number (EIN). The EIN will help the entity open bank accounts and credit cards, apply for business licenses, set up company payroll for employees, and file income tax and payroll tax returns.

The EIN application is free and can be accessed online using the IRS website. You can find the application page in the “Small Business and Self-Employed Section” of the IRS website. If you are unsure about how to complete the EIN application, you can hire a third-party provider to file the necessary application. Companies like Northwest Registered Agent can provide this service.

Sometimes, the LLC is ineligible to apply online, and it must paper file or fax the IRS Form SS-4 to the appropriate IRS office. For example, an LLC with non-U.S. ownership may be unable to use the online application. View our post “Form SS-4 (Application for EIN)” for more details and video tutorials on EIN filings for an LLC with non-U.S. ownership.

Once the EIN is approved, the LLC receives a CP 575 (EIN Confirmation Letter), which assigns the EIN and confirms the default federal tax treatment based on the number of LLC members. A single-member LLC is, by default, a disregarded entity, while a multi-member LLC is a partnership.

If the LLC desires to change its tax classification to either an S Corporation or C corporation, the LLC would need to separately file Form 2553 (Election by Small Business Corporation) or Form 8832 (Entity Classification Election).

The LLC should open a business checking account using the LLC name, EIN, and company address. As an LLC owner, you do not want to use your personal bank account to receive payments and pay company expenses. Commingling business and personal accounts can create issues for the LLC and its members, such as piercing the company veil by challenging the entity’s separate existence.

To open a business bank account, you’ll generally need the following information and documents:

• The LLC’s Certificate of Formation or Articles of Organization.
• The LLC’s operating agreement, if applicable.
• The LLC’s EIN with a copy of the IRS CP 575 confirmation notice.
• The name, address, and U.S. taxpayer ID number for any substantial owner of the LLC. A substantial owner generally owns more than 25% of the company.
• Provide a completed and signed Form W-9 (Request for Taxpayer Identification Number and Certification). A foreign-owned disregarded LLC may be required to provide a Form W-8. View our blog post “Form W-8 Withholding Certificate – Which One Do You Need?” for more information.

When choosing a business bank account, there are many factors to consider. Those factors may include account fees, minimum balance requirements, monthly transaction limits on deposits and withdrawals, interest rates on savings products, bank solvency and stability, access to credit, and the quality of their customer service.

Popular banking options for new small businesses include Wise and Mercury.

A business credit card is critical for making business purchases and paying expenses. By opening a credit card, you open a credit profile for your LLC. Building credit history for your business is just as important as building credit for an individual. A solid business credit score and positive history will make obtaining loans, lines of credit, and other financing easier for your LLC.

For more information on banking products, please visit the “Banking & Credit” section of our website.

Beginning January 1, 2024, there are new reporting requirements for entities that are domestic or foreign reporting companies. The Corporate Transparency Act (CTA) implemented these new filing requirements, which require all reporting entities to provide information about beneficial owners and company applicants to the Financial Crimes Enforcement Network (FinCEN).

A domestic LLC is an entity formed within the United States and is generally classified as a domestic reporting company that must file these reports with FinCEN.

What are the Filing Deadlines for an Initial BOI Report?

The filing deadline for an initial BOI report depends on when you opened the LLC. If you opened the LLC before January 1, 2024, the LLC must file its initial BOI report on or before January 1, 2025. If you opened the LLC in 2024, the LLC must file its initial BOI report within 90 days of the entity formation date. If you opened the LLC on or after January 1, 2025, the LLC must file its initial BOI report within 30 days.

What are the Filing Deadlines for a Corrected/Updated BOI Report?

The LLC must file an updated report when there is a change to previously reported information about the company or its beneficial owners. The LLC must file a corrected report if the previously reported information was incorrect when originally submitted.

The LLC must file an updated or corrected report within 30 calendar days of the change in information or discovery of the inaccuracy.

What Information Must be Reported?

The principal purpose of BOI reports is to report information on the natural persons who beneficially own or control a company and the persons who prepare and file the organizational documents.

A beneficial owner includes an individual who exercises substantial control over the reporting company or owns or controls at least 25% of the ownership interests in the reporting company. A company applicant is an individual who directly files the document that creates the company (e.g., the Articles of Organization or Certificate of Formation). A maximum of 2 individuals may be reported as company applicants. There is no limit on the number of beneficial owners included in a BOI report.

For a sample BOI filing for an LLC formed in 2024, view our blog post “How to File BOI Report – Example for Single Member LLC,” which includes a related video tutorial.

Here are some other items you should consider when opening your LLC.

Annual Reporting in the State

Like many states, your Tennessee LLC must comply with annual filing and reporting obligations to maintain good standing with the state. The state may administratively dissolve the LLC if the entity does not remain in good standing.

Each LLC must file an Annual Report on or before the first day of the fourth month following the close of the LLC’s fiscal year. For example, if your LLC uses a calendar year ending December 31, the annual report is due on or before April 1st of each year. The annual report fee is calculated based on the number of LLC members in the company. The filing fee is a minimum of $300 and is increased by $50 per member for every member over 6 members. The maximum fee is $3,000. For example, if an LLC has 8 members, the total annual report fee would be $400.

The best way to file the annual report is online through the TN Secretary of State website.

Company Payroll & Related Taxes

Most early-stage companies do not have employees because the owners find themselves bearing all of the responsibility of getting the company up and running.

However, if you plan to hire employees for your new LLC, consider using a payroll service provider to manage payroll and maintain compliance with federal, state, and local payroll tax obligations. Companies like Wave and Gusto Payroll have a combined accounting and payroll service platform.

Launch a Company Website

Launching a website for your new business is essential because it establishes your online presence, making your brand accessible to a global audience 24 hours a day.

A website builds credibility, allowing potential customers to learn about your products or services, read testimonials, and contact you for more information.

Many business create their website using WordPress because it is user-friendly, flexible, and highly customizable. Select a web hosting service and purchase a domain name to get started. You can check out hosting providers like Bluehost, Hostgator, and WP Engine.

Virtual Mailing Address & Mail Forwarding Services

If you are a new entrepreneur running your business from home, consider using a virtual mailbox and mail forwarding service provider.

A virtual office address provides a physical address rather than a P.O. Box. The virtual office enhances the company’s credibility and provides the business owner some privacy protection by preventing them from using their home address for contact information, invoicing, and other correspondence.

A third-party mail forwarding service provider will receive and open your mail, scan the documents, and upload those documents to a secure portal for your review. If you need to obtain the original document, the provider can forward the original mail to your residential address for a small fee.

You can check out mail forwarding providers such as Northwest Registered Agent and Bizee.

Business Licenses & Insurance

Every LLC should have the proper business licenses and insurance to ensure the business stays compliant with all local and federal regulations.

In Tennessee, not every LLC is required to obtain a business license. Permits and licenses are only required if the LLC is engaged in a particular business activity within the state. The license requirements vary by county, city, or municipality where the business operates, so it is always best to check with local authorities for business license and permit requirements.

Depending upon the type of activities conducted by the business, you’ll want some form of business insurance to protect the LLC and its owners against future risks and other liabilities. Consider using a provider like Next Insurance to get a quote.

Annual Income Tax Filings

All U.S. companies, including LLCs, must comply with all federal, state, and local tax filing obligations. A U.S. LLC is, by default, a pass-through entity for federal tax purposes, meaning the entity itself is not subject to income taxes because the earnings are passed through to the LLC members and reported on their respective income tax returns.

For a new Tennessee LLC, the tax filing obligations will largely depend upon the tax classification of the LLC (i.e., is the entity a partnership, S corporation, C corporation, or a disregarded entity).

For example, a multi-member LLC treated as a partnership for federal tax purposes should file an annual Form 1065 (US Return of Partnership Income). Tennessee does not have a partnership tax return; however, businesses are required to file an annual franchise tax return using TN Form FAE 170 (Franchise and Excise Tax Return).

For more information on business taxes for LLCs, please visit the “Business Taxes“ section of our website.

Payment Processing Services

Most customers expect to be able to pay for goods and services using a debit or credit card. If your business plans to accept credit & debit card payments from customers, you’ll need to partner with a credit card processing company to receive these payments. Some of the most popular choices for credit card processing are Stripe, Paypal, and Wave Invoicing.

Processing credit & debit card payments usually result in a processing fee, which is a fixed percentage of the payment amount. For example, suppose you run an online store, and a customer purchases a product for $50. The payment processor may charge a 3% processing fee on the $50 sale. The processor will keep a fee of $1.50 (3% times $50) and deposit the remaining $48.50 into your company bank account.

Summary

Starting an LLC in Tennessee is the first step to launching your new business venture. Our state LLC guide helps you navigate the various steps and complete the process as smoothly as possible.

If you need help and want to hire a third-party service provider, entity formation service providers can help you complete each step of the process.