Starting a business is an exciting venture, and if you’re considering launching in Tennessee, forming a Limited Liability Company (LLC) could be the perfect choice for you. Whether you’re a first-time entrepreneur or expanding your existing business, Tennessee offers a favorable environment for LLCs with its business-friendly regulations and no state income tax.
An LLC provides you with the legal protection of your personal assets, while also offering flexible tax options and simpler administrative requirements compared to other business structures like corporations.
In 2025, forming an LLC in Tennessee is easier than ever, thanks to streamlined online processes and resources provided by the state. If you’re thinking about starting an LLC, you’ve come to the right place. This step-by-step guide will walk you through the entire process of setting up your LLC in Tennessee, from choosing a business name to filing essential documents and maintaining compliance.
The LLC structure is a popular choice for small businesses because it protects your personal assets in the event of business liabilities. Plus, it offers flexibility when it comes to taxation, allowing you to choose between pass-through taxation or corporate taxation.
As a result, you can ensure that your business is well-suited to your financial goals and needs. Furthermore, an LLC is relatively easy and inexpensive to set up, especially compared to other business entities like corporations, which require more complex paperwork and higher fees.
Tennessee is a state that encourages entrepreneurship. It is known for being business-friendly, with no state income tax and a relatively low cost of doing business. Whether you plan to start a small side business, a consultancy, or a larger enterprise, Tennessee’s LLC structure can offer you the security and flexibility you need to grow and thrive.
In this guide, you’ll find everything you need to know to get your LLC up and running smoothly, ensuring you comply with all state requirements while setting yourself up for long-term success.
What is an LLC?
Before diving into the steps of forming an LLC, it’s important to understand what an LLC is. A Limited Liability Company (LLC) is a business structure that combines the benefits of a corporation and a partnership or sole proprietorship. LLCs protect business owners from personal liability, meaning your personal assets, like your home or car, are typically shielded from business debts and lawsuits.
Why Choose an LLC in Tennessee?
There are many reasons why starting an LLC in Tennessee makes sense for small business owners:
- Personal Asset Protection: The LLC structure provides personal liability protection for the owners (called members), meaning you won’t be personally responsible for business debts.
- Flexibility in Taxation: An LLC can choose how it wants to be taxed. It can opt for pass-through taxation (similar to a sole proprietorship or partnership) or elect to be taxed as a corporation.
- Simple Setup: Tennessee has relatively simple and affordable requirements for forming an LLC. It is also a business-friendly state with no state income tax.
- Credibility: Forming an LLC can increase the credibility of your business, as it signals to potential customers, partners, and investors that you are serious and professional.
Now that you understand why an LLC is a great choice, let’s look at the detailed steps for forming your LLC in Tennessee.
Step 1: Choose a Name for Your LLC
The first step in forming an LLC in Tennessee is choosing a name for your business. Your LLC’s name must meet certain requirements set by the state. Here are some of the key guidelines:
- Unique Name: Your LLC name must be unique and distinguishable from other LLCs, corporations, or limited partnerships registered in Tennessee.
- Required Terms: The name must include the words “Limited Liability Company” or the abbreviations “LLC” or “L.L.C.” The term “Limited Company” or “LC” is also acceptable.
- No Confusing Terms: The name should not confuse your business with a government agency or include words that could mislead the public (e.g., “FBI” or “Treasury”).
- No Prohibited Words: Some words are prohibited in an LLC name, such as “bank,” “insurance,” or “trust,” unless you have specific approval from the state.
How to Check Name Availability
You can check whether your desired LLC name is available through the Tennessee Secretary of State’s online database. It’s always a good idea to have a few name options in case your first choice is already taken. If the name you want is available, you can reserve it for 120 days by filing a name reservation form and paying a small fee.
Step 2: Appoint a Registered Agent
Every LLC in Tennessee is required to appoint a Registered Agent. A Registered Agent is an individual or a business entity that receives legal documents on behalf of your LLC, such as lawsuits, subpoenas, and official government correspondence.
Who Can Be a Registered Agent?
Your Registered Agent can be:
- An individual: This person must be a resident of Tennessee and have a physical address (not a P.O. box) in the state.
- A professional service: Many LLC owners choose to hire a professional Registered Agent service. These companies provide you with a physical address and handle the receipt of legal documents for you.
You can serve as your own Registered Agent, but if you do, you must be available during business hours to receive official documents. Many entrepreneurs choose to hire a Registered Agent service to ensure they remain compliant with Tennessee law and avoid the risk of missing important notices.
Step 3: File Articles of Organization
To officially create your LLC, you need to file a document called the Articles of Organization with the Tennessee Secretary of State. This is the form that registers your LLC with the state.
You can file your Articles of Organization online or by mail. The process is simple and involves providing basic information about your LLC.
Information You’ll Need for the Articles of Organization
When filling out the Articles of Organization, you’ll need to provide the following details:
- LLC Name: The official name of your LLC (with “LLC” or “L.L.C.” in the name).
- Registered Agent: The name and address of your Registered Agent.
- Business Address: The physical address of your LLC (it can be your home address or a business address).
- Members or Managers: Tennessee allows LLCs to be managed by members or managers. You’ll need to indicate which structure your LLC will follow.
- Duration: LLCs in Tennessee are assumed to have a perpetual duration unless you specify otherwise.
Filing Fee
The filing fee for the Articles of Organization in Tennessee is $300. You can pay this fee online or by check if filing by mail. Once filed, your LLC will officially be created.
Step 4: Create an Operating Agreement
Although not required by Tennessee law, it is highly recommended that your LLC has an Operating Agreement. This internal document sets the rules for how your LLC will be managed and outlines the rights and responsibilities of the members.
An Operating Agreement helps avoid disputes by clearly defining:
- The ownership structure: Who owns the LLC, and what percentage of the company does each member hold?
- Management structure: How will the LLC be managed? Will it be member-managed or manager-managed?
- Profit distribution: How will profits and losses be shared among members?
- Decision-making processes: How will major decisions be made?
Having an Operating Agreement helps ensure that everyone is on the same page and provides clarity in case of disagreements.
Step 5: Apply for an EIN (Employer Identification Number)
An Employer Identification Number (EIN) is required for most LLCs. It functions as a Social Security Number for your business and is used for tax reporting purposes. You’ll need an EIN to:
- Open a business bank account
- Hire employees
- File federal and state taxes
The good news is that obtaining an EIN is free and easy. You can apply for your EIN online through the IRS website.
How to Apply for an EIN
- Go to the IRS website and complete the online application.
- Answer basic questions about your LLC, including its structure and principal business activities.
- Receive your EIN immediately after completing the application.
Once you have your EIN, keep it in a safe place, as you’ll need it for various business-related tasks.
Step 6: Register for Business Taxes
In Tennessee, most businesses are required to register for various state taxes. Depending on the nature of your LLC, you may need to register for:
- Sales Tax: If your business sells goods or certain services, you will need to collect sales tax from customers. To do so, you must register with the Tennessee Department of Revenue.
- Franchise and Excise Taxes: LLCs that generate substantial revenue or have significant business activities in Tennessee may be subject to these taxes. They are calculated based on the company’s income and net worth.
- Other Taxes: Depending on your industry, you may also need to register for other taxes or permits.
Make sure to contact the Tennessee Department of Revenue to determine which taxes apply to your LLC. Registration can often be completed online.
After Your LLC is Approved
Once your LLC is officially formed and registered, there are a few ongoing requirements to maintain your LLC’s good standing in Tennessee.
Annual Report
Each year, you must file an Annual Report with the Tennessee Secretary of State. This report keeps the state updated on your LLC’s status and ensures that you remain in good standing.
- Due Date: Your Annual Report is due every year on the anniversary of the filing date of your Articles of Organization.
- Filing Fee: The filing fee for the Annual Report is $300.
- How to File: You can file your Annual Report online through the Tennessee Secretary of State’s website.
How Will My LLC Be Taxed in Tennessee?
Tennessee does not have a state income tax, which is a huge advantage for business owners. However, LLCs in Tennessee are subject to two types of taxes:
- Franchise Tax: This tax is based on the net worth of your LLC.
- Excise Tax: This tax is based on the income your LLC generates.
LLCs can elect to be taxed as a corporation, but if they do not make this election, they are generally taxed as pass-through entities. This means that profits and losses are passed through to the members, who report them on their personal tax returns.
Conclusion
Starting an LLC in Tennessee is a straightforward process that offers significant benefits for entrepreneurs. By following the steps outlined in this guide, you’ll be on your way to establishing a legal business entity that protects your personal assets and sets you up for success.
As you navigate the steps, remember to seek professional advice when needed, especially for tax and legal matters, to ensure everything is done correctly. With the right planning and preparation, your LLC in Tennessee will be a solid foundation for your business ventures.
FAQ
How long does it take to form an LLC in Tennessee?
The processing time for filing the Articles of Organization is typically 1–2 business days if done online. If you file by mail, it may take 3–5 business days.
Can I be my own Registered Agent?
Yes, you can be your own Registered Agent if you have a physical address in Tennessee and are available during business hours to receive legal documents.
Do I need an Operating Agreement?
Although not required by Tennessee law, having an Operating Agreement is highly recommended to define the roles and responsibilities of the members and avoid future disputes.
How do I maintain my LLC’s good standing?
To keep your LLC in good standing, file your Annual Report on time, maintain a Registered Agent, and pay any applicable taxes.