How to Start an LLC in Tennessee

Starting an LLC in Tennessee Is Easy With These 5 Steps

STEP 1: Name your Tennessee LLC

Choosing a company name is the first and most important step in setting up an LLC in Tennessee. Be sure to choose a name that complies with Tennessee naming requirements and is easily searchable by potential clients.

1. Follow the naming guidelines for a Tennessee LLC:

• Your name must include the phrase “limited liability company” or one of its abbreviations (LLC or L.L.C.).
• Your name cannot include words that could confuse your LLC with a government agency (FBI, Treasury, State Department, etc.).
• Restricted words (e.g. Bank, Attorney, University) may require additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.

2. Is the name available in Tennessee? Make sure the name you want isn't already taken by doing a Tennessee LLC name search on the Secretary of State website.

To learn more about searching for a Tennessee LLC name, read our full guide.

3. Is the URL available? We recommend that you check to see if your business name is available as a web domain. Even if you don't plan to start a business website today, you may want to buy the URL in order to prevent others from acquiring it.

Now that you have verified your name and secured the URL you may select a professional service to complete the LLC formation process for you. We recommend using a professional service:

• Northwest ($29 + State Fees)

STEP 2: Choose a Tennessee Registered Agent

You are required to appoint a Registered Agent for your Tennessee LLC.

What is a Registered Agent? A registered agent is an individual or business entity responsible for receiving important tax forms, legal documents, notice of lawsuits, and official government correspondence on behalf of your business. Think of your registered agent as your business's point of contact with the state.

Who can be a Registered Agent? a Registered Agent must be a resident of Tennessee or a corporation, such as a registered agent service, authorized to conduct business in the state of Tennessee. You may elect an individual within the company including yourself.

Recommended: Northwest provides the first year of registered agent service free with LLC formation ($29 + State Fees)

STEP 3: File the Tennessee LLC Articles of Organization

To register your Tennessee LLC, you'll need to file Form SS-4270 - Articles of Organization with the Tennessee Secretary of State. You can apply online, in person, or by mail. The filing fee is $50 per member, with a minimum of $300 and a maximum of $3,000.

Now is a good time to determine whether your LLC will be member-managed vs. manager-managed.

For help with completing the form, visit our Tennessee Articles of Organization guide.

If you’re expanding your existing LLC to the state of Tennessee, you will need to form a Foreign LLC.

STEP 4: Create Your Tennessee LLC Operating Agreement

In Tennessee, LLCs are not required to have an operating agreement, but it's a good practice to have one.

What is an operating agreement? An operating agreement is a legal document outlining the ownership and operating procedures of an LLC.

Why are operating agreements important? A comprehensive operating agreement ensures that all business owners are on the same page and reduces the risk of future conflict.

For more information on operating agreements, read our Tennessee LLC operating agreement guide.

STEP 5: Get a Tennessee LLC EIN

What is an EIN? EIN stands for Employer Identification Number. EINs are a nine-digit number assigned by the Internal Revenue Service (IRS) to help identify businesses for tax purposes. It is essentially a Social Security number for a business.

An EIN is sometimes referred to as a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN).

Why do I need an EIN? An EIN is required to:

• Open a business bank account
• File and manage Federal and State Taxes
• Hire employees

What if I already have an EIN for my sole proprietorship? The IRS requires that sole proprietorships get a new EIN when converting to an LLC.

Where do I get an EIN? You can get an EIN for free from the IRS. Getting an EIN is an easy process that can be done online or by mail.

FOR INTERNATIONAL EIN APPLICANTS: You do not need a SSN to get an EIN. For more information, read our How to Get an EIN as a Foreign Person guide.

Frequently Asked Questions

Important Steps After Forming an LLC

Separate Your Personal and Business Assets

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your Tennessee LLC is sued. In business law, this is referred to as piercing the corporate veil.

You can start protecting your LLC in Tennessee with these steps: 

1. Opening a business checking account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Need help finding your EIN for your bank application? Visit our EIN Lookup guide for help.

Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.

2. Getting a business credit card:

• Helps categorize and separate all business expenses for end-of-year tax purposes.
• Helps build your business credit score — an essential step toward getting a line of credit or business loan in the future. 
• Allows you to keep track of department expenses by issuing multiple cards (with multiple budgets) to your employees.

For a closer look at business credit cards and their benefits, check out our review of the best small business credit cards.

3. Hiring a business accountant:

• Prevents your business from overpaying on taxes while helping you avoid penalties, fines, and other costly tax errors
• Makes bookkeeping and payroll easier, leaving you with more time to focus on your growing business 
• Manages your business funding more effectively, discovering areas of unforeseen loss or extra profit

Recommended: Find out how much you could be saving today by trying our recommended accounting service.

For more business accounting tools, read our guide to the best business accounting software.

Get Business Insurance for Your LLC

Business insurance helps you manage risks and focus on growing your LLC. The most common types of business insurance are:

• General Liability Insurance: A broad insurance policy that protects your business from lawsuits. Most small businesses get general liability insurance.
• Professional Liability Insurance: A business insurance for professional service providers (consultants, accountants, etc.) that covers claims of malpractice and other business errors.
• Workers' Compensation Insurance: A type of insurance that provides coverage for employees’ job-related illnesses, injuries, or deaths. In Tennessee, businesses with five or more employees, including LLC members and corporate officers, are required by law to have workers' compensation insurance.

Read our review of the best small business insurance companies.

Create Your Business Website

Creating a website is an important step in legitimizing your business. Every business needs a website if you want your customers to find you.

Send Out a Press Release

Press releases are among the easiest and best ways to promote your business. They are also one of the most cost-effective strategies as they:

• Provides publicity
• Establish your brand presence on the web
• Improve your website’s search engine optimization (SEO), driving more customers to your website
• Are a one-time cost in terms of effort and money
• Have long-lasting benefits

Keep Your Company Compliant

Tennessee Business Permits and Licenses

To operate your Tennessee LLC, you must comply with federal, state, and local government regulations. For example, restaurants likely need health permits, building permits, signage permits, etc.

The details of business licenses and permits vary from state to state. Make sure you read carefully. Don't be surprised if there are short classes required as well.

Fees for business licenses and permits will vary depending on what sort of license you are seeking to obtain.

Find out how to obtain necessary Tennessee business licenses and permits for your LLC or have a professional service do it for you:

• Business License Guide: Use our detailed Tennessee Business License guide.
• Federal: Use the U.S. Small Business Administration (SBA) guide.
• State: Use the State of Tennessee Licenses and Permits website.
• Local: Contact your local county clerk and ask about local business licenses and permits.

Tennessee LLC Tax Filing Requirements

In order to keep your business in good standing, it's important to stay up to date on your Tennessee LLC taxes.

Depending on the nature of your business, you may be required to register for one or more forms of state tax.

Sales Tax

If you are selling a physical product, you’ll typically need to register for a seller's permit through the Tennessee Department of Revenue website.

This certificate allows a business to collect sales tax on taxable sales.

Sales tax, also called "Sales and Use Tax," is a tax levied by states, counties, and municipalities on business transactions involving the exchange of certain taxable goods or services.

Read our Tennessee sales tax guide to find out more.

Employer Taxes

If you have employees in Tennessee, you will have to register for Unemployment Insurance Tax on the State of Tennessee's Workforce website.

Federal LLC Tax Filing Requirements

Most LLCs will need to report their income to the IRS each year using:

• Form 1065 Partnership Return (most multi-member LLCs use this form)
• Form 1040 Schedule C (most single-member LLCs use this form)

How you pay yourself as an owner will also affect your federal taxes. Visit our guide to learn more about how to pay yourself from your LLC.

File Your Tennessee LLC Annual Report

Tennessee requires LLCs to file an annual report. This form can be submitted online.

Franchise & Excise Tax

All Tennessee LLCs must register for and pay both a franchise tax and an excise tax to the state Department of Revenue.

The Tennessee franchise tax is 0.25% and is based on either the LLC's net worth or the book value of the LLC's real and tangible property owned or used in the state.

The excise tax is 6.5% and is based on the LLC's net earnings or income for that tax year.

For more information, check out the state's Franchise and Excise Tax Manual.

Avoid Automatic Dissolution

LLCs may face fines and even automatic dissolution when they miss one or more state filings. When this happens, LLC owners risk the loss of limited liability protection. A quality registered agent service can help prevent this outcome by notifying you of upcoming filing deadlines and by submitting reports on your behalf.

Hiring Employees

If you plan to hire employees for your Tennessee LLC, stay compliant with the law by following these steps:

• Verify that new employees are able to work in the US
• Report employees as "new hires" to the State
• Provide workers' compensation insurance for employees
• Withhold employee taxes
• Print workplace compliance posters and place them in visible areas of your workspace

Find more information at the Tennessee Department of Labor and Workforce Development.

Small Business Resources

Get Help Starting a Business in Tennessee

We understand that creating an LLC in Tennessee and getting your business up and running comes with many challenges. To help you succeed, we compiled the best local resources in every major metro area in Tennessee. You can get free assistance in the following areas:

Chattanooga | Knoxville | Memphis | Nashville

State of Tennessee Quick Links

• Tennessee Secretary of State Business Services
• Tennessee LLC Statutes
• Understanding Tennessee LLC Laws
• Tennessee LLC Annual Report
• Best Registered Agent Service in Tennessee

More Tennessee LLC Information

Register a Foreign LLC in Tennessee

Forming a foreign LLC allows your company to operate as one entity in multiple states. If you have an existing LLC and want to do business in Tennessee, you will need to register as a foreign LLC. This can be done by mail.

How to Obtain a Certificate of Good Standing in Tennessee

A Certificate of Good Standing, known in Tennessee as a Certificate of Existence, verifies that your LLC in Tennessee was legally formed and has been properly maintained. Several instances where you might need to get one include:

• Seeking funding from banks or other lenders
• Forming your business as a foreign LLC in another state
• Obtaining or renewing specific business licenses or permits

You can order a Tennessee LLC Certificate of Existence online.

How to Dissolve an LLC in Tennessee

If at any point in the future you no longer wish to conduct business with your LLC, it is important to officially dissolve it. Failure to do so in a timely fashion can result in tax liabilities and penalties, or even legal trouble. To dissolve your LLC, there are two broad steps:

• Close your business tax accounts
• File the Articles of Dissolution

When you are ready to dissolve your LLC, follow the steps in our Tennessee LLC Dissolution Guide.