Key Takeaways

  • A Tennessee LLC offers liability protection, flexible management, and potential tax advantages compared to corporations or sole proprietorships.
  • Out-of-state LLCs conducting business in Tennessee must register as a foreign LLC and obtain a Certificate of Authority.
  • Tennessee requires LLCs to pay franchise and excise taxes, though certain exemptions exist for smaller businesses.
  • LLC membership in Tennessee is governed by the Tennessee Revised Limited Liability Company Act, and courts often look at both documents and conduct to determine member status.
  • A properly drafted Operating Agreement is essential to define management structure, profit distribution, and dispute resolution.

When creating an LLC in TN, it is an easy process that yields the tax benefits of a partnership combined with the corporate umbrella of personal asset protection. Tennessee has certain LLC requirements that are unique when compared to other states. First, you must do the following:

  • Register with the TN Secretary of State with the necessary paperwork
  • Pay fees
  • Adhere to all formation and naming mandates

What Kind of Documentation Do I Need to Manage my LLC?

  • Operating Agreement
  • LLC Membership Certificate
  • LLC Membership Interest Bill of Sale
  • LLC Meeting Minutes

Before starting, you need to provide basic information to complete the LLC process. You need to know:

  • The name of your LLC
  • Your business address
  • The person who formed and will manage the LLC
  • Your specific industry
  • Your business Statement of Purpose

Articles of Organization

All applicants must file articles of organization with the secretary of state office. This is the document that registers and manifests your LLC into existence. Your articles of organization requires the following information:

  • LLC Name and Primary Business Address
  • Name of Registered Agent and Agent Address
  • Added Designation (Ex. Professional LLC)
  • Fiscal Year Close Month
  • Effective Date
  • Management Structure: Member-Managed, Director-Managed or Manager-Managed
  • Member Numbers During Registration Time
  • Duration of LLC if the Business Has a Limited Lifespan

Once you submit all documentation, you must pay the filing fee. The filing fee depends on a number of factors, but the minimum fee is $300 and the maximum is $3,000. Each member costs $50 for registration. The processing times vary from three to five business days, and no expedited service is available.

Foreign LLC Registration in Tennessee

If your business was formed outside of Tennessee but regularly conducts business within the state—such as maintaining a physical office, hiring employees, or providing in-state services—you must register as a foreign LLC. This is done by filing an Application for Certificate of Authority with the Tennessee Secretary of State.

To complete the filing, you’ll need:

  • A Certificate of Existence or Good Standing from your home state (issued within 60 days)
  • The name and address of your Tennessee registered agent
  • Payment of a $50-per-member filing fee (minimum $300, maximum $3,000)

Failing to register a foreign LLC can result in penalties and prevent you from legally maintaining lawsuits in Tennessee courts. However, registration does not require creating a new Tennessee LLC—your existing entity simply gains authorization to operate within the state.

Creating Your Name

Under state law, your LLC must include words such as “Limited Liability Company” or abbreviations in the form of “LLC” or “L.L.C.” The requirements for naming your LLC may be confusing, but the best way to get through the process is to ensure your LLC name is unique from other business names.

Further, you should include specific words used in the industry your business is part of, so you can attract the right type of clientele to your business. When choosing, keep in mind that there are certain words that are restricted and may require additional licensure. The following words are usually restricted:

  • Bank
  • University
  • Attorney

Further, an LLC created by doctors or attorneys will require additional state certification to conduct business in TN. Also, other words are entirely forbidden, such as:

  • FBI
  • Treasury
  • Secret Service

State authorities will reject any name that associates a business with a state or federal agency. You may also register your name for up to four months by filing an Application for Reservation of Limited Liability Company Name with the secretary of state office. The reservation application must be sent via mail, and you must pay a filing fee of $20.

Additional Tennessee Naming Guidelines

Before finalizing your Tennessee LLC name, check its availability through the Tennessee Secretary of State Business Name Database. The name must be distinguishable from all other registered business entities in the state.

Additional tips:

  • Avoid misleading terms like “Inc.” or “Corporation” unless you’re registered as such.
  • Industry-specific terms like “Bank,” “Insurance,” or “University” require proof of relevant licensure or regulatory approval.
  • You can reserve a name for up to four months for a $20 fee by filing an Application for Reservation of Limited Liability Company Name.

If you plan to operate under a name different from your LLC’s legal name, you’ll also need to file an Assumed Name (DBA) with the Secretary of State.

Registered Agent

All LLCs in TN must have a registered agent in place. A registered agent is an individual or entity that accepts any legal paperwork on behalf of your LLC in the event of litigation. An agent must be a person who resides in TN or a business that is authorized to conduct business in the state. In addition, the agent must have a physical street address in TN.

Maintaining a Tennessee Registered Office

Your Tennessee registered agent must maintain a physical street address in the state—P.O. boxes are not accepted. This address serves as your official location for receiving legal documents and tax notices.

If you change your agent or office, you must file a Statement of Change of Registered Agent/Office with the Tennessee Secretary of State. Failure to maintain an active registered agent can lead to administrative dissolution or forfeiture of your business authority in Tennessee.

Tax Regulations

Your LLC must comply with certain tax guidelines. For example, you will need an employer identification number (EIN), which is a number that the IRS uses to identify and tax your business. You will need an EIN if your business has more than a single member, even if there are no employees. For sole members, you must get an EIN if you intend to hire employees or choose to have your LLC taxed as a corporation.

In certain cases, you will need to collect sales taxes. If so, you’ll need to register with the TN Department of Revenue. Further, TN levies excise and franchise taxes on many LLCs. You may register via mail or online if you need to register to collect sales taxes.

Tennessee LLC Tax Obligations and Exemptions

Tennessee imposes both a franchise tax and an excise tax on most LLCs:

  • Franchise tax: 0.25% of the greater of net worth or real and tangible property owned in Tennessee (minimum $100).
  • Excise tax: 6.5% of net earnings derived from business conducted in the state.

Certain entities are exempt from these taxes, including:

  • Single-member LLCs treated as disregarded entities with no employees or in-state assets.
  • Family-owned noncorporate entities that meet specific ownership and income thresholds.

You must also register with the Tennessee Department of Revenue to collect and remit sales tax if your business sells taxable goods or services.

Dividing Assets

Most importantly, you need to divide your personal business assets to manage your LLC effectively and gain personal protections. Further, dividing your assets makes tax and accounting an easier process. In addition, getting a business credit card places a firmer divide between your personal and business operations.

Advantages of a Tennessee LLC

Forming a Tennessee LLC provides numerous business advantages:

  1. Limited Liability Protection: Shields members’ personal assets from business debts or lawsuits.
  2. Pass-Through Taxation: Profits are taxed only once, at the member level.
  3. Flexible Management: Members can manage directly or appoint managers.
  4. Perpetual Existence: The LLC can continue even if a member leaves.
  5. Simplified Compliance: Tennessee’s annual filing and tax processes are relatively straightforward compared to other states.

These benefits make a Tennessee LLC ideal for small and medium-sized businesses seeking protection and flexibility without the complexity of a corporation.

Tennessee LLC Membership and Legal Disputes

Tennessee courts follow the Tennessee Revised Limited Liability Company Act when determining LLC membership rights and disputes. Membership can be defined in the Articles of Organization, the Operating Agreement, or inferred from conduct and contributions.

For example, in Parigin v. Mills and Heatherly v. Off the Wagon Tours, courts held that membership is not always determined by documents alone—consistent participation in profits, voting, and operations may also establish member status.

To prevent future conflicts, clearly outline in your Operating Agreement:

  • How new members are admitted or removed
  • Voting rights and capital contributions
  • Procedures for resolving disputes or dissolving the LLC

Frequently Asked Questions

  1. Do I need a Tennessee LLC if I already have one in another state?
    Not necessarily. You can register your out-of-state LLC as a foreign LLC to legally operate in Tennessee.
  2. How much does it cost to start a Tennessee LLC?
    The filing fee is $50 per member, with a $300 minimum and $3,000 maximum.
  3. What taxes does a Tennessee LLC pay?
    Most LLCs owe franchise and excise taxes, though exemptions apply for some single-member and family-owned entities.
  4. How long does it take to form an LLC in Tennessee?
    Processing usually takes 3–5 business days after filing with the Secretary of State.
  5. Can I change my LLC’s registered agent later?
    Yes. File a Statement of Change of Registered Agent/Office with the Secretary of State to update your information.

To find out more about creating an LLC in TN, submit your legal inquiry to our UpCounsel marketplace. UpCounsel’s lawyers have graduated from some of the top law schools in the county and will rely on their expertise and savvy in guiding you through the LLC process in TN. In addition, our lawyers will ensure you remain compliant under state tax and licensure laws, so you don’t have to worry about any missteps as you manage your business.