How to Start a Tennessee LLC in 2024 - MarketWatch (2024)

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Now that you’re sure an LLC is the right move for your new business, it’s time to get down to brass tacks. In the next five steps we’ll walk you through the process from start to finish.

Step One: Choose a Name for Your Tennessee LLC

Your LLC can’t share a name with any other Tennessee LLC or business. You can use Tennessee’s business name availability tool to check whether any other company is using the name that you hope to claim. Once you’ve chosen a name that’s available, you’ll need to register your company moniker by submitting an application for name reservation with the state.

Some things to be aware of when naming your new LLC include the following rules:

• Your name must include the phrase “limited liability company,” “LLC” or “L.L.C.”
• Your name cannot include words that could imply your LLC is associated with a government agency (FBI, IRS, Treasury, etc.)
• Using certain restricted words (e.g., attorney, university, architect) requires additional steps, authorization and licenses

You can reserve your desired name while you learn how to start an LLC in Tennessee. This must be done by mail or in person; it costs $20 to hold the name for four months.

Inside Scoop: It’s a good idea to reserve a website domain name as early as possible for your new business. Even if you don’t anticipate building a website immediately, you can reserve an address for a minimal cost using a service like GoDaddy. If you don’t do this, you may lose the ability to use your preferred website address later.

Step Two: Name a Registered Agent for Your Tennessee LLC

Perhaps the most unexpected aspect of how to start an LLC in Tennessee involves naming a registered agent. This part of business operations may not be as well known, so it can come as a surprise that business owners must appoint a person or business to receive official state mail and legal notices on behalf of their company.

In Tennessee, LLC owners may choose any of the following to serve as a registered agent on behalf of their business:

• A resident of the state
• A business entity that maintains a Tennessee street address
• An out-of-state resident or company that maintains a business office in Tennessee

Inside Scoop: Although you can serve as your own registered agent, using a registered agent service can ensure someone is always available to promptly receive and notify you of important documents.

Step Three: File Articles of Organization for Your Tennessee LLC

The most detailed documentation to be aware of as you learn how to file an LLC in Tennessee will be your “articles of organization.” You’ll need to provide some information when filing your Tennessee articles of organization form, including:

• The name of the LLC and the address of its principal in-state office
• The number of LLC members (the term for owners)
• The name and address of the registered agent appointed by the LLC
• The effective date of the articles of organization, if that date is not to commence immediately
• Details about the LLC’s business
• Whether the LLC will exist perpetually or has a definite end date

You’ll need to file this paperwork regardless of whether you’re forming a single-member LLC or a multiple-member LLC. You can do this via mail or the state’s online filing system. The filing fee is $50 per LLC member, with a minimum fee of $300 and a maximum of $3,000.

Inside Scoop: Tennessee protects the privacy of LLC members by not requiring the disclosure of their identity, contact information or role in the business.

Step Four: Secure an IRS Employer Identification Number

Your LLC will be required to obtain an IRS employer identification number (EIN), unless you’re creating a single-member LLC. You’ll need this number when engaging in various business pursuits, including filing employment tax returns, establishing business credit and opening a business bank account.

The person who fills out the paperwork for this process must have a valid taxpayer identification number, which can be a Social Security number (SSN), an individual taxpayer identification number (ITIN) or an EIN. The applicant must be a natural person and must own or control the LLC in question.

You can complete your application online at the IRS website. Once your online EIN application is complete, you’ll obtain a valid EIN for your business.

Inside Scoop: Even if you’re not required to obtain an EIN, it can help you keep the finances of your business separate from your personal finances. There are several benefits to keeping these funds separate, including the ability to take advantage of business-only financial services and tax deductions.

Step Five: Prepare Your Business for Operations

When thinking about how to start an LLC in Tennessee, it’s important to keep an eye on the business formation steps that occur immediately after filing articles of organization. You don’t want to lose any momentum as you work to become operational. These include:

An LLC, which stands for “limited liability company,” is a type of business entity. (Other types include corporations and partnerships.) It offers its owners, called “members,” the ability to limit their personal liability for business debts and obligations. At the same time, it doesn’t require many of the formalities involved in a corporation, such as electing a board of directors and holding regular meetings.

An LLC is ultimately created under state, not federal, law. While LLCs can be similar across many states, there are some important differences, which is why it’s helpful to know how Tennessee defines key LLC terms. Creating an LLC in Tennessee is a great way to put down roots in the Volunteer State.

Tennessee LLC laws don’t require new companies to craft an operating agreement, but doing so will help you to formalize your company’s management structure, limited liability status and financial distribution procedures. This helps protect each member’s interest in the LLC and can set out a process for resolving disputes or dissolving the business.

Inside Scoop: It may be worth hiring an attorney to draft your operating agreement if your Tennessee LLC has more than one member. A well-crafted operating agreement can prevent costly litigation if members disagree about business issues or want to leave the LLC.

You should familiarize yourself with the annual reporting requirements for Tennessee LLCs. You’ll need to file an annual report and pay a fee each year for your company to remain operational in Tennessee. Knowing what you’ll need to report will help to ensure that you start keeping track of that information from the start.

Next, determine whether you need to register with the Tennessee Department of Revenue. This is required if your LLC will be engaged in a business that collects sales tax or you plan to hire employees to work for you. You may want to consult with an accountant or tax professional to help you understand what tax forms you may need to file during or at the end of each fiscal year.

Inside Scoop: Learning how to start an LLC in Tennessee can help you save money on your income taxes. Rather than having to pay taxes on corporate profits, LLC members benefit from the business’s status as a “pass through entity.” They each report their share of income from the business on their personal tax return; since Tennessee does not have an individual income tax, this can be a significant savings.

It may be necessary or advisable to obtain insurance coverage for your new business. If you want to hire employees, you’ll have to obtain workers’ compensation coverage. Depending on what type of business you conduct, you may also need other types of coverage, like:

• Professional liability insurance
• Commercial general liability insurance
• Commercial vehicle insurance
• Errors omissions coverage
• Unemployment insurance
• Cyber liability coverage
• Umbrella coverage

Learning how to start an LLC in Tennessee is only the beginning. Once you’re up and running, you need to learn how to promote your company. Here are some ideas to get started.

• Build a great business website. Your website is your introduction to potential customers and helps maintain your current client relationships; you can DIY your site using a platform like SquareSpace, or you can hire a website designer
• Interact on social media. Building your brand presence on TikTok, Facebook, LinkedIn, Twitter and other social media networks can help your business gain credibility, trust and an enthusiastic client base
• Use real-life connections. Volunteering at or sponsoring festivals, charity drives, church functions and other local events can help you connect with your community while advertising your new business; display your contact information on a QR code, business card, flier or merchandise
• Think local. Contact your local chamber of commerce or small business association to learn about local opportunities for promotion, funding and collaboration
• Get connected. Tennessee’s Small Business Development Centers have many resources to help you understand what you need to do to help your small business succeed and connect with other helpful services

Inside Scoop: The State of Tennessee’s Smart Start platform is an interactive tool that connects you to a wealth of public and private resources, including funding, mentorship and educational opportunities. These make Tennessee one of the best places to start an LLC. If your company will need licenses or permits to become lawfully operational, you’ll learn about those requirements on Smart Start, too.

Funding Your New Business

Marketing is important, but you might also be wondering about funding opportunities. Small business grants and low interest loans are a great place to start. There are also specialty funding opportunities that you may qualify for as well.

• Minority, veteran-owned or woman-owned Tennessee LLC. There are additional resources available for you to consider through the Small Business Administration

• Rural development. The U.S. Department of Agriculture offers funding and technical assistance for small business owners and entrepreneurs

• Arts and culture. Nashville is known for its music scene, and there are plenty of arts-related grants available to support arts and culture projects throughout the state

Inside Scoop: There is no dearth of funding opportunities for your LLC in Tennessee — get creative and explore all your options! For example, Launch Tennessee offers unique support as a self-described “public-private partnership” with the goal of making Tennessee the most startup friendly state in the nation.

Because of the state’s business-friendly climate, the process of starting an LLC in Tennessee is relatively straightforward, but it can still be a challenge if you go it alone. Don’t take any chances with your business. Find out how you can form your Tennessee LLC at a low cost from the comfort of your home or office.

Legal Disclaimer: This article contains general legal information but does not constitute professional legal advice for your particular situation and should not be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed in your jurisdiction.

Consumers rely on us to provide objective and accurate information, so our credentialed team of legal experts created a comprehensive rating system to formulate our rankings of online legal services. To create our list of best LLC services, we gathered information on all providers on a variety of ranking factors and gave ratings from 0.0 to 5.0, with 5.0 being the best, for experiences in the following areas:

• Features. We look at what essential features the company offers for starting an LLC. We consider essential features to be a registered agent service, operating agreement template, EIN application, license help, expert advice, tax advisory services, compliance help and guarantee of acceptance.
• Value for money. Did we feel like we were getting a deal, getting short-changed or getting what we paid for? We rated the value of every formation company’s basic, middle and premium formation packages.
• Customer service. Was our customer service experience good, fair or poor? We reviewed each company’s customer service offerings over email, phone and chat, depending on timeliness and accuracy of responses.
• Usability. We looked at whether we could navigate the website successfully and where the roadblocks, if any, came up. Did we have trouble adding features or signing into our account? We compared our experiences before and after account setup.
• Customer satisfaction. We looked at customer reviews across reputable review sites and rated our own satisfaction with the process.

The result gave us an overall rating for each provider.