How to Form an LLC in Tennessee

Everything you need to form a Limited Liability Company in Tennessee (TN). Filing fee: $300 | Processing time: 5-7 business days

Filing Fee
$300
Annual Report
$300 minimum annually
Processing Time
5-7 business days
Online Filing
Yes

State Income Tax

No state income tax on wages; 6.5% franchise and excise tax

Steps to Form an LLC in Tennessee

1

Check LLC name availability with the Tennessee Secretary of State

2

Appoint a registered agent in Tennessee

3

File Articles of Organization with the Tennessee Secretary of State

4

Pay the $300 filing fee ($50 per member, $300 minimum)

5

Obtain an EIN from the IRS

6

Register for franchise and excise tax with the Department of Revenue

7

Draft an Operating Agreement

Step-by-Step Tennessee LLC Formation Guide

Tennessee charges a per-member filing fee of $300 per member (with a minimum of $300) for Articles of Organization submitted to the TN Secretary of State. The state has no personal income tax on wages, making it attractive for business owners who draw salary from their LLC. Tennessee's dynamic economy, particularly in Nashville's booming tech, healthcare, and entertainment sectors, provides a fertile ground for new businesses.

Step 1: Verify Your LLC Name Availability

Search the Tennessee Secretary of State's business entity database to confirm your desired LLC name is available. Your name must include 'Limited Liability Company,' 'LLC,' or 'L.L.C.' and be distinguishable from other registered entities. Tennessee allows name reservations for four months by filing an application with the Secretary of State for a $20 fee.

Step 2: Designate a Registered Agent

Tennessee requires every LLC to maintain a registered agent with a physical address in the state. The agent is responsible for receiving legal documents, tax notices, and service of process on behalf of your LLC. You may serve as your own registered agent if you have a Tennessee address, or you can hire a professional service for convenience.

Step 3: File Articles of Organization

Submit your Articles of Organization to the Tennessee Secretary of State, paying $300 per member with a minimum filing fee of $300. For a single-member LLC, the fee is $300; for a five-member LLC, the fee would be $1,500. Online filing is available through the Secretary of State's website, and the articles must include your LLC name, registered agent details, management structure, and the number of members.

Step 4: Draft Your Operating Agreement

Tennessee does not require an operating agreement by law, but having one is essential for establishing clear governance rules. Your operating agreement should outline member contributions, voting rights, profit allocation, and the process for admitting or removing members. Given Tennessee's per-member filing fee structure, documenting how new members are added is particularly important.

Step 5: Obtain Your EIN from the IRS

Apply for a free Employer Identification Number through the IRS website. Your EIN is required for opening a business bank account, filing federal taxes, and hiring employees. Tennessee has no state income tax on wages, but the EIN is still essential for federal compliance and business banking.

Step 6: Register for Tennessee Taxes

Register with the Tennessee Department of Revenue for applicable state taxes. Tennessee has a 7% state sales tax rate—one of the highest in the nation—plus local additions that can bring the combined rate above 9%. LLCs are also subject to the Tennessee franchise and excise taxes, which include a 6.5% excise tax on net earnings and a 0.25% franchise tax on net worth or real and tangible property.

Step 7: Open a Business Bank Account

Open a business bank account using your filed Articles of Organization and EIN. Tennessee's banking sector is robust, with Nashville serving as a major financial center. Keeping your business finances separate from your personal accounts protects your liability shield and makes tax compliance significantly easier.

Step 8: File Your Annual Report

Tennessee LLCs must file an annual report with the Secretary of State by the first day of the fourth month following the close of your fiscal year. The annual report fee is $300 minimum ($300 per member). Failure to file the annual report can result in administrative dissolution, so build this cost into your annual business budget.

Tennessee's lack of income tax on wages and thriving economy make it an appealing state for LLC formation, though the per-member filing and annual report fees can add up for multi-member LLCs. Be prepared for the franchise and excise taxes that apply to business earnings. With careful planning around the fee structure and strong compliance habits, your Tennessee LLC can take full advantage of the state's dynamic business landscape.

Pros of Forming in Tennessee

  • ✓No state income tax on wages and salaries
  • ✓Growing economy with strong music, healthcare, and tech sectors
  • ✓Central location with excellent logistics infrastructure

Cons of Forming in Tennessee

  • ✗High filing fee of $300
  • ✗High annual report fee of $300 minimum
  • ✗Franchise and excise tax of 6.5% applies to LLCs

Best For

Healthcare, music, and entertainment businesses in Nashville or Memphis that benefit from no wage income tax.

Frequently Asked Questions About Tennessee LLCs

How much does it cost to form an LLC in Tennessee?▼
Tennessee charges a filing fee of $300 per member for forming an LLC, with a minimum fee of $300. This means a single-member LLC costs $300, a two-member LLC costs $600, and so on. This per-member fee structure makes Tennessee one of the most expensive states for multi-member LLC formation.
How long does it take to process an LLC filing in Tennessee?▼
Standard processing for Tennessee LLC filings takes approximately 5 to 7 business days. Expedited processing is available for an additional fee for faster turnaround. Online filing through the Tennessee Secretary of State's website is recommended for the quickest processing.
What are the annual report requirements for a Tennessee LLC?▼
Tennessee LLCs must file an annual report with a fee of $300 per member. Like the initial filing fee, this per-member structure means costs scale with the number of LLC members. The report is due on the first day of the fourth month after the LLC's fiscal year ends and can be filed online.
What are the registered agent requirements for a Tennessee LLC?▼
Tennessee requires every LLC to maintain a registered agent with a physical address in the state. The agent can be a Tennessee resident or a business entity authorized to do business in Tennessee. The registered agent must be available during normal business hours to accept service of process and official documents.
Is an operating agreement required for a Tennessee LLC?▼
Tennessee does not legally require LLCs to have an operating agreement. However, given the per-member cost structure for both formation and annual reports, having a clear operating agreement that defines membership terms is especially important. The agreement should address member contributions, profit distribution, management roles, and procedures for adding or removing members.
When does a Tennessee LLC need an EIN?▼
Your Tennessee LLC needs an EIN if it has more than one member, has employees, or elects corporate tax treatment. Since Tennessee's LLC fees are based on the number of members, having an EIN is essential for multi-member LLCs to manage tax filings properly. You can apply for an EIN for free through the IRS website.
How does an LLC compare to an S-Corp or sole proprietorship in Tennessee?▼
Tennessee has no state income tax on wages or business income, as the Hall Tax on dividends and interest was fully repealed in 2021. A sole proprietorship is simplest but offers no liability protection. An LLC provides personal asset protection with no state income tax burden. An S-Corp election is primarily useful for reducing federal self-employment taxes, since Tennessee imposes no state income tax. However, multi-member LLCs should consider Tennessee's per-member fees when selecting a structure.
Why is Tennessee's per-member fee structure significant?▼
Tennessee's unique $300 per-member fee for both initial filing and annual reports makes it one of the most expensive states for multi-member LLCs. For example, a five-member LLC would pay $1,500 in formation fees and $1,500 annually for its report. This cost structure encourages businesses with many members to carefully consider whether Tennessee is the best state for their LLC or whether they should limit the number of members designated in the LLC's formation documents.
What taxes does a Tennessee LLC need to pay?▼
Tennessee has no state individual income tax, making it highly attractive for pass-through LLC income. The state's franchise and excise taxes apply to LLCs with a corporate tax election, with the excise tax at 6.5% of net earnings and the franchise tax at 0.25% of the greater of net worth or real and tangible property. Tennessee does have a 7% state sales tax (one of the highest in the nation), which businesses selling goods must collect.

Calculate Your Tennessee LLC Costs

Get a detailed cost breakdown for forming your LLC in Tennessee, including filing fees, registered agent costs, and more.

Use the Cost Calculator

Form an LLC in Other States

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