How to Start Your Own LLC in Tennessee

LLCs are also considered "pass-through entities" for taxation purposes, which means profits and losses flow directly to members' personal tax returns, avoiding double taxation. Additionally, LLCs offer flexibility in management structure and tax elections, making them an ideal choice for many Tennessee business owners. Here's a step-by-step guide to forming an LLC in Tennessee.

1. Name Your Tennessee LLC

Choosing a name for your LLC is an essential step, as it establishes your brand identity and helps create a strong first impression. Start by clarifying your business concept—know exactly what your business does and the message you want to convey. Seek suggestions from trusted friends or mentors, and conduct online searches to check the availability of domain names and potential conflicts with other businesses. Online business name generators can provide creative inspiration, but rely on your judgment and understanding of your business.

Tennessee has specific naming rules for LLCs. Your company name must include "Limited Liability Company" or its abbreviations "LLC" or "L.L.C." It cannot imply affiliation with government agencies or mislead the public regarding your business type. Certain words like "bank," "insurance," or "university" require special state approval, and the name must not falsely suggest sponsorship or connection to professional, charitable, or religious organizations.

After narrowing your options, check the US Patent and Trademark Office to ensure the name isn't federally trademarked, and then perform a business name search on the Tennessee Secretary of State's website. Once verified, you may reserve your name by submitting a Name Reservation Request form with a $20 fee. Name reservations last 120 days and can be filed by mail or in person at:

Tennessee Secretary of State
ATTN: Corporate Filing
312 Rosa L. Parks Ave, 6th Floor
Nashville, TN 37243

Doing Business As (DBA)

If you plan to operate under a different name than your LLC, Tennessee requires you to register an assumed name (commonly known as a DBA). This allows you to open bank accounts and conduct business under that name. Registration is done online via the Secretary of State's portal, using the LLC control number, with a $20 filing fee.

2. Select a Registered Agent

Tennessee law mandates that every LLC appoint a registered agent, who acts as the official point of contact for legal, tax, and business correspondence. Your registered agent can be a member of the LLC, another individual, or a professional service that meets state requirements.

A registered agent must:

• Be at least 18 years old
• Have a physical street address in Tennessee (P.O. boxes are not allowed)
• Be available during standard business hours
• Be registered to conduct business in Tennessee if an entity

Many entrepreneurs hire professional registered agent services to ensure compliance while maintaining privacy and flexibility. Acting as your own agent is possible, but you must remain available at the listed address during business hours.

3. Determine Your Management Structure

Tennessee LLCs can be structured as either member-managed or manager-managed. In a member-managed LLC, all members actively participate in daily operations and decision-making. Manager-managed LLCs allow certain members to take a passive role while designated managers, who may or may not be members, handle the company's day-to-day operations.

Member-managed LLCs are generally simpler and more common among small businesses, while manager-managed LLCs are suited for larger LLCs or investors who want to remain "silent." If you do not specify in your Articles of Organization, Tennessee will default to a member-managed structure.

4. File Articles of Organization

To officially form your LLC, you must file Articles of Organization with the Tennessee Secretary of State. This can be completed online or via mail. The Articles include:

• LLC name and designation
• Registered agent information
• Principal office address and mailing address
• Member and manager information
• Fiscal year close month
• Any additional provisions

Online filings are the fastest method and typically finalize your LLC within a few business days. Mail filings may take longer. The cost is $50 per member, with a minimum of $300 and a maximum of $3,000.

Contact Information:
Tennessee Secretary of State
312 Rosa L. Parks Avenue, 6th Floor, Nashville, TN 37243
Phone: (615) 741-2286

5. Draft an Operating Agreement

Although Tennessee does not legally require an operating agreement, having one is strongly recommended. This internal document defines ownership, management roles, voting rights, profit distribution, procedures for adding or removing members, and how disputes are resolved.

Even single-member LLCs benefit from an operating agreement, as it provides legal clarity and helps establish the company's formal structure. Templates are available online, but reviewing them with a lawyer ensures accuracy and enforceability.

6. Obtain an Employer Identification Number (EIN)

An EIN from the IRS is essential for tax purposes, hiring employees, opening bank accounts, and applying for business credit. If your LLC has multiple members or hires employees, obtaining an EIN is mandatory.

Applications require the "responsible party," a natural person who controls or directs the LLC's funds, along with their Taxpayer Identification Number. The application can be completed online on the IRS website for immediate processing.

7. Obtain Business Licenses and Permits

Tennessee businesses must comply with federal, state, and local licensing requirements. Some licenses are industry-specific, such as those for construction, food services, healthcare, childcare, finance, or liquor. Others include zoning, fire safety, and signage permits.

Most businesses in Tennessee must also register for a business tax license and may require additional city licenses depending on the location of operations. Noncompliance can result in penalties or forced closure.

Consulting a business attorney or professional licensing service ensures you meet all requirements efficiently.

8. Determine Your Tax Status

By default, LLCs in Tennessee are pass-through entities, but the state taxes LLCs differently than many other states. LLC members pay personal income taxes on profits, while the LLC itself must pay franchise and excise taxes.

Single-Member LLCs

Default taxed like sole proprietorships. Report income on Schedule C and pay self-employment taxes.

Multi-Member LLCs

Default taxed as partnerships. File Form 1065 with the IRS; profits and losses flow to members' personal returns.

Optional Corporate Taxation

LLCs can elect C-Corp or S-Corp status by filing the appropriate IRS forms. C-Corp taxation may be beneficial for retained earnings, while S-Corp status can reduce self-employment tax liability if reasonable salaries are paid to members.

Additional Steps for Tennessee LLCs

Open a Business Bank Account

Separating business and personal finances protects your liability protection and simplifies accounting. You'll need your EIN and Articles of Organization.

Business Credit Card

Helps establish business credit and cover startup expenses without mixing personal funds.

Business Insurance

Depending on your business type, essential insurance may include general liability, professional liability, workers' compensation, property, commercial auto, equipment breakdown, or a business owner's policy (BOP) that combines coverage.

Record Keeping

Maintain all formation documents, contracts, tax filings, and correspondence in a secure location.

Annual Reporting

LLCs must file an annual report by the first day of the fourth month after the fiscal year ends. The filing fee is $300.

Tennessee LLC FAQs