How to Form an LLC in Tennessee
Forming an LLC in Tennessee is a straightforward process that provides liability protection and tax flexibility for business owners. The initial filing fee is $300, filed with the Tennessee Secretary of State.
Step 1: Choose Your Business Name
Your LLC name must be distinguishable from existing business entities registered in Tennessee. The name must include "LLC" or "Limited Liability Company." Check name availability through the Secretary of State's website before filing.
Step 2: File Articles of Organization
Submit your Articles of Organization to the Tennessee Secretary of State with the $300 filing fee. This document establishes your LLC as a legal entity. Processing times vary but typically take 5-10 business days.
Step 3: Obtain an EIN
Apply for a federal Employer Identification Number (EIN) from the IRS at no cost. This is required for tax filing, opening a business bank account, and hiring employees.
Step 4: Register for State Taxes
Register with the Tennessee Department of Revenue for applicable tax accounts. You will need a sales tax permit to collect the 7% state sales tax. Tennessee has no state income tax, a significant advantage for LLC owners.
Ongoing Costs
Tennessee does not impose an annual franchise tax on LLCs, keeping ongoing costs low. An annual report fee of $300 is also required.
Tennessee LLC Tax Advantages
One of Tennessee's biggest advantages is the absence of state income tax. LLC members keep more of their earnings compared to states with income tax. The 7% state sales tax requires proper collection and remittance procedures.