Forming a Limited Liability Company (LLC) in Tennessee offers business owners personal liability protection while maintaining operational flexibility. This guide explains the essential steps to establish and maintain an LLC in Tennessee, from selecting a name to understanding tax obligations and compliance requirements.

The first step in forming an LLC in Tennessee is selecting a unique and compliant business name. Under T.C.A. § 48-249-106(a)(1), the name must:

1. Include the words “Limited Liability Company,” “L.L.C.,” or “LLC.”
2. Be distinguishable from existing business names registered with the Tennessee Secretary of State.

If a name is not unique but is still desired, written consent from the existing business is required under T.C.A. § 48-249-106. It’s crucial to perform a thorough trademark search, as the Secretary of State does not check for conflicts with federally registered trademarks.

To formally establish your LLC, you must file Articles of Organization with the Tennessee Secretary of State. The filing requires:

1. The full legal name of the LLC.
2. Designation of the LLC’s type (e.g., nonprofit, professional LLC).
3. The address of the LLC’s Tennessee office.
4. The name and address of the Registered Agent.
5. The fiscal year close month.
6. Whether the LLC is Member-Managed, Manager-Managed, or Director-Managed.
7. The number of Members at the time of filing.
8. Whether the LLC is a term company (limited duration).
9. The primary office address.

The filing fee is $50 per Member, with a minimum fee of $300 and a maximum fee of $3,000. Filings can be completed online or via mail, with online filings often processed faster.

Every LLC in Tennessee must appoint a Registered Agent to receive legal notices, service of process, and other official documents. The Registered Agent can be:

1. An individual residing in Tennessee.
2. A business entity authorized to operate in Tennessee.

Twisdale Law, PC offers professional Registered Agent services to ensure compliance and reliable communication.

Although not required by law, an Operating Agreement is highly recommended for Tennessee LLCs. This document outlines:

1. The roles and responsibilities of Members.
2. Procedures for decision-making and dispute resolution.
3. Profit and loss allocation.
4. Membership changes (e.g., adding or removing Members).
5. Dissolution procedures.

Without an Operating Agreement, disputes among Members may lead to costly litigation, as Tennessee’s statutory framework for LLCs offers limited guidance for resolving internal conflicts.

Tennessee LLCs must pay the state’s annual report fee, which ranges from $300 to $3,000 depending on the number of Members. Each Member adds $50 to the fee. While Tennessee does not impose personal income tax on wages, LLC Members may be subject to the state’s excise tax and franchise tax if the LLC is taxed as a corporation.

Consult a tax professional to ensure compliance with state and federal tax obligations.

Maintaining an LLC in Tennessee involves fulfilling ongoing compliance requirements:

1. Annual Report Filing: Due each year, with fees calculated based on the number of Members.
2. Registered Agent Updates: Ensure the Registered Agent’s information remains current.
3. Tax Obligations: File and pay any applicable state taxes, including excise and franchise taxes if required.

Failure to meet these requirements may result in penalties or administrative dissolution of the LLC.

Forming and operating an LLC in Tennessee requires careful attention to detail, from selecting a unique name and filing the Articles of Organization to maintaining compliance through annual reports and tax payments. By proactively addressing potential issues—such as drafting an Operating Agreement—business owners can establish a strong foundation for their LLC.

Twisdale Law, PC offers comprehensive support for forming and maintaining LLCs in Tennessee, ensuring that entrepreneurs can focus on growing their businesses with confidence.