How to Start an LLC in Tennessee: 2024 Guide

Using an LLC Formation Service

Small business entrepreneurs can benefit from online LLC services to establish their Limited Liability Companies (LLC). These services will help file the necessary documents, allowing small business owners to focus on running their businesses. They have features like guaranteed acceptance by the state, assistance with the EIN application, registered agent service, and drafting of operating agreements. Online LLC services can be a reasonable and worthwhile cost.

Business owners can customize these packages to suit their individual needs. If you want to compare services and costs before deciding, you can choose from several options. Northwest Registered Agent, Swiftfilings, and Bizee LLC services are the most popular choices and have the best ratings.

Starting a Limited Liability Company (LLC) in Tennessee is an excellent way for entrepreneurs to bring their business ideas to life. An LLC combines the liability protection of a corporation with the flexibility and tax efficiency of a partnership, making it a popular choice for business owners. This guide will walk you through setting up your LLC in Tennessee in 2024.

Step 1: Choose a Business Name

The first step in creating your LLC is picking a unique name. Your LLC’s name identifies your business and plays a vital role in branding. In Tennessee, your LLC name must include “Limited Liability Company” or its abbreviations (LLC or LLC). 

Here are the guidelines you must follow: 

• It must include “Limited Liability Company” or its abbreviations (LLC or L.L.C.).
• It can’t be too similar to existing business names in Tennessee.
• Avoid restricted words without necessary permissions (e.g., Bank, Attorney).

You can do a quick, free name check to see if your chosen name is available. If you are considering getting a website name that matches your business name, You can find good deals for your domain names on Namecheap.

Step 2: Hire a Registered Agent

Like in other states, your LLC must have a registered agent in Tennessee. A registered agent is a person or company that agrees to receive legal papers on behalf of your LLC, ensuring you get all important legal notices. The agent must have a physical address in Tennessee and be available during business hours. You can act as your registered agent, choose someone you trust, or hire a professional service like Northwest Registered Agent, Swiftfilings, or Bizee.

Check out our blog: ‘Is a Registered Agent Necessary? Your Guide to Finding an Affordable Option‘

Step 3: File Your Articles of Organization in Tennessee 

The cornerstone of creating your LLC in Tennessee is filing the Articles of Organization with the Tennessee Secretary of State. This document registers your LLC with the state and includes important details about your business.

What to Include in Your Articles of Organization:

• LLC Name: Your LLC’s name must include “Limited Liability Company” or its abbreviation “LLC” to comply with Tennessee naming conventions.
• Mailing Address: List a mailing address if it’s different from the LLC’s physical location.
• Registered Agent: Tennessee requires you to appoint a registered agent to accept legal documents on your LLC’s behalf. Include their full name and physical address in Tennessee. The registered agent must consent to this appointment.
• Management Structure: Indicate whether your LLC is member-managed or manager-managed, including the members’ or managers’ names and addresses. A P.O. box may be used for addresses if privacy is a concern.
• Purpose: While a specific purpose isn’t necessary, you may briefly describe your business activities.
• LLC Organizer: The person or entity filing the Articles of Organization should be identified here.
• Formation Date: You can choose the LLC’s start date, either the filing date or a specific date, within 60 days of filing.
• Signing: Ensure all information is accurate before signing. The form must be signed by either an LLC member, manager, or organizer.

How to Send Your Form:

• Online: For the fastest processing, file your Articles of Organization online through the Tennessee Secretary of State’s website. This platform offers an efficient way to submit your paperwork and payment.
• By Mail: If you prefer, you can also file by mail. Complete the Articles of Organization and send it with the appropriate fee to the Division of Business Services, 312 Rosa L. Parks Ave., 6th Floor, William R. Snodgrass Tower, Nashville, TN 37243.
• In-Person: If you’d like to file in person, you can bring your completed Certificate of Formation to the same address as above.

Filing Fee: The cost is $300 for up to 6 members, with an additional $50 for each member over 6.

Ensuring all information on your Articles of Organization is accurate and complete is crucial for the smooth establishment of your LLC in Tennessee.

Step 4: Making an Operating Agreement for Your Business

Let’s discuss setting up some ground rules for your business. This is where an Operating Agreement comes in. Think of it as a handbook that explains how your business runs. It’s important because it helps everyone understand their role and what’s expected in your LLC.

Here’s what an Operating Agreement usually includes:

• Ownership: This part talks about who owns what percentage of the business. 
• Member’s Rights and Responsibilities: Here, you’ll write down what each person in the LLC can and cannot do and what they’re responsible for. It’s like a job description for each member.
• Joining & Leaving: This section covers how new people can enter your business and what happens if someone decides to leave. It’s good to have this figured out so there are no surprises later.
• Dissolution: This might sound a bit gloomy, but it’s practical. It’s about how to close down the LLC if you ever need to. It includes the steps to take and how to handle everything when wrapping up the business.

Creating an Operating Agreement is a smart move. It keeps things clear and organized so everyone knows what to expect, and it can save you a lot of time. 

Step 5: Getting Your EIN from the IRS

Your business needs a number called an EIN from the IRS. It’s like an ID number for your business. This number will help you as an identification number when getting bank accounts and credit accounts, filing taxes, and hiring employees.

It’s free, and you can get it from the IRS website.

Step 6: Steps After Forming Your LLC 

Open a Business Bank Account 

Keeping your personal and business finances separate is crucial for financial management and legal protection. Opening a business bank account requires your EIN and Articles of Organization. It makes tracking business expenses easier and simplifies tax filing.

Get a Business Credit Card

A business credit card is an excellent tool for handling business purchases and can help build your company’s credit history. Just like with personal credit, a good business credit score can make it easier to get loans and may qualify you for better terms. Visit our website to see our favorite business cards review.  

Check out our blog: Novo Review: The Best Business Banking Account in 2024?

Hire an Accountant

Managing finances can get complicated, especially as your business grows. An accountant can help you navigate tax laws, handle bookkeeping, and plan for financial growth. This professional guidance can save you time and money in the long run.

Create a Professional Website 

A website makes your business look legit. WordPress is a great tool to build your site. You can check out SiteGround or Hostinger for web hosting. They’re both good options to get your site up and running.

Tennessee LLC: Permits, Licenses, Tax Requirements, and Annual Reporting

Setting up an LLC in Tennessee involves more than just filing paperwork; it’s about ensuring your business complies with all state regulations for smooth operations. This includes obtaining the proper permits and licenses, understanding tax obligations, and meeting annual reporting requirements.

Obtain Any Additional Permits and Licenses

Your LLC may need various permits and licenses based on its activities and location within Tennessee:

• Local Business Licenses: Check with your local city or county clerk’s office or website for any required business licenses.
• Professional Licenses: Certain professions may require a license to operate in Tennessee. The Tennessee Department of Commerce & Insurance’s website has more information.
• Health Permits: Businesses in food service, healthcare, or beauty industries might need health permits from the Tennessee Department of Health or local health departments.

Tax Requirements in Tennessee

Managing your LLC’s tax obligations is crucial for legal compliance and financial health:

• Employer Taxes: If you plan to have employees, register with the Tennessee Department of Labor and Workforce Development for Unemployment Insurance and the Tennessee Department of Revenue for Employee Withholding Tax.
• State Taxes: Tennessee does not levy income tax on wages but does tax interest and dividends. If your LLC sells goods or specific services, you must register for a Sales Tax Permit through the Tennessee Department of Revenue.
• EIN: All LLCs require an Employer Identification Number (EIN) from the IRS for tax purposes, hiring employees, and more.

Annual Reporting in Tennessee

Maintaining good standing with the state involves submitting an annual report:

• Filing Requirements: All Tennessee LLCs must file an annual report with the Secretary of State.
• Fees and Filing: The annual report filing fee is $300 for up to 6 members, with an additional $50 for each member over 6. It can be filed online through the Tennessee Secretary of State’s website.
• Importance: This report is essential for keeping your LLC’s contact information current and maintaining good standing with the state.

Following these guidelines for permits, licenses, tax obligations, and annual reporting is essential for the successful operation of your Tennessee LLC and compliance with state laws. For the most accurate and detailed information, visit the Tennessee Secretary of State website and the Tennessee Department of Revenue website. 

New 2024 Reporting Requirements (BOI)

Effective from January 1, 2024

Big news! Starting January 1, 2024, there are new reporting requirements for both domestic and foreign reporting companies. This includes LLCs, corporations, and other entities. Here’s what you need to know:

First Report Deadlines:

• Existing Entities: If your LLC was already around before 2024, you’ve got until January 1, 2025, to submit your first report.
• New Entities: If you’re forming your LLC in 2024, you must file your report within 90 days of your company’s creation.

Who Needs to Report:

• Domestic Reporting Companies: This includes LLCs and similar entities within the U.S.
• Foreign Reporting Companies: Entities registered foreign entities must also adhere to these new rules.

Exceptions to Reporting:

• For specific exceptions, you’ll want to refer to the Beneficial Ownership Information Reporting Regulations at 31 CFR § 1010.380(c)(2) and the Small Entity Compliance Guide.

What Must Be Reported

What you need to report is all about transparency. The exact details can be found in the compliance guide, but it generally involves information about your LLC’s ownership and control.

When Must Reporting File Reports

Remember, if you’re an existing entity, your deadline is January 1, 2025. For new LLCs formed in 2024, it’s within 90 days of creation.

Filing Reports & Noncompliance Penalties

Starting January 1, 2024, all BOI reports must be filed electronically. Here are some critical points:

• Filing Before the Date: You must file on January 1, 2024.
• Accuracy: Filer certification of accuracy is mandatory – you need to double-check that everything you report is correct and accurate.

Penalties for Noncompliance:

• False Information Penalties: Mistakes or misinformation can lead to a fine of up to $10,000 or up to 2 years in prison.
• Penalties: If you slip up here, you could face a fine of up to $10,000 or even imprisonment for up to 2 years.
• FinCEN’s Approach: The Financial Crimes Enforcement Network (FinCEN) focuses on education and outreach to ensure compliance. 
• Safe Harbor Rule: Did you make a mistake? If you discover inaccuracies in your initial report, you have a 90-day grace period to submit a corrected report.
  

If you need more information or specific guidance, please visit the FinCEN website for all the details.

Starting an LLC in Tennessee in 2024 is easy if you follow these steps. An LLC offers flexibility, limited liability protection, and potential tax benefits, making it an attractive option for many business owners. Remember to check the Tennessee Secretary of State’s website regularly for any changes in laws or fees that might affect your LLC. If you need help, services like Northwest Registered Agent, Swiftfiling, or Bizee exist. They can handle any legal details your LLC requires, like getting your EIN and sorting out your operating agreement.