Tennessee has become a major draw for Americans due to its low-cost housing, affordable taxes, and major factories. Setting up a Limited Liability Company (LLC) is a great way to capitalize on the economic growth of the state.
Tennessee LLC formation numbers are at the highest the state has ever seen, with many entrepreneurs choosing to start their business ventures in the “Volunteer State”. By following the 5 steps in this “how to” guide, you will be able to form your own Tennessee LLC in no time.
Step 1: Name you Tennessee LLC
Naming an LLC is not as easy as just choosing any name that comes to mind. Tennessee state law requires that certain rules be met when naming an LLC. The name must be unique and may not be similar or the same as any other registered name. Registered business names can be searched online via the Tennessee Secretary of State name database.
All naming regulations can be found on the State Secretary’s website. Once a name has been chosen it can be reserved for 4 months by filing an Application for Reservation of Limited Liability Company Name and paying the required fee of $20.
Step 2: Appoint a Registered Agent
Every LLC in Tennessee is obligated to appoint a registered agent. This can be an individual within the LLC or alternatively, a business entity such as a registered agent service can be appointed.
The registered agent must be available during business hours and possess a physical address in Tennessee. The function of the registered agent is to receive any legal documentation including tax filings and legal notices on behalf of the LLC.
Step 3: File the Articles of Organization
In order to officially register the LLC with the state, the Articles of Organization (Form ss-4270) must be filed with the Secretary of State. This can be done online or through the mail and costs $50 for each LLC member with a minimum charge of $300 and a maximum charge of $3000. Online filings will carry an additional filing fee.
Once the form has been filled out correctly, the person forming the LLC needs to sign. It is important to note that the information of the signee will be a matter of public record.
Step 4: Comply with Taxes and Regulations
Some additional requirements may be needed in order to remain in good legal standing with the Tennessee Secretary of State. Most businesses in Tennessee will require a business license in order to trade and can be obtained from any relevant government agency in the LLCs’ jurisdiction.
It is also wise to register for an EIN with the IRS. An EIN is an employer identification number that allows the LLC to hire staff, open bank accounts, and register for federal taxes. This can be done online at no cost.
If the LLC is going to collect sales taxes from goods sold, it needs to register with the Tennessee Department of Revenue. Every LLC will also need to file an annual report that ensures all the LLC details on record are kept up to date. The fee is $50 per LLC member with a minimum fee of $300 and a maximum fee of $3000.
Step 5: Create an Operating Agreement
An Operating Agreement ensures that the LLC will have a proper foundation to conduct business from. It is an internal document not submitted to the Secretary of State that outlines:
- Business rules
- Management structure and responsibilities
- Clauses and regulations
- Processes for hiring and replacing members or dissolving the LLC
The document is key to avoiding any legal court disputes between members as well as serves as a guide on to base important financial decisions.
After the Tennessee LLC has been Established
Now that the LLC is officially formed there are a few other things to consider in order to keep the business sustainable for the future. You might consider opening a business bank account with a line of credit which will ensure that personal and business finances are kept separate from each other. A must for any business.
It is also the right time to consider some general business insurance that will keep the business and its assets safe in the event of damages or loss. Thinking ahead will put your LLC on the right path toward longevity and success.