Thousands of Americans choose to form a business every year. The rewards of entrepreneurship make it an appealing and exciting endeavor. However, proper preparation is necessary to ensure success, especially with a Tennessee LLC.
Doing Business In Tennessee
Many startups choose to form a Tennessee LLC because of the business-friendly climate of the state. For instance, it does not impose personal income taxes on wages and salaries. The state also has a right-to-work policy. Additionally, it has a low state debt per capita.
Some of the other benefits for LLCs that choose to register in Tennessee include the following:
- Flexible Profit Distribution
- Asset Protection For Owners
- Economic Development Incentive Programs
- FastTrack Infrastructure Program
- FastTrack Economic Development Fund
- FastTrack Job Training Assistance Program
- Job Tax Credit
- Enhanced Job Tax Credit
- Industrial Machinery Tax Credit
- Sales Tax Exemption Program
- Business Incentive Programs
- Valley Incentive Programs
- Investment Credit
- Loan Funds
Forming A Tennessee LLC
Companies that plan on choosing the LLC structure will have to be familiar with the business formation process in the state. That includes multiple steps such as the filing of formal paperwork and payment of the corresponding fees.
Here are the basic steps on how to form an LLC in Tennessee:
- Step 1: Pick an appropriate company name.
This step may seem easy. However, companies should be mindful of the naming regulations that the state has set. Failure to do so can lead to business and legal issues. For instance, LLCs should ensure that their company names are distinguishable. That means using a company name that had already been taken by another entity in the state is prohibited. In order to ensure the availability of their desired name, LLCs should conduct a business name search on the state database.It is also necessary to include proper designators. An LLC can have the phrase “Limited Liability Company” or any of its abbreviations like LLC or L.L.C. The state also does not allow the use of any term that could confuse the company for a government agency or imply affiliations with charities. The use of restricted words such as “attorney,” “bank,” or “university” requires the submission of additional paperwork and inclusion of a licensed individual in the LLC.Business entities that wish to operate in the state also have the option to reserve a name. That will be a good idea for companies that have already thought of a name but are still not ready to proceed with the business formation process. Filing an Application for Reservation of Limited Liability Company Name with the Secretary of State and paying the $20 fee will reserve the name for four months.If a company wishes to use a name different from the one it registered on its formation documents, then it has to register an assumed name. This is also known as doing business as (DBA) or a fictitious business name. Submit an Application for Registration of Assumed Name form to the Secretary of State and pay the $20 filing fee. However, it is important to note that companies can only proceed with this step after successfully registering the business.
- Step 2: Select a registered agent for the company.Like other states, Tennessee requires the appointment of a qualified registered agent. So what exactly is that?Generally, the registered agent plays the role of a middleman. They act as the point of contact of the LLC with the state. That means that they will be receiving all official government correspondence, notices of lawsuits, tax forms, and legal documents on behalf of the company.In choosing a registered agent, it is important to ensure that they qualify based on the requirements of the state.
- Individual Registered Agent
- A resident of the state
- Has a physical address in Tennessee
- Is present in the given address during regular business hours
- Is at least 18 years old
- Commercial Registered Agent
- Has a physical address in the state
- Is present in the said address during regular business hours
- Is in good standing with the state
- Is authorized to do business in Tennessee
- Individual Registered Agent
- Step 3: File the necessary paperwork.
To register as a Tennessee LLC, a company has to file a completed Articles of Organization form with the Secretary of State. Doing this will legalize and officially form the business entity. The filing fee for this paperwork is $50 per member. There is a minimum fee of $300. Meanwhile, the maximum is $3,000.Completion of the form requires the disclosure of the following pieces of information:
- LLC name
- Name consent if necessary
- Additional designation if applicable
- Name and address of the registered agent
- Close month of the fiscal year
- Effective date if not upon filing
- Management structure governing authority type
- Number of members
- Duration of business
- Principal office address
- Mailing address
- Nonprofit certification if applicable
- Professional LLC or series LLC designation if applicable
- Obligated member entity information if necessary
- Business prohibition if applicable
- Other provisions
- Step 4: Prepare an operating agreement.
While the operating agreement of an LLC is not required paperwork in the state, having one is advisable. This internal document will establish how to run the LLC. That includes the processes and management structure. Additionally, it can help prevent disputes and disagreements among members. That is because it sets out the duties, obligations, and powers of each member. It can also include provisions on the distribution of profits and losses as well as the dissolution of the company. For a deeper look into this subject, read our article on LLC operating agreement filing.
- Step 5: Ensure compliance with tax and regulatory requirements.
Depending on company activities, industry, and location, there may be additional requirements.
- Employer Identification Number (EIN) – LLCs with multiple members will have to obtain an EIN from the Internal Revenue Service (IRS). This nine-digit number is similar to a social security number. It is necessary to identify the LLC for tax purposes. Additionally, LLCs that are planning on hiring employees or opening a business bank account will need an EIN. Applying for an EIN can be done online.
- Business Licenses or Permits – For business licensing requirements, Tennessee LLCs will have to check with the local county and city clerks where the primary place of business of the company is located.
- Sales Tax – LLCs that plan on selling products that require the collection of sales taxes will have to register with the Department of Revenue. Use the Application for Registration form.
- Step 6: File annual reports.
The state requires all LLCs to file an annual report with the Secretary of State. This should be done on or before the first day of the fourth month after the closing of the company’s fiscal year. For example, if the fiscal year of an LLC ends on December 31, then the deadline for the report is on April 1. The filing fee is $50 per member, with a minimum of $300 and a maximum of $3,000.
Getting Help To Complete The Process
Forming a Tennessee LLC requires the completion of a multi-step process that the state imposes. It includes the preparation and filing of formal paperwork as well as the payment of certain fees.
Tennessee companies that may find the whole ordeal too time-consuming and a bit overwhelming can get help from a reliable third-party organization like DoMyLLC. Our team of experts has experience in handling state requirements in all 50 states, including the District of Columbia. Additionally, we are authorized to serve as a registered agent in Tennessee.
Handling state processes is challenging for many entrepreneurs. But with the help of an experienced document filing company, LLCs can ensure compliance with state obligations without hassle. Doing this allows entrepreneurs to focus on growing the company. It prevents missed deadlines that can lead to bigger issues such as a bad standing status or administrative dissolution.
DoMyLLC also lets companies request personalized solutions. This way, all the services you get from our team are suitable to the specific needs and circumstances of the company. With our live support, companies can get immediate answers to queries and concerns as well. Contact us now or check out our services to find out how our team of experts can help in streamlining state processes.
Business Filing Section