Form an LLC in Tennessee

What is different about forming an LLC in Tennessee

Tennessee prices both the formation filing and the recurring report by member count. Articles of Organization cost $50.00 per member, with a minimum of $300.00 and a maximum of $3,000.00, and the annual report runs on the same idea from the other end: $300 minimum, rising by $50 for every member over 6 members, to the same $3,000 ceiling.

Three further features shape the work. The Articles collect a fiscal year ending month, and the annual report deadline hangs off that month rather than the date of formation. An LLC can elect on the Articles to make its members fully obligated for its debts, and the Department of Revenue treats that election as an exemption from franchise and excise tax. And Tennessee does not recognize "DBAs"; a second trading name is an assumed name registered with the Secretary of State.

Filing the Articles of Organization

The formation document is the Articles of Organization Limited Liability Company, Form SS-4270, filed with the Division of Business and Charitable Organizations of the Tennessee Secretary of State. It sets out the items required by T.C.A. § 48-249-202, under the Tennessee Revised Limited Liability Company Act.

SS-4270 states the filing fee as $50.00 per member in existence on the date of the filing, with a minimum fee of $300.00 and a maximum fee of $3,000.00. One election changes the arithmetic: if the Articles prohibit the LLC from doing business in Tennessee, the fee is $300.00 regardless of the number of members, and item 13 is the box that makes that election.

How the filing is submitted

The form lists three methods: e-file through TNCaB, Tennessee's Charity and Business Filing System, at https://tncab.tnsos.gov/; mail to TN Secretary of State, ATTN: Corporate Filing, 312 Rosa L. Parks Ave., Nashville, TN 37243; or walk-in at the Secretary of State Customer Service Counter on the 3rd floor of Snodgrass Tower. An account must be created in TNCaB the first time it is used.

A convenience fee applies to credit card, debit card and e-check payments, and mailing a check or money order payable to the Tennessee Secretary of State avoids it. The Business Forms and Fees schedule, which lists the Secretary of State's filing fees across every entity type, contains no expedite, rush, priority or same-day line.

What the form asks for

SS-4270 runs to seventeen numbered items, several with conditions attached.

• Fiscal year. If a fiscal year ending month is not indicated, the Division lists it as December by default, and that month drives the annual report deadline.
• Business email. All reminders are sent by email, and a missing address is one of the published reasons a filing is rejected.
• Principal office. A post office box is not acceptable; the address is verified, and if it cannot be recognized as valid, the form will be rejected. A post office box is acceptable for a mailing address.
• Management. Item 10 asks whether the LLC will be Member Managed, Manager Managed, or Director Managed. Only the number of members is collected, not their names.
• Delayed effective date. Item 15 permits one, but no more than ninety (90) calendar days from filing.

The organizer signs the form, and a conformed or typed signature is not acceptable.

Designations and elections on the form

Item 3 carries seven additional entity designations: Captive Insurance Company, Decentralized Organization, Insurance Company, Litigation Financier, Professional Limited Liability Company, Processing Cooperative and Trust Company. A Litigation Financier must submit with its Articles a bond of fifty thousand dollars ($50,000) made payable to the State of Tennessee. A separate checkbox certifies a Series LLC under T.C.A. § 48-249-309(a) and (b).

Item 12 registers the LLC as an Obligated Member Entity under T.C.A. § 48-249-114(f) and § 67-4-2008(d)(1), with the no-fee Obligated Member Entity Addendum, Form SS-4600, signed by each obligated member and attached.

Naming a Tennessee LLC

Under T.C.A. § 48-249-106, each limited liability company name must contain the words "Limited Liability Company" or the abbreviation "LLC" or "L.L.C." The name must also be distinguishable from another business entity on file; a name that is not is one of the published reasons a filing is rejected. The state's Name Availability Search sits at https://tncab.tnsos.gov/portal/business-entity-search.

Where a name is not distinguishable, the Articles must be accompanied by an Application for Use of Indistinguishable Name, Form SS-9411, signed by both entities, and an additional $20 fee, setting out the criteria for name duplication described in T.C.A. § 48-249-106(c).

Some words need written approval before the Division can accept the filing: "bank," "banks," "banking," "credit union," or "trust" from the Tennessee Department of Financial Institutions, and "insurance company" from the Tennessee Department of Commerce and Insurance. An Application for Name Reservation, Form SS-9425, costs $20 and holds a name for four months (120 days).

Assumed names instead of DBAs

The Secretary of State states that Tennessee does not recognize "DBAs" or fictitious names. An assumed name is a name other than the true entity name under which a business conducts business, registered with the state on an Application for Registration of Assumed Name, Form SS-4402, for $20. It is good for 5 years and can be renewed on Form SS-4481 for $20. The assumed name must itself meet T.C.A. § 48-249-106.

Registered agent

Tennessee requires all entities except general partnerships to maintain a registered agent and registered office in the state at all times. Item 16 of SS-4270 asks whether the agent is an individual or an organization, and item 17 collects the agent's name, address with county, and email. The address of the registered office must be a physical Tennessee address; it cannot be a post office box, route number, or box number alone.

Changes run on Form SS-4534, Statement of Change of Registered Agent by Entity, which states a $20 filing fee and cites T.C.A. § 48-249-110 for LLCs. After a change, the street addresses of the entity's registered office and the business office of the registered agent must be identical, which the filer certifies by signing. A no-fee form, Change of Business Information (SS-4800), handles an address change, but a change in registered agent or principal address requires filing Articles of Amendment and paying the statutory $20 filing fee. Articles of Amendment (SS-4451) and Amended and Restated Articles of Organization (SS-4701) are each $20. See the Tennessee registered agent guide.

The annual report

T.C.A. § 48-249-1017 requires LLCs to file an annual report with the Secretary of State on or before the first day of the fourth month following the close of the LLC's fiscal year. Because the Articles set that month, and the Division defaults it to December, the deadline follows the fiscal year the LLC declared.

The Secretary of State states that the annual report fee for LLCs is $300 minimum up to a maximum of $3,000, and that the fee increases by an additional $50 per member for every member over 6 members. Filing runs through TNCaB, under Business Filings and then File Annual Report, locating the entity by name or control number and confirming its NAICS codes.

A business entity that has failed to file its annual report on a timely basis may be administratively dissolved and placed in inactive status. Failure to file is one of four published grounds for administrative dissolution, alongside being without a registered agent, a foreign entity failing to maintain its assumed name due to a name conflict, and a returned payment by a financial institution.

Coming back is a filing of its own. The Application for Reinstatement Following Administrative Dissolution/Revocation, Form SS-9410, states a $70 filing fee, and before the document is accepted for filing, tax clearance verification must be obtained from the Tennessee Department of Revenue. Tax clearance also gates a certificate of existence and any termination, cancellation or withdrawal of an entity from Tennessee. The Tennessee dissolution guide covers the closing route.

State taxes

Any limited liability company chartered, qualified, or registered in Tennessee, or doing business in the state, must register for and pay franchise and excise taxes. Franchise tax is 0.25% of Tennessee net worth, meaning total assets less total liabilities, and the minimum franchise tax is $100, payable if the company is registered through the Secretary of State to do business in Tennessee regardless of whether it is active or inactive. Excise tax is 6.5% of Tennessee taxable income. Both are due on the 15th day of the fourth month following the close of the books and records, and a seven month extension is available.

The Obligated Member Entity election connects here. The Department of Revenue lists seventeen types of entity exempt from franchise and excise tax, one of them being "LLCs or LPs where the members are fully obligated for the debts of the entity (OME)". The exemption is claimed on Form FAE 183, filed on the Tennessee Taxpayer Access Point, and the entity must then annually certify on the same form that it continues to be eligible.

An LLC selling taxable goods or services collects sales and use tax. The general state rate is 7% for most tangible personal property and taxable services, and 4% on food. Every local jurisdiction has a local rate, which may not be higher than 2.75%. See the Tennessee LLC tax guide.

Business tax and local licenses

Business tax reaches down to the county and city clerk. The Department of Revenue states that, generally, a business conducting business within any Tennessee county or incorporated municipality and grossing $100,000 or more should register for and remit business tax.

The license follows the same numbers. An in-state location with gross receipts of more than $3,000 but less than $100,000 must obtain a minimal activity license from its county and/or municipal clerk, and a standard business license is needed from that clerk if gross receipts are $100,000 or more. A separate $15 business license registration fee is paid to the clerk for each new business. The Department of Revenue states that you are not allowed to operate until your required license is obtained and posted in your business' location, and that registration takes up to 10 business days. The return is due on the 15th day of the fourth month after the fiscal year ends, and every taxpayer must pay at least a minimum tax of $22.

Other Secretary of State filings

A Certificate of Formation, Form SS-4232, is a separate $20 filing under T.C.A. § 48-249-201, stating only the LLC's name, which must be the same as on the Articles, and its date of formation.

An LLC formed elsewhere registers instead on an Application for Certificate of Authority Limited Liability Company, Form SS-4233, under T.C.A. § 48-249-904, which states the same $50.00 per member fee with a $300.00 minimum and $3,000.00 maximum. See the Tennessee foreign LLC guide.

EIN and operating agreement

An EIN is issued by the Internal Revenue Service, not by any Tennessee agency. The EIN guide sets out the application steps.

An operating agreement is not filed with the Secretary of State: none of the seventeen items on SS-4270 refers to one, and the published list of reasons a filing is rejected contains no operating agreement item. See the operating agreement guide.

Frequently asked questions

How much does it cost to form a Tennessee LLC?

The filing fee for Articles of Organization is $50.00 per member in existence on the date of the filing, with a minimum fee of $300.00 and a maximum fee of $3,000.00. If the Articles of Organization prohibit the LLC from doing business in Tennessee, the fee is $300.00 regardless of the number of members.

When is the Tennessee LLC annual report due?

T.C.A. § 48-249-1017 requires an LLC to file an annual report with the Secretary of State on or before the first day of the fourth month following the close of the LLC's fiscal year. The fiscal year ending month is set on the Articles of Organization, and the Division lists December if the field is left blank.

How much is the Tennessee LLC annual report fee?

The Secretary of State states that the annual report fee for LLCs is $300 minimum up to a maximum of $3,000, increasing by an additional $50 per member for every member over 6 members.

Does Tennessee recognize DBAs?

No. The Secretary of State states that Tennessee does not recognize DBAs or fictitious names, and that a business uses an assumed name instead, registered on Form SS-4402 for $20 and good for 5 years with renewal available.

What happens if a Tennessee LLC misses its annual report?

A business entity that has failed to file its annual report on a timely basis may be administratively dissolved and placed in inactive status. Reinstatement is Form SS-9410 at $70, and tax clearance verification must be obtained from the Tennessee Department of Revenue before the document is accepted.