How to start an LLC in Tennessee

Tennessee LLC vs. Sole Proprietorship

If you're currently operating as a sole proprietor, forming a Tennessee LLC can be one of the most important steps toward protecting yourself and formalizing your business.

The biggest difference between a Tennessee LLC and a sole proprietorship is liability protection.

A sole proprietorship does not legally separate the owner from the business. If the business is sued or cannot pay its debts, the business owner's personal assets may be at risk. Forming a Tennessee LLC creates a legal separation between you and your business from day one.

For retail businesses, construction companies, professional service firms, healthcare providers, restaurants and hospitality businesses, administrative service providers, manufacturers, wholesalers, transportation companies, finance and insurance professionals, arts and entertainment businesses, educational organizations, and real estate businesses, an LLC is often viewed as the logical next step beyond operating as a sole proprietorship.

How to Start an LLC in Tennessee

Follow these steps to form your Tennessee LLC.

Step 1: Choose Your Tennessee LLC Name

Your LLC name must be distinguishable from other registered businesses in Tennessee and must include one of the following:

• LLC
• L.L.C.
• Limited Liability Company

Before filing, search the Tennessee Secretary of State business database to confirm your desired business name is available.

If you'd like additional time before filing, Tennessee allows you to reserve a business name by filing an Application for Reservation of Limited Liability Company Name and paying the applicable filing fee. A name reservation is generally valid for four months.

Best practices before filing:

• Verify Tennessee name availability
• Check domain name availability
• Search the USPTO trademark database
• Avoid restricted words unless properly authorized

Step 2: Appoint a Registered Agent

Every Tennessee LLC must designate a registered agent.

A registered agent receives legal documents, service of process, and official government correspondence on behalf of your business.

Your registered agent may be:

• An individual Tennessee resident
• A business entity authorized to provide registered agent services in Tennessee

The registered agent must:

• Maintain a physical street address in Tennessee (P.O. Boxes alone are not permitted)
• Be available during normal business hours
• Consent to serving as your LLC's registered agent

A professional registered agent can help:

• Receive legal documents promptly
• Protect your privacy by using a business address instead of your home address
• Help keep your business compliant with state requirements

Step 3: File Your Tennessee Articles of Organization

The Articles of Organization officially create your Tennessee LLC. Tennessee allows LLCs to file online or by mail with the Tennessee Secretary of State.

Information you'll generally provide includes:

• LLC name
• Registered agent information
• Principal business address
• Management structure (member-managed or manager-managed)
• Organizer information

Tennessee Articles of Organization filing fee: $300 minimum when filing online or by mail for LLCs with up to six members. Additional state filing fees apply for LLCs with more than six members.

Once approved by the Tennessee Secretary of State, your LLC officially exists as a legal business entity.

Step 4: Create an Operating Agreement

Tennessee does not legally require LLCs to adopt an operating agreement, but creating one is strongly recommended.

An operating agreement establishes how your LLC will operate and can help prevent disputes as your business grows.

A typical operating agreement addresses:

• Ownership percentages
• Member responsibilities
• Voting procedures
• Profit distributions
• Admitting or removing members
• Dissolution procedures

Even single-member LLCs benefit from maintaining a written operating agreement because it helps reinforce the legal separation between the owner and the business.

Step 5: Obtain an EIN

An Employer Identification Number (EIN) is your business's federal tax identification number.

Most Tennessee LLCs need an EIN to:

• Open a business bank account
• Hire employees
• File federal taxes
• Establish business credit
• Work with payment processors

The IRS issues EINs at no cost.

Step 6: Open a Business Bank Account

Once your Tennessee LLC has been approved and you've received your EIN, opening a dedicated business bank account is an important next step.

Keeping business and personal finances separate helps:

• Reinforce liability protection
• Simplify bookkeeping
• Improve tax reporting
• Establish business credibility

Banks commonly request approved Articles of Organization, EIN confirmation, an operating agreement (if applicable), and personal identification.

Maintaining separate financial records can also make accounting and tax preparation significantly easier as your business grows.

Step 7: Understand Tennessee Business License and Tax Requirements

Tennessee does not issue one universal statewide business license for every LLC. Depending on your industry, location, and business activities, you may need licenses or permits from state agencies or local governments before beginning operations.

Although Tennessee does not impose a state income tax on wages or ordinary pass-through LLC income earned by individuals, businesses may still be responsible for franchise and excise taxes, sales and use taxes, employer registrations, or industry-specific tax requirements.

Depending on your business, you may also need:

• Local business licenses
• Professional licenses
• Contractor licenses
• Employer tax registrations
• Health or environmental permits
• Industry-specific permits

Business licensing, tax registration, and compliance requirements vary depending on your industry, location, and business activities, making it important to verify which requirements apply before beginning operations.

Step 8: File Your Annual Report

Tennessee requires LLCs to file an Annual Report each year to remain in good standing with the Tennessee Secretary of State.

The Annual Report is generally due by the first day of the fourth month following the close of your LLC's fiscal year.

Failing to file the Annual Report on time may result in your LLC falling out of good standing and could eventually lead to administrative dissolution if the filing remains delinquent.

Keeping up with this annual requirement is one of the most important ongoing compliance responsibilities for Tennessee business owners.

*Tennessee's filing fee is based on the number of LLC members, with a minimum fee of $300 and additional fees for LLCs with more than six members.

Tennessee LLC Ongoing Costs and Compliance Requirements

After your Tennessee LLC is formed, you'll have several ongoing responsibilities to help keep your business in good standing. These may include maintaining a registered agent with a physical Tennessee address, filing the Annual Report each year, renewing applicable business licenses and permits, maintaining accurate business records, filing required federal, state, and local tax returns, and updating the Tennessee Secretary of State when business information changes.

Understanding these ongoing responsibilities is an important part of operating a Tennessee LLC successfully.

Common Tennessee LLC Mistakes to Avoid

Forming a Tennessee LLC is relatively straightforward, but first-time business owners still make avoidable mistakes. Some of the most common include:

Choosing the Wrong Registered Agent

Your registered agent plays an important role in receiving legal notices and official state correspondence. Using someone who is unavailable during business hours or allowing registered agent information to become outdated can result in missed legal documents or compliance issues.

Missing the Annual Report Filing

Tennessee requires LLCs to file an Annual Report each year to remain in good standing. Missing the filing deadline can result in your business falling out of good standing and may eventually lead to administrative dissolution. Setting reminders or using a compliance service can help you stay on track.

Mixing Personal and Business Finances

One of the primary reasons entrepreneurs form an LLC is to separate personal and business liability. Mixing funds can weaken that separation and create accounting and tax complications. Opening a dedicated business bank account immediately after formation is one of the simplest ways to help preserve your LLC's liability protection.

Skipping an Operating Agreement

Although Tennessee does not require an operating agreement, having one establishes clear expectations for ownership, management, voting rights, and profit distributions. Even single-member LLCs benefit from documenting how the business will operate.

Overlooking Business License Requirements

Many entrepreneurs assume forming an LLC automatically authorizes them to begin doing business. Depending on your industry and location, additional licenses or permits may still be required. This is especially important for retail businesses, construction companies, professional service firms, healthcare providers, restaurants and hospitality businesses, administrative, support, and waste management businesses, manufacturers, real estate businesses, wholesalers, finance and insurance firms, transportation and warehousing companies, arts and entertainment businesses, and educational organizations. Requirements vary across Tennessee, making it important to verify state and local regulations before beginning operations.

Assuming There Are No Tennessee Business Taxes

Although Tennessee does not impose a state individual income tax on wages or ordinary pass-through income, many LLCs are still subject to business taxes. Depending on your business activities, you may need to register for franchise and excise taxes, sales and use taxes, employer taxes, or other applicable tax programs. Understanding your obligations early can help avoid penalties and compliance issues.

Not Planning for Taxes Early

Tennessee LLC owners may be responsible for federal income taxes, self-employment taxes, franchise and excise taxes, payroll taxes, sales taxes, or other applicable business taxes depending on the nature of the business. Working with a CPA or tax advisor early can help avoid surprises as your business grows.

Electing S Corporation Status Too Soon

Some business owners immediately elect S Corporation taxation without determining whether it provides a financial benefit. For many new businesses, standard LLC taxation is often the simplest option during the early years. As profits increase, an S Corporation election may become advantageous after consulting with a qualified tax professional.

Tennessee Registered Agent Requirements

Every Tennessee LLC must continuously maintain a registered agent.

A registered agent is responsible for receiving legal documents, service of process, and official government correspondence on behalf of your business.

A Tennessee registered agent must:

• Have a physical street address in Tennessee where service of process can be delivered
• Be available during normal business hours
• Consent to serving as your LLC's registered agent

A registered agent may receive service of process, legal notices, official government correspondence, tax and compliance notices, and other important legal communications.

Keeping your registered agent information current helps ensure your business receives important legal documents without unnecessary delays.

Should You Use Your Own Registered Agent in Tennessee?

Tennessee allows business owners to serve as their own registered agent if they meet the state's requirements.

However, many entrepreneurs choose a professional registered agent service to gain:

• Additional privacy
• Reliable document handling
• Compliance support
• Flexibility while traveling or working remotely

Using a professional registered agent also helps prevent legal notices from being delivered to your home or business in front of customers, employees, or clients.

Tennessee LLC Ongoing Compliance Requirements

After your Tennessee LLC is formed, you'll need to meet several ongoing compliance requirements to help keep your business in good standing.

These may include:

• Maintaining a registered agent with a physical Tennessee address
• Filing the Annual Report each year
• Renewing applicable business licenses and permits
• Updating the Tennessee Secretary of State if business information changes
• Filing required federal, state, and local tax returns
• Maintaining accurate business records

Quick Fact: Tennessee requires LLCs to file an Annual Report each year to remain in good standing with the Tennessee Secretary of State. Businesses must also maintain a registered agent, comply with applicable tax laws, renew required licenses and permits, and keep required business information current.

Staying organized and meeting these ongoing obligations can help your LLC remain compliant and avoid unnecessary administrative issues.

BizUp helps founders stay organized by keeping important formation documents, compliance reminders, and business records together in one dashboard.

Tennessee LLC Taxes: What You Need to Know

Tennessee LLCs offer flexible tax treatment while remaining subject to applicable federal, state, and local tax laws.

1. Tennessee Does Not Tax Individual Earned Income

Tennessee does not impose a state individual income tax on wages or ordinary pass-through LLC income earned by individuals.

Most Tennessee LLCs are taxed as pass-through entities, meaning business income generally passes through to the owners, who report it on their federal income tax returns.

LLC owners may still be responsible for federal income taxes, self-employment taxes, and other applicable federal tax obligations.

2. Pass-Through Taxation by Default

By default:

• Single-member LLCs are generally taxed as sole proprietorships
• Multi-member LLCs are generally taxed as partnerships

In most cases, the LLC itself does not pay federal income tax at the entity level. Instead, profits and losses pass through to the LLC owners.

3. Other Tennessee Taxes May Apply

Although Tennessee does not tax individual earned income, many LLCs remain subject to other state taxes. Depending on your business activities, your Tennessee LLC may need to register for:

• Tennessee franchise tax
• Tennessee excise tax
• Sales and use tax
• Employer withholding and unemployment taxes
• Industry-specific tax programs

Businesses selling taxable goods or services, hiring employees, or meeting certain filing thresholds may have additional registration and tax obligations.

4. Business Licenses May Be Required

Tennessee does not issue one universal statewide business license for every LLC.

Depending on your business and location, you may need:

• Local business licenses
• Professional licenses
• Contractor licenses
• Health permits
• Industry-specific approvals

Understanding your licensing and tax obligations before beginning operations can help your business remain compliant from day one.

5. You May Elect S Corporation Tax Treatment Later

As your business becomes more profitable, you may decide — with guidance from your CPA or tax advisor — to elect S Corporation tax treatment.

This is a federal tax election rather than a different business entity.

For some growing businesses, this election may reduce self-employment tax obligations while preserving the liability protection of an LLC.

Why Founders Use BizUp Instead of Filing Directly with the State

You can file your Tennessee LLC directly through the Tennessee Secretary of State, and many business owners do.

However, for first-time founders, the process often becomes more time-consuming after the filing itself — especially when preparing an operating agreement, obtaining an EIN, selecting a registered agent, understanding Tennessee tax obligations, securing any required business licenses, filing the Annual Report, and staying on top of ongoing compliance responsibilities.

BizUp was built to simplify the entire Tennessee LLC formation process in one place.

Instead of juggling state filing requirements, IRS registration, compliance tasks, and business documents on your own, founders can manage business setup and ongoing requirements through a single dashboard designed specifically for new businesses.

Start Your Tennessee LLC with BizUp

Starting a business already comes with enough moving parts. Forming a Tennessee LLC should not add unnecessary confusion, compliance stress, or filing complications.

BizUp simplifies Tennessee LLC formation by helping founders manage filing, registered agent service, EIN registration, operating agreement creation, compliance tracking, and business setup through one streamlined platform.

Whether you're launching a retail business, construction company, professional services firm, healthcare practice, restaurant or hospitality business, administrative services company, manufacturer, real estate business, wholesaler, finance or insurance firm, transportation or warehousing company, arts and entertainment business, educational organization, or growing startup, BizUp helps simplify the process from formation through ongoing compliance.

Choose the plan that fits your business today — and keep building from there:

Start Your Tennessee LLC