Important Notice: This page is for informational purposes only and does not constitute legal advice. Jurist-Diction is not a law firm. For free legal assistance, contact Legal Aid Society of Middle Tennessee — 1-800-238-1443 or Memphis Area Legal Services — 901-523-8822.
Tennessee Limited Liability Companies are governed by the Tennessee Revised Limited Liability Company Act (T.C.A. § 48-249-101 et seq.). Tennessee is consistently ranked among the best states for small business due to its favorable tax environment — no personal income tax on wages, no state income tax on pass-through LLC profits, and a relatively streamlined regulatory process.
Note that Tennessee charges an LLC formation fee of $50 per member with a $300 minimum and $3,000 maximum. For a single-member LLC, the fee is $300. This is higher than some neighboring states, but Tennessee's overall tax environment generally offsets the higher initial filing cost.
Why Form an LLC in Tennessee
Key advantages under the Tennessee Revised LLC Act (TCA § 48-249).
No State Income Tax on Pass-Through Income
Tennessee does not impose a personal income tax on LLC members' share of profits (Tennessee eliminated its Hall Tax on investment income in 2022). Tennessee LLCs that are taxed as pass-through entities — the default for single-member and multi-member LLCs — avoid state-level income tax on business profits distributed to members. Tennessee does impose a Franchise and Excise Tax on LLCs that exceed $50,000 in net earnings or $100,000 in assets, so high-revenue businesses need to account for this.
Limited Personal Liability
Tennessee LLC members are not personally liable for the LLC's debts or legal obligations, provided the LLC is properly maintained (separate bank accounts, documented decisions, and adherence to the Operating Agreement). Creditors can only reach LLC assets — not members' personal assets — in the event of a lawsuit or debt default. This protection is the primary reason sole proprietors form LLCs.
Business-Friendly Environment
Tennessee has no personal income tax on wages or salaries (as of 2022) and a relatively low corporate tax rate. Tennessee is consistently ranked among the most business-friendly states for small business formation. The state filing fee for an LLC is $300 — slightly higher than some neighboring states — but the overall tax environment and regulatory burden are favorable.
Flexible Management Structure
Tennessee LLCs under T.C.A. § 48-249-101 et seq. can be structured as member-managed (all members participate in day-to-day operations) or manager-managed (designated managers run the business while other members are passive investors). The Operating Agreement controls these arrangements and can be customized for any ownership structure — from a single-owner freelancer to a multi-member real estate investment partnership.
What You Need to Form a Tennessee LLC
How to Form Your Tennessee LLC
Choose and Confirm Your LLC Name
Your LLC name must include "LLC," "L.L.C.," "Limited Liability Company," "Limited Company," or "LC" under T.C.A. § 48-249-106. Check availability using the TN Secretary of State's online name search at tnbear.tn.gov. If the name is available, you may reserve it for 4 months for $20 by filing a Name Reservation application. Avoid names that imply a government connection (Federal, State, National) or require special licenses (Bank, Insurance, Attorney) without first obtaining the required approvals.
Designate a Registered Agent
Tennessee requires every LLC to continuously maintain a registered agent with a physical street address (not a P.O. box) in Tennessee. The registered agent receives lawsuits, state correspondence, and legal notices. You can be your own registered agent if you have a Tennessee physical address and are available during business hours. Professional registered agent services cost $50–$150/year and provide privacy (your home address won't appear on public records) and ensure no notices are missed.
File the Articles of Organization with the TN Secretary of State
File the Articles of Organization online at tnbear.tn.gov or by mail to the Division of Business Services, 312 Rosa L. Parks Ave., 6th Floor, Nashville, TN 37243. The filing fee is $300 for a single-member LLC (minimum fee). Include: the LLC's name, principal office address, registered agent name and address, whether the LLC is member-managed or manager-managed, and the organizer's name and signature. Online processing is typically immediate; mail processing takes 5–7 business days. You will receive a stamped copy of the Articles confirming the formation.
Draft the Operating Agreement
The Operating Agreement is not filed with the state but is the governing document for your LLC. It should cover: member names and ownership percentages, capital contributions, profit and loss allocation (default is by ownership percentage), voting rights and procedures, management structure (member-managed vs. manager-managed), what happens when a member wants to exit, how new members are admitted, and dissolution procedures. Multi-member LLCs absolutely need an Operating Agreement to prevent disputes. Single-member LLCs benefit from one to document the business structure and support limited liability protection.
Obtain an EIN and Open a Business Bank Account
Apply for a Federal EIN at IRS.gov — free and instant. An EIN is required to open a business bank account and is needed for federal tax filings. Open a dedicated business bank account immediately after formation. Never comingle personal and business funds — this is the single most important step for maintaining your limited liability protection. If you plan to hire employees in Tennessee, also register with the Tennessee Department of Labor and Workforce Development and obtain workers' compensation insurance as required.
File Annual Reports and Handle the Franchise & Excise Tax
Tennessee LLCs must file an Annual Report each year. The fee is $300 minimum ($50 per member). The Annual Report is due by the first day of the fourth month after your fiscal year-end (April 1 for calendar-year LLCs). Tennessee also has a Franchise and Excise Tax (F&E Tax) — LLCs earning more than $50,000 in net earnings or holding more than $100,000 in assets owe both a 6.5% excise tax on net income and a 0.25% franchise tax on the greater of net worth or real and tangible property in Tennessee. LLCs below these thresholds are exempt from the F&E Tax. File Tennessee business taxes through the TNTAP (Tennessee Taxpayer Access Point) portal.
Related Resources
Tennessee Specific
Tennessee LLC Formation Kit
Complete LLC formation package for Tennessee. Includes the Articles of Organization, customizable Operating Agreement, EIN Application Guide, TNTAP tax registration walkthrough, Franchise & Excise Tax explanation, annual report compliance checklist, and step-by-step filing instructions.
Get the LLC Formation KitDisclaimer: This page is for informational purposes only and does not constitute legal advice. Jurist-Diction is not a law firm and does not provide legal representation. For questions about your specific business situation, consult a licensed Tennessee attorney or CPA.