Looking to join Tennessee’s booming business community? You’re not alone. Entrepreneurs are flocking to the Volunteer State, drawn by its affordable housing, thriving manufacturing sector, and business-friendly tax environment. With no state income tax and low property taxes, Tennessee makes it easier to keep more of what you earn.
If you’re planning to start a business in Tennessee, establishing an LLC remains one of the most flexible and advantageous ways to get started. Here are 12 steps to establish your Tennessee LLC and position yourself for success in 2025.
Ready to start your business? Create your website today or learn more about Shopify’s tools for selling online and in person.
What is a limited liability company (LLC)?
An LLC (limited liability company) lets one or more owners run their business without oversight from a corporate board of directors. Managing members control day-to-day operations, while non-managing members can hold ownership stakes without participating in daily activities.
Tennessee recognizes single-member LLCs (one owner), multi-member LLCs (multiple owners), and professional limited liability companies (PLLCs). The state is also one of the few to recognize series LLCs, which offer unique advantages for certain business structures.
A series LLC works as a master LLC that can own multiple subsidiary LLCs or “series.” Each series operates separately when it comes to debts, liabilities, obligations, and expenses. This structure gives you additional flexibility in organizing multiple business ventures.
Tennessee LLC formation services
You have two ways to set up your LLC in Tennessee. The first is to use an LLC formation service like ZenBusiness or LegalZoom. Both of these business services take only five to 10 minutes to file an LLC in Tennessee.
ZenBusiness has served more than 500,000 businesses and offers a $0 option plus state fees. They provide excellent customer support and include extras like free LLC operating agreement templates and registered agent services.
LegalZoom has helped over four million businesses get started and also offers a $0 option plus state fees. They provide attorney consultations, business document templates, and help with getting an EIN.
Your other option is to file your LLC paperwork yourself. This takes about an hour and costs almost the same as using a formation service, but requires you to handle all the details independently.
How to start an LLC in Tennessee in 12 steps
- Name your Tennessee LLC
- Create a business plan
- Choose a registered agent
- File your Articles of Organization
- Get your tax numbers
- Secure business licenses and permits
- Understand Tennessee business tax requirements
- Prepare your operating agreement
- Get the right business insurance
- Understand financial considerations
- Market your LLC
- File your BOI report
1. Name your Tennessee LLC
Your business name is your first big decision. Make sure it’s unique and follows Tennessee’s requirements:
- Check if your chosen name is available, using the Tennessee secretary of state’s online search tool.
- Include “Limited Liability Company,” “LLC,” or “L.L.C.” in your official name.
- Reserve your name by filing Form SS-9425 ($20 fee) by mail or online.
Want to operate under a different name? Consider a DBA (“doing business as”) to use a different customer-facing name while maintaining your LLC’s legal identity.
💡Use Shopify’s free business name generator to find the perfect name for your LLC.
2. Create a business plan
Think of your business plan as your roadmap for success. A strong business plan helps you:
- Set clear goals for your business
- Understand your target market
- Define your products and services
- Plan your revenue streams
- Track your progress
Save time with a business plan template and study relevant business plan examples from your industry.
3. Choose a registered agent
Every Tennessee LLC needs a registered agent to receive legal documents and tax forms. Your agent must have a physical street address in Tennessee. You can:
- Serve as your own registered agent
- Choose another LLC member
- Hire a registered agent service
Good news: While your registered agent needs a Tennessee address, you don’t need to live in the state to own an LLC here.
4. File your Articles of Organization
This official paperwork establishes your LLC with Tennessee. Submit Form SS-4270 electronically, by mail, or in person, with:
- Your LLC’s name
- Principal office address
- Registered agent details
- Management structure
- Member information
- Contact details
Filing fees start at $300 and increase by $50 per member, with a $3,000 maximum. When registering a business with the state, you’ll receive a Tennessee secretary of state control number, which you’ll use to make business filings. You’ll need this to file your annual reports for the same fee to maintain your LLC.
5. Get your tax numbers
Your Tennessee LLC needs two important tax identification numbers to operate legally. First, get your employer identification number (EIN) from the IRS—think of it as a Social Security number for your business. The quickest way is to apply online through the IRS website, where you’ll receive your EIN immediately. You’ll need this number to hire employees and set up your business bank account.
Next, secure your state sales tax number through the Tennessee Taxpayer Access Point (TNTAP). Both numbers are essential before you can start accepting payments from customers.
6. Secure business licenses and permits
Your Tennessee LLC needs specific licenses based on your revenue and business type. The Tennessee Department of Revenue can help you determine which licenses you need to get started.
Most companies will need one of two business licenses from your local county clerk:
- Minimal activity license. Tennessee businesses with gross receipts of more than $3,000 but less than $100,000 must obtain a minimal activity license from their local county clerk. The registration fee is $15.
- Standard business license. Tennessee businesses with gross receipts exceeding $100,000 must obtain a standard business license from the local county clerk. The registration fee is also $15.
You’ll also need a sales tax certificate since Tennessee LLCs must collect sales tax on merchandise. Depending on your industry, you might need additional certifications. Fields like architecture, accounting, insurance, home inspection, and cosmetology all require special licensing.
7. Understand Tennessee business tax requirements
Running an LLC in Tennessee means managing several state taxes on top of your federal obligations. Here’s what you need to know:
Franchise tax
Your LLC must file an annual franchise tax using the Franchise and Excise Tax Form, which you can submit online. Tennessee calculates its franchise tax rate at 0.25% of either your net worth or real and tangible property value (whichever is greater). Even small LLCs must pay at least $100 annually.
Sales tax
Your LLC needs to collect and send sales tax to the state. Tennessee charges 7% on merchandise sales, but local taxes often increase this rate.
The average Tennessee retail sale faces a 9.55% tax—one of the highest in the country.
Corporate tax
You can choose to have your LLC taxed as a corporation instead of passing profits and losses to individual owners. If you choose this route, Tennessee charges a 6.5% excise tax on corporate profits. This option appeals to business owners who want to keep company profits separate from their personal tax obligations.
8. Prepare your operating agreement
While Tennessee doesn’t require an operating agreement, creating one helps protect your business and your members’ interests. Think of it as your LLC’s constitution—a document that spells out how your business runs.
A solid operating agreement should include:
- Your LLC’s name and primary address
- Duration of the LLC
- Registered agent information
- Articles of organization details
- Business purpose and mission
- Member information and investments
- Profit and loss distribution
- Rules for adding or removing members
- Management structure and responsibilities
9. Get the right business insurance
Smart insurance coverage protects your LLC from unexpected challenges. While some policies are required by law, others just make good business sense.
Common policies include:
- Workers’ compensation insurancecovering on-the-job injuries becomes mandatory once you have five or more employees
- Commercial general liability insuranceto protect against property damage claims, injuries, and advertising issues
- Commercial auto insurancecovering any business vehicles in Tennessee, whether they’re used for commercial or personal purposes
- Unemployment insurance supporting employees laid off through no fault of their own
- Cyber liability insurance protecting against financial losses from cyberattacks and data breaches
- Commercial umbrella insurance, which extends your existing coverage limits for major incidents
10. Understand financial considerations
Setting up strong financial systems helps your Tennessee LLC succeed from day one. Start by opening a business bank account at a commercial bank or a credit union to handle your company’s transactions.
Need help with funding? Several organizations can connect you with grants, loans, and tax benefits:
- Tennessee Small Business Development Center offers local guidance.
- Tennessee Department of Economic and Community Development provides state resources.
- US Small Business Administration has federal programs.
- Shopify Capital provides quick funding options.
11. Market your LLC
While you’re handling the legal requirements for starting your LLC, you can begin building your brand.
Your marketing strategy might include:
- Website design to bring your online store to life
- Slogans, taglines, and a brand voice that attracts your ideal customers
- TV and radio ads to reach a broad audience but require a bigger budget
- Social media influencer campaigns to let you tap into established audiences who trust the influencer’s recommendations
- Store displays in retail locations to inform customers and draw attention
Want to build a strong online presence? Check out our small business marketing guide to learn about growing your audience, building customer relationships, and attracting new business.
12. File your BOI report
The Corporate Transparency Act now requires a Beneficial Ownership Information (BOI) report to prevent financial fraud. You’ll need to submit this report through the Financial Crimes Enforcement Network (FinCEN) website.
Your report should include details about anyone who:
- Owns 25% or more of your LLC
- Receives economic benefits from your LLC’s assets
- Has substantial control over the LLC
Timing matters: If you form your LLC in 2024, file within 90 days of formation. For LLCs created before 2024, submit your initial report by January 1, 2025.
Is a Tennessee LLC right for you? Pros and cons
LLCs are a popular choice for Tennessee small business owners because they strike a balance between simple sole proprietorships and more complex corporations. Let’s look at what makes them appealing—and what to watch out for.
Advantages of a Tennessee LLC:
- Limited liability protection keeps your personal assets safe from business debts and lawsuits—crucial whether you’re selling online or running a wholesale business
- Pass-through taxation helps you avoid double taxation by flowing profits and losses to your personal tax return
- Operational flexibility means no mandatory annual meetings or a board of directors
- Business-friendly state policies and support from Tennessee
Potential drawbacks:
- Annual report fees and other compliance costs
- One of the highest sales tax rates in the country
- Mandatory annual franchise tax based on your net worth or property value
What to do after forming your Tennessee LLC
Getting your LLC up and running is just the beginning. Here’s how to keep your new business healthy and protected:
Set up your internal structure
Start with a strong foundation by documenting your operations. Hold and document your first member meeting to approve your operating agreement and discuss strategy. Consider issuing membership certificates to clearly show ownership percentages and voting rights.
Create a record-keeping system
Good records protect you during audits and legal situations. Set up a system to store:
- Important business documents like legal filings
- Meeting minutes and resolutions
- Financial statements and tax returns
- Business contracts and agreements
- Member contribution records
- Banking and credit documents
Google Workspace lets you collaborate with members in real time and includes video conferencing for remote meetings.
Stay compliant
Keep your LLC in good standing by tracking key deadlines:
- File your annual support by the fourth month after your fiscal year ends with a $300 fee
- Know your sales tax filing schedule:
- Monthly: Due the 20th of the following month
- Quarterly: Due January 20, April 20, July 20, and October 20
- Annual: Due January 20
- Submit your BOI report yearly and update it when ownership changes
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Starting an LLC in Tennessee FAQ
How much does a Tennessee LLC cost?
Initial registration runs $300 to $3,000, based on member count. You’ll pay this same amount yearly for your annual report, plus a franchise tax of 0.25% of your net worth or property value.
Why choose Tennessee for your LLC?
Tennessee offers a growing market, lower living costs, and business-friendly taxes (ranked 15th nationally). The trade-off? High sales taxes that can impact consumer spending.
Do you need a registered agent for your LLC in Tennessee?
Yes. Your Tennessee LLC must have a registered agent with a physical state address who can receive documents during business hours. Many services like ZenBusiness offer this service.
How do state taxes work for LLCs in Tennessee?
Your LLC’s profits and losses flow to your personal tax return through Schedule K-1, divided by ownership stake. You can opt for S corporation taxation at 6.5%. Remember to collect state sales tax (7%) plus any local taxes.
How do I dissolve an LLC in Tennessee?
File Articles of Dissolution ($100 fee) with the secretary of state. First, pay all taxes, settle debts, distribute assets, and notify creditors. Then, cancel business licenses and file final tax returns.
