Tennessee LLCs cost $300 to form and $300/year for annual reports - among highest in Southeast. Annual report due by first day of anniversary month. Tennessee Secretary of State processes online filings in 7-10 business days. High fees offset by no state income tax and business-friendly environment.
Tennessee LLC Formation
Tennessee Secretary of State processes LLC formations. $300 filing fee (expensive compared to most states).
Standard processing: 7-10 business days. Expedited processing: +$20 (fast-track 3-5 days).
Name Requirements
Must include "Limited Liability Company", "L.L.C.", or "LLC". Not case-sensitive.
Restricted words: Bank, Trust, Insurance, University. Tennessee SOS rejects 16% of names for similarity to existing businesses.
Name Reservation
Search Tennessee Business Services at tnbear.tn.gov. Free.
Name reservation: $20, holds 120 days. Can't extend but can re-reserve.
Formation Process
File Articles of Organization with Tennessee Secretary of State. Online filing at tnbear.tn.gov or mail to Nashville office.
Required: LLC name, registered agent with TN address, principal office address, organizer information, business purpose.
Registered Agent Requirement
Must have Tennessee registered agent with physical TN address (no PO boxes). Can be individual or entity.
Can use yourself if you have TN address. Professional registered agent: $100-200/year.
Annual Report
Due every year by FIRST DAY of anniversary month. $300 fee. ALL Tennessee LLCs have same deadline pattern.
Example: LLC formed March 15, 2024 must file annual report by March 1, 2025 (not March 15).
Penalty for Late Filing
$50 penalty if filed late. Administrative dissolution after extended non-filing.
Reinstatement: $300-400. Much more expensive than $300 on-time filing.
TN vs Other Southeast States
Tennessee $300 + $300/year vs Georgia $100 + $50/year: GA saves $250/year.
Tennessee $300 + $300/year vs Florida $125 + $138.75/year: FL saves $336.25/year.
Why TN Fees Are Higher
Tennessee uses LLC fees to offset no state income tax. High initial/annual fees but $0 income tax on profits.
Trade-off: Pay upfront fees but keep more profit (no 5-7% income tax taken from earnings).
No State Income Tax
Tennessee has NO STATE INCOME TAX on business income. Only federal tax on LLC profits.
Compare to North Carolina 4.5% state tax: On $100K profit, TN saves $4,500/year in taxes.
$300 Annual Fee vs Income Tax
$300 annual report seems expensive. But no income tax saves thousands for profitable businesses.
Break-even: If LLC earns $6,666+ profit, TN's $0 tax (vs 4.5% in NC) saves more than $300 annual fee.
Most businesses earn >$6,666, so TN's no-income-tax structure wins despite $300 annual fee.
Tax Considerations
No state income tax. Tennessee eliminated Hall Tax (investment income tax) in 2021. Now true zero-income-tax state.
Franchise & Excise Tax: Only applies to businesses with $3M+ in-state gross receipts. Most small LLCs exempt.
Nashville Additional Requirements
Nashville (Davidson County) businesses need business license. Cost varies by business type, usually $15-300/year.
Memphis, Knoxville, Chattanooga have similar local business license requirements.
Operating Agreement
Not required by TN law but HIGHLY RECOMMENDED for all LLCs.
Tennessee courts enforce Operating Agreement terms. Critical for multi-member LLCs.
Foreign LLC
Out-of-state LLCs doing business in Tennessee must register as foreign LLC. $600 filing fee (double domestic rate).
Annual report still required: $300/year by first day of anniversary month.
When Foreign Registration Required
Maintaining office in TN, employing TN workers, owning TN real estate, regularly conducting business in state.
Online sales to TN customers typically don't require foreign registration (no physical presence).
Common Mistakes
Missing first-of-month deadline: TN uses "first day of anniversary month" not "anniversary date." March 20 formation = March 1 deadline, not March 20.
Not calculating income tax savings: $300 fee seems high but no income tax saves thousands for profitable businesses. Do the math.
Choosing neighboring state for lower fees: Georgia $50/year saves $250 vs TN $300/year. But if LLC earns $5,556+ profit, TN no-income-tax saves more money overall.
When TN Makes Sense
Choose Tennessee LLC if: Profitable business (no income tax saves thousands), Nashville/Memphis/Chattanooga operations, music/entertainment industry, want zero income tax despite higher upfront cost.
DON'T choose if: Low-profit or break-even business (won't benefit from zero income tax), very cost-sensitive (Georgia/Florida cheaper), side business with uncertain revenue.
Music & Entertainment Industry
Nashville is music industry capital. Infrastructure, networks, venues all support music businesses.
No income tax particularly valuable for high-earning performers, producers, songwriters (keep more of royalties and performance income).
Healthcare Hub
Nashville also major healthcare hub (Hospital Corporation of America, LifePoint Health headquartered there).
Healthcare businesses benefit from ecosystem and no-income-tax structure.
Trademark Lens verifies Tennessee LLC name availability before $300-320 formation costs.