Many Tennessee entrepreneurs choose to form a limited liability company (LLC) because of the many benefits of this business entity type. An LLC provides liability protection, for instance, so your assets are not at risk if your business is sued or cannot pay debts.
An LLC is a “pass-through entity” for tax purposes, meaning that the LLC itself is not taxed. Instead, income passes through the business to the LLC owners or members, who report it on their tax returns. LLCs also offer flexibility in terms of management and taxation.
Creating an LLC is relatively straightforward, but ensuring it’s done correctly is crucial to getting your Tennessee business on the right foot. The most critical step is filing articles of organization.
What Are Articles of Organization for an LLC?
The articles of organization is a legal document filed with the Secretary of State to form an LLC officially. It will include your business name, address, registered agent information, and more, as detailed below.
First, Select a Registered Agent for Your State LLC
Tennessee requires LLCs to appoint a registered agent, a person or company authorized to accept and respond to official business correspondence, such as legal, tax, or financial documents.
The registered agent ensures all required notices and documents are received. In Tennessee, the registered agent can be an LLC member, individual, or entity that meets state requirements. In Tennessee, a registered agent must:
- Be 18 years or older
- Have a physical address in the state
- Be available during regular business hours
- Be registered to operate in the state, if it’s a business
Many business owners hire a registered agent service to ensure their LLC stays fully compliant and for convenience.
If you choose to be your registered agent, you must be at your registered agent’s address for all business hours. A registered agent service allows you to be wherever you need to be to run and grow your business.
How to Submit Articles of Organization in Tennessee
To start, visit the Secretary of State’s website and click on File New Businesses Online from the homepage. Then click the Start Now button to begin your filing.
In Tennessee, the articles of organization require the following information:
- LLC name
- Company designation
- Registered agent information
- Fiscal year close month
- Member and manager information
- Principal office information
- Mailing address
The first step in the online filing process is to choose your entity type (LLC) from the drop-down menu, click the checkbox, and then click Continue.
The following screens will prompt you to enter all the business information listed in the bulleted list above.
Once you’ve moved through all the screens, you can review your entries and make the necessary changes. When you are finished, provide an electronic signature and confirm to head to the payment screen.
You can also complete and submit a paper form if you wish to file by mail.
The filing fee is $50 per LLC member, with a minimum of $300 and a maximum of $3,000. Your LLC should be fully formed within five to seven business days of filing.
Some entrepreneurs hire an LLC formation service like ZenBusiness to handle this step, saving time and ensuring the process is done correctly.
Draft an Operating Agreement
Tennessee does not require an operating agreement, but it’s a crucial document that defines members’ ownership percentages and profit allocations. Those are the two key elements, but it should also include the following:
- Each member’s rights and responsibilities
- Management structure and roles
- Voting rights of each member
- Rules for meetings and voting
- What happens when a member sells their interest, becomes disabled, or dies
You can find operating agreement templates online, but it’s best to have them drawn up or reviewed by an attorney. The language of an operating agreement is crucial and can often help determine how member disputes will be resolved. Here you can obtain a free operating agreement template for your Tennessee LLC.
Contact Information for the Tennessee Secretary of State
Tennessee Secretary of State Website
Phone: (615) 741-2286
312 Rosa L. Parks Avenue
Nashville, TN 37243-1102
There’s only one way to create an LLC in Tennessee: successfully filing articles of organization. If you make any mistakes, you’ll likely have to refile, so be sure to do it right the first time and set your business up for serious success!