Starting a business takes time, money, and knowledge. The most significant advantage of forming a Limited liability company (LLC) is the liability protection for its owners from lawsuits or other financial liabilities.
Plus, it offers tax advantages and can be set up with minimal paperwork.
The initial cost of forming an LLC depends on the state. If you plan to start an LLC in Tennessee, you should be aware of the cost, which is at least $300.
Bare Minimum Cost to Start an LLC in Tennessee
The price is the base cost for filing articles of organization in Tennessee, which can be done through the state's Corporation Division. It is a one-time fee that establishes your LLC and makes it official with the Secretary of State.
The bare minimum cost to form an LLC in Tennessee is $300. This includes articles of organization, registration fees, and filing fees.
The articles of organization fee are $50 per member, and the registration fee is $50, but there may be additional filing fees depending on where you file your articles of organization.
As you can see, the minimum cost to start an LLC in Tennessee is $300. Getting legal advice before starting your business will help minimize the financial risk.
You should also be aware that there may be additional filing fees depending on where you would like to file articles of organization.
LLC Registration Fee
If you want to register an LLC in Tennessee, you will need to pay a $50 filing fee. This is the only fee for this process because all other LLC forms are free of charge.
The state's secretary will issue an organization number for this form within five business days after its filing.
Also, you should know that the LLC registration fee is exclusive of other state fees like annual reports, registered agent, or public notice fees which are also subject to change once every year.
Creating an LLC in Tennessee requires a minimum of two members; one member can act as manager if he wants. Also, the LLC must have its principal place of business in this state.
Articles of Organization Fees
Articles of organization fees are charges applied to newly-formed businesses within Tennessee.
These fees are designed to regulate and identify these organizations by requiring them to put their best foot forward in public records through Articles of Organization.
Tennessee LLC articles of organization are filed with the Tennessee Secretary of State, who issues an organization number for this newly formed corporation.
This becomes the entity's identifying number within the state government, which is important if they ever need to do business or transact with other businesses.
The filing fee for this form with the state's secretary of state is $50 per member minimum and $3,000 maximum. The minimum fee for filing articles of organization is $50.
However, if you have more than one member in your LLC, there is a flat fee of $50 per member. For example, if your LLC has five members, the articles of organization fee would be at least $250 and up to $3,000.
Registered Agent Service
Registered agent services in Tennessee are very important for every business in the United States, especially for LLCs.
The registered agent is an individual or company that acts as a liaison between your business and the secretary of state's office.
A registered agent must be available to accept important legal documents on behalf of your company during regular business hours.
The registered agent fee is based on several factors, including the number of members, but it usually ranges between $100 and $300.
You should also confirm that your registered agent service offers "pay as you go" services and the rates and fees if you do not pay an annual rate for their services.
Finding a Tennessee registered agent might be difficult for small businesses because most registered agents are lawyers or companies that provide professional services to clients.
On the other hand, you can also serve as your own registered agent if you want. This can help you save money.
Attorney Fees
You may need business advice to form your business, which will allow you to minimize the risk of business failure. An attorney fee for business incorporation is usually around $1,000. This includes the attorney services at every step, but this may vary depending on how complicated your business structure is.
It is very important that you receive legal advice before starting a Business in Tennessee because business attorneys can help you avoid unnecessary paperwork, which is critical to the success of your business.
You should be able to receive business advice delivered straight to you through an attorney or through a business consultant who provides business incorporation services for small businesses.
LLC Annual Fees
An LLC annual fees are necessary to maintain your business's existence in Tennessee. Like any other business, you will need annual reports and an annual fee for this service.
Annual report fees depend on several factors like the number of members or gross revenues generated by your company during the LLC's fiscal year. This means that there is no actual LLC annual fee per se, although you will have to pay a fee for filing annual reports.
An LLC in Tennessee must file an annual report every year with the state's secretary of state office within four months from the last day of its fiscal year.
The filing fee for this document is $20 "postpaid," meaning that you do not need to include any money with your annual report.
LLC Name Reservation Fee
LLC's name should be reserved in Tennessee before filing the LLC form. This can be done at the state's secretary of state office, and it costs $20 per name reservation.
It is optional to reserve your company's name before someone else uses it.
The fee for this service includes a search by the secretary of state's office to make sure that your proposed business name is unique.
The name search will be conducted at the time of filing unless you decide to file for an additional fee within 60 days after the initial filing date.
LLC Public Notice Filing Fee
The state of Tennessee charges a $20 fee for LLCs to make a public notice filing. This is the only LLC business registration fee required by this state, and you can file an annual report along with your public notice statement.
In other words, you will have to pay $20 to file your public notice statement, and you will have to pay $20 every year for LLC annual report.
Professional and Business Licenses
Starting a business can be expensive and time-consuming. One of the first things you need to consider is whether or not you will need special licenses or permits for your business.
Business and professional licenses are required by the state, county, and municipal governments so that they have proof that your company meets specific requirements before starting a business in their area.
Professional licenses, or licenses for a specific profession, are often needed as part of the incorporation process.
For example, if you are starting a business as an accountant, you need to have your professional license number available before filing your Articles of Organization with the state.
The cost of a business and professional license depends on what type of business is incorporated. Most licenses will cost anywhere from $50 to $100, but what you pay varies by business type.
Is LLC Formation a Good Idea?
After researching the costs of starting an LLC in Tennessee, you may wonder if this is a good idea.
Generally speaking, it can be complicated to start one, and failures are not unusual. Also, you will probably want some assistance to make sure that you cover all your bases legally.
Opening an LLC is a good idea if you are looking to separate your personal assets from your business assets.
An LLC also makes it possible to take advantage of the tax benefits that can be associated with certain types of businesses.
Related Article: Tennessee LLC Formation Services
The first advantage of forming an LLC is separating personal and business assets.
This means that if your business fails or has legal issues, your personal assets are safe from creditors or lawsuits. The other benefit of forming an LLC is the possibility of reducing taxes through tax deductions.
So is it a good idea to form one? It depends on you and the type of business you are establishing.
How to Form an LLC in Tennessee?
The process of forming a Tennessee LLC is actually straightforward. The first step in the formation process is to file your Articles of Organization with the Secretary of State's Business Services Division and pay the filing fee.
The other requirement for incorporating in the state is to name your business.
This can be done by using your personal name or a fictitious business name. The four main steps in the formation process are to file Articles of Organization, obtain an EIN, create an LLC Operating Agreement and obtain additional licenses depending on your business type.
ZenBusiness provides a high-end startup service for your company and will walk you through the procedure.
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Create your Tennessee LLC Operating Agreement
An LLC Operating Agreement is a document that outlines the members of an LLC and their personal percentages of ownership. The Tennessee LLC Operating Agreement also includes the personal responsibilities of the members and how profits and losses will be shared by each member.
An important feature included in the operating agreement is the management structure of your Tennessee business, which must include more than one member.
One of the most important steps in creating your Tennessee LLC Operating Agreement is to include personal and business expenses, personal tax percentages paid by members, personal profit distribution percentages paid by each member, and personal asset protection provided to each member.
Setting these personal restrictions into the operating agreement at the beginning of your company's formation process will eliminate personal interactions and conflicts as the business grows.
FAQs
Which Is Better, LLC or Sole Proprietorship?
It is better to form a Tennessee LLC for your new business in most cases because you can split personal and business assets. This means that a successful new business venture will not put your home or car at risk of being taken away from you in case of a liability claim.
Should I Get an EIN for My LLC?
Yes, you should get an Employer Identification Number (EIN) for your LLC so that it can open a business bank account or file taxes. If you need help, visit the IRS website to apply.
How Much Does the EIN Cost?
The cost for an EIN is $0, and it can be obtained in a matter of minutes. However, you will need to register your LLC in order to get one.
Is a Tax ID Number the Same as an EIN?
No, a tax ID number is issued by the IRS, and it is used to pay taxes. An EIN is also referred to as an Employer Identification Number because it allows your business to file taxes as a company.
