How Much Does an LLC Cost in Tennessee? (Fees Breakdown)
Starting a business takes time, money, and knowledge.
As a Mergers and Acquisitions specialist, I spent considerable time helping clients with forming businesses and joint organizations. After consulting business experts in the state and extensive analysis of Tennessee's LLC formation process, I’ve compiled a comprehensive breakdown of the costs involved.
- An LLC in Tennessee costs $300 to cover the basic filing fees to register the Articles of Organization and between $100 to $300 to employ a registered agent service.
- Additional costs include LLC name reservation fees, business licenses, taxes, and annual fees.
- Compared to other states which have an average cost of $50 to $500 to start an LLC, Tennessee laws charge an additional fee per member which tends to increase the overall cost.
- I advise clients to consider the needs of the company and determine if the business entity requires professional assistance, or additional documentation.
Cost to Start an LLC in Tennessee
Starting an LLC in Tennessee entails basic expenses to cover requirements and documentation for the business entity to be legally registered.
1. LLC Formation Filing Fee ($300 - $3,000 - Mandatory)
In Tennessee, LLCs' Articles of Organization fees depend on the number of members. For LLCs with six members or fewer, the minimum cost is $300 to a maximum of $3,000. There is an extra charge of $50 for each additional member.
When I wanted to avail of accelerated filing options, I discovered that the state doesn’t offer expedited services since online filings only took 2 business days to be approved.
2. Registered Agent Service Fee ($80-$300 – Optional)
Registered agent services in Tennessee will act as a liaison between your business and the Secretary of State's office.
The Tennessee registered agent fee ranges between $80 and $300.
3. Name Reservation Fee ($20 - Optional)
Reserving an LLC name in Tennessee costs $20, which includes a name availability search. I had to visit the Secretary of State’s office to confirm that my desired company name has not been taken by another business entity.
Learn about the process of LLC name change in Tennessee.
Expenses Following the Approval of Your LLC
Aside from the basic expenses, forming an LLC in Tennessee may result in additional costs to cover the operations.
1. Business License (Depending on the Line of Business - Mandatory)
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.
Several of my clients were required to obtain professional licenses to prove that their company met specific requirements necessary to operate in the area.
2. Annual Report Fee ($20 – Mandatory)
An LLC annual fee is necessary to maintain your business's existence in Tennessee. Like any other business, you will need annual reports and a $20 fee for this service.
An LLC in Tennessee must file an annual report with its Secretary of State office within four months from the last day of its fiscal year.
3. Franchise and Excise Taxes (Mandatory)
LLCs in Tennessee are subject to franchise and excise taxes, which are based on the LLC's net worth or income.
The state franchise tax requires a minimum payment of $100 .
Additionally, LLCs are obligated to pay the excise tax, which is calculated at a rate of 6.5 percent on the net taxable income generated within the state.
To avoid penalties, I personally settle my LLC taxes and advise my clients to do the same, at least a month before they are due.
4. Employer Identification Number ($0 - Optional, but Recommended)
Obtaining an EIN is necessary for tax purposes, opening a bank account, hiring employees, and availing of loans. You can apply for an EIN on the Internal Revenue Service's website free of charge.
5. Operating Agreement (Optional, but Recommended)
An operating agreement specifies the rules and regulations governing your LLC. It outlines the company's management structure, distribution of profits and losses, members' rights and responsibilities, and voting procedures.
There is no associated cost for drafting an operating agreement by yourself. However, you can employ a lawyer or use an online LLC formation service. The cost varies depending on the company, it usually ranges between $100 to $200.
What Payment Methods Can I Use To Pay Tennessee's State Fees For Filing My LLC?
The payment methods you can use to pay Tennessee’s state fees for filing your LLC include check, money order, debit, or credit cards.
What is the Penalty for Filing Taxes Late in Tennessee?
The penalty for filing taxes late in Tennessee is 5% of the amount due per month.
Tennessee LLC Costs
The filing fee for forming a Tennessee LLC with the Secretary of State is approximately $300. Additionally, additional costs might be associated with obtaining necessary licenses and permits, which vary depending on the nature of your business.
Other potential expenses include legal fees for drafting the operating agreement and ongoing annual report fees. It's important to note that these costs are estimates and may vary.
Using a professional Tennessee LLC formation or attorney can aid in understanding the specific fees involved in forming and maintaining a Tennessee LLC.