How to form an LLC in Tennessee

TN charges $50 per member with a $300 minimum and $3,000 maximum. So a single-member LLC pays $300; a 6-member LLC pays $300 (the minimum); a 7-member LLC pays $350; a 60-member LLC pays $3,000 (the maximum). The annual report uses the same calculation. Realistic year-one cost for a single-member LLC: $300. Ongoing yearly cost: $300+ plus the F&E tax.

Online filings through TN SOS Business Services approve in 1–3 business days. Mail filings take 5–7 business days.

Tennessee LLCs pay two state-level entity taxes despite having no personal income tax: the Franchise Tax (0.25% of net worth, $100 minimum) and the Excise Tax (6.5% of TN-source net earnings). Both are filed annually with the Tennessee Department of Revenue. The F&E tax is what makes TN materially more expensive than its "no income tax" reputation suggests.

TN has no personal income tax on wages or salaries (the Hall Income Tax on dividends and interest was fully eliminated in 2021). However, LLCs pay the Franchise & Excise (F&E) tax at the entity level: 0.25% of net worth + 6.5% of TN-source net earnings. So while owners don't pay personal income tax, the LLC itself pays both an asset-based and an income-based state tax.

By the 1st day of the 4th month after the LLC's fiscal year end — April 1 for calendar-year LLCs. The fee is $50 per member ($300 minimum, $3,000 maximum). File through TN SOS Business Services.

Yes. TN has no residency requirement for LLC members or managers. You only need a TN-based registered agent. Out-of-state owners commonly use a commercial registered agent service.

For TN residents and businesses tied to healthcare HQs (Nashville), music/entertainment, auto/EV manufacturing (Nissan, VW, Ford BlueOval), or logistics (FedEx Memphis): the industry depth justifies the cost. For solo founders, the per-member fee model and F&E tax make TN materially more expensive than neighboring Georgia or Alabama. Many TN solo founders consider sole-proprietor status instead because the F&E tax can exceed the personal-income-tax savings of pass-through.

TN has the highest combined state + local sales tax in the U.S. — averaging 9.55%, with state at 7% and local add-ons up to 2.75%. If you sell taxable goods or services, register with the Tennessee Department of Revenue.

Tennessee does not impose a personal state income tax, which is a significant advantage for LLC owners who report business profits on their personal returns. However, Tennessee LLCs are subject to the state's Franchise and Excise Tax, which consists of a franchise tax of $0.25 per $100 of net worth (minimum $100) and an excise tax of 6.5% on net earnings. Single-member LLCs with no employees and less than $50,000 in gross receipts may qualify for an exemption from the Franchise and Excise Tax. You file these returns with the Tennessee Department of Revenue, and the annual deadline is typically the 15th day of the fourth month after the close of your fiscal year.

Tennessee does not issue a single statewide general business license, but most LLCs engaged in business activities must obtain a Tennessee business license through their county clerk's office. The standard business license costs $15 per county and must be renewed annually; businesses with gross receipts over $3,000 but under $10,000 pay a minimal fee, while those over $10,000 are subject to a county business tax based on gross receipts. Certain professions — such as contractors, healthcare providers, and childcare operators — also require state-level occupational or professional licenses issued by the Tennessee Department of Commerce and Insurance. Check with your specific county and industry regulator to ensure you have every required permit before you begin operating.

Yes, non-residents and foreign nationals can form an LLC in Tennessee without any citizenship or residency requirement. However, you must maintain a registered agent with a physical street address in Tennessee, since a non-resident owner typically cannot serve in that role. If you also conduct business in your home state or another state, you will likely need to foreign qualify your Tennessee LLC in those states by filing a Certificate of Authority and paying those states' fees. Tennessee itself does not require you to live in the state to operate a Tennessee LLC, but you should consult a tax advisor about nexus and multistate tax obligations.

To dissolve a Tennessee LLC, you must first file Articles of Dissolution with the Tennessee Secretary of State online or by mail, along with a $20 filing fee. Before or alongside dissolution, you should wind up business affairs — paying creditors, liquidating assets, and distributing remaining funds to members — and file a final Franchise and Excise Tax return with the Tennessee Department of Revenue. If your LLC has employees, you must also close your state withholding and unemployment accounts with the Department of Labor and Workforce Development. Once the Secretary of State processes the Articles of Dissolution, the LLC is officially terminated and no further annual reports or franchise taxes are owed.

Tennessee law does not require an LLC to have a written operating agreement, but the Tennessee Revised Limited Liability Company Act strongly implies that having one is best practice and members can agree to almost any governance structure in writing. Without an operating agreement, your LLC defaults to Tennessee's statutory rules, which may not reflect how you actually want to split profits, assign voting rights, or handle a member's departure. A well-drafted operating agreement is especially important for multi-member Tennessee LLCs to prevent disputes, and some banks will ask to see one when you open a business checking account. You do not file the operating agreement with the state — it is an internal document kept with your company records.