How to Form an LLC
in Tennessee

Tennessee charges a $300 filing fee for the Articles of Organization filed with the Tennessee Secretary of State Business Services Division at sos.tn.gov. That $300 covers 1-6 members. Above 6 members, the fee scales at +$50 per additional member, capped at $3,000 for LLCs with 50 or more members. This per-member scaling is unusual — most US states charge a flat filing fee regardless of member count. For single-member and small multi-member LLCs, your total is $300. For a 10-member LLC, it's $500. For a 20-member LLC, it's $1,000. National formation services quote the $300 minimum and rarely explain the scaling, which surprises larger multi-member LLCs at checkout. Ongoing cost is equally front-loaded: the annual report fee uses the same per-member structure — $300 minimum, +$50 per member above 6, $3,000 cap. So a 6-member TN LLC pays $300/yr forever. Eleet AI charges $449 all-inclusive for the standard 1-6 member formation — $300 state fee, Articles of Organization preparation, and first-year Tennessee registered agent service. DIY realistic totals land $425-$800+ in year one after adding paid registered agent service, optional expedited processing, and business tax registration.

Not exactly — and this is the single most misunderstood thing about forming a Tennessee LLC. Tennessee does NOT levy a personal income tax on wages, salaries, or interest/dividends as of January 1, 2021 (the Hall Income Tax was fully phased out). That part is TRUE and is a real benefit for founders living in TN. But Tennessee DOES impose the Franchise & Excise Tax (F&E Tax) on business entities — and that absolutely includes LLCs. Franchise Tax: 0.25% on the greater of (a) the LLC's apportioned net worth or (b) the value of real and tangible personal property owned or used in Tennessee, with a $100 minimum. Excise Tax: 6.5% on Tennessee-source net earnings. Both are assessed annually on Form FAE 170 through the TN Department of Revenue. The only LLCs exempt from F&E are single-member LLCs disregarded to a natural person for federal tax purposes (since they're treated as a sole proprietorship rather than an entity). Multi-member LLCs taxed as partnerships, single-member LLCs owned by another entity, and any LLC electing S-Corp or C-Corp treatment all owe F&E. A typical TN LLC with $100k in TN-source profits pays roughly $6,500 in excise tax plus $100-$250+ in franchise tax — about the same effective business tax rate as a state with a 4-5% personal income tax. The "no state income tax" pitch is a half-truth that matters for founders but not for their LLCs.

Every Tennessee LLC must file an annual report with the Secretary of State Business Services Division and pay the annual fee (same per-member formula as formation: $300 minimum for 1-6 members, +$50 per member above 6, $3,000 cap). The due date is the first day of the fourth month following the close of the LLC's fiscal year. For calendar-year LLCs (the default unless you elect otherwise), that's April 1 every year. For fiscal-year LLCs, count four months from your fiscal year-end — a June 30 fiscal year means October 1 annual report. File online at sos.tn.gov Business Services using your TN Secretary of State control number (included on your filed Articles of Organization). Missing the annual report triggers administrative dissolution 60 days after the due date — TN is one of the faster states to dissolve inactive entities. Reinstatement requires filing a Reinstatement form plus all missed annual reports plus a $70 reinstatement fee. Calendar your April 1 filing the moment the LLC is formed. Note: the TN annual report is SEPARATE from the F&E Tax return (Form FAE 170, due April 15 for calendar-year LLCs) and SEPARATE from the Business Tax return (see below). Three separate TN tax filings in the same calendar quarter — surprising to founders coming from states with one combined filing.

Yes — every Tennessee LLC must continuously maintain a registered agent with a physical Tennessee street address under T.C.A. § 48-249-109. No P.O. boxes, no commercial mail-drop addresses without real physical presence. The agent receives service of process, Secretary of State correspondence, Department of Revenue notices, and legal filings on behalf of the LLC during normal business hours (9am-5pm Central, Monday-Friday). Requirements: (a) a natural person resident in Tennessee age 18+ with a TN street address, or (b) a Tennessee-qualified business entity authorized to transact business in TN with a TN street address. You can serve as your own registered agent if you're a TN resident available during business hours — but doing so means your home address appears on the public sos.tn.gov record, indexed by process servers, collections agencies, legal solicitors, and data brokers. Most founders use a commercial agent for privacy (the agent's address stays on public record instead of yours) and reliability (no missed service of process while traveling or on vacation). Eleet AI's Tennessee registered agent service is included free in year one with formation, then $100/yr after.

Standard online filing at sos.tn.gov Business Services processes in minutes to hours — Tennessee is one of the fastest-filing states in the US, typically same-day once the credit card clears during business hours. Paper filings (mailed to the TN Secretary of State in Nashville) take 3-5 business days. Unlike New Jersey ($15 for 1-day expedite), Ohio ($100 for 1-day, $300 for 4-hour), California ($350 for 24-hour, $750 for 2-hour), or Delaware ($50-$1,000 tiered expedite), Tennessee does NOT need an expedite tier because online processing is already same-day. You pay $300, you file online, your LLC is legally formed within hours. Eleet AI's TN filing uses the online channel by default — your Articles of Organization are typically accepted within 1-2 business hours of submission. EIN issuance (instant online through IRS.gov), operating agreement drafting, F&E Tax registration, and bank-account opening all happen in parallel. For founders who need to sign a lease or contract on short notice, TN's same-day turnaround is a genuine competitive advantage over 5-10 day states.

The Tennessee Business Tax is a COUNTY-LEVEL gross receipts tax administered under T.C.A. § 67-4-701 et seq. It's separate from the Franchise & Excise Tax (which is state-level) and separate from the Secretary of State annual report. Every TN LLC with a physical business location in Tennessee must obtain a Business Tax License from the county clerk (and city recorder if inside an incorporated city) before beginning operations. Rates depend on the tier: Minimal Activity License ($3,000-$10,000 gross receipts per year) = $15 county fee + $15 city fee, no gross receipts tax. Standard Business License ($10,000+ gross receipts per year) = same $15+$15 licensing fee PLUS an annual gross receipts tax at 0.1875%-0.3125% depending on business classification (retail, wholesale, services, manufacturing all have different rates under T.C.A. § 67-4-709). Businesses operating in multiple counties need a license in each. Online-only businesses without a TN physical presence typically don't owe Business Tax even if the LLC is formed in TN — the tax is triggered by physical operations in a county, not by entity domicile. This is a common trap: founders assume "no income tax" means "no TN state tax burden" and don't register for Business Tax, then face back taxes and penalties when the Department of Revenue audits. If your TN LLC has any physical storefront, office, warehouse, or service delivery location in TN, register for Business Tax within 20 days of starting operations through the TN Taxpayer Access Point (TNTAP) at tntap.tn.gov.

Probably yes if you have a physical presence in any TN metro. Tennessee does not issue a state-level general business license — the closest analog is the county-level Business Tax License described above. But most cities require their own additional licensing: Nashville (Metro Nashville-Davidson County): the Metro Business License covers the combined city-county since 1963 consolidation — $15 minimum fee plus Business Tax at standard rates. Restaurants, retailers, home-occupation businesses each have additional permits through the Metro Codes Department. Memphis (Shelby County): Memphis City Business License + Shelby County Business License required separately. $15 each minimum + Business Tax. Beale Street, Downtown, and Cooper-Young districts have additional zoning permits. Knoxville (Knox County): Knoxville City Business License + Knox County Business License. University-area home-based businesses and short-term rentals have additional permits. Chattanooga (Hamilton County): standard $15+$15 licensing plus Business Tax; downtown Innovation District businesses may qualify for PILOT incentives. Franklin, Murfreesboro, Clarksville, Jackson, Kingsport: most follow the $15+$15 county-city structure plus Business Tax. Industry-specific state licenses (contractors, cosmetologists, real estate, healthcare, food service, liquor, childcare, financial services) issue through the TN Department of Commerce & Insurance Regulatory Boards and can be thousands annually. Sales tax collection requires registration with the TN Department of Revenue through TNTAP (7% state + 2.25%-2.75% local = 9.25%-9.75% combined, among the highest in the US).

Tennessee is the wrong formation state if you don't actually operate in Tennessee. The "no state income tax" pitch doesn't save LLCs money because of the Franchise & Excise Tax — every TN LLC owes at least $100/yr in franchise tax (or more based on net worth or property) plus 6.5% excise tax on any TN-source earnings. Add the $300/yr annual report and the county-level Business Tax registration if you have any TN physical presence, and a TN LLC with no real TN economic activity costs $400-$500+/yr in state overhead for zero benefit. If you're considering TN for privacy, Wyoming ($60/yr, anonymous members, no Business Tax) is vastly cheaper and more private. If you're considering TN for asset protection, T.C.A. § 48-249-509 charging order protection is solid but Wyoming W.S. § 17-29-503 exclusive-remedy provisions are stronger. If you're considering TN because "my favorite country artist lives there," that's not worth $400/yr forever. Tennessee IS the right answer when: (1) you're a Nashville music, healthcare, or AI startup (Nashville is the fastest-growing major metro in the US as of 2024), (2) you're a Memphis logistics, FedEx-adjacent, or BBQ/restaurant operator, (3) you're a Knoxville TVA, Oak Ridge National Lab, or UT-affiliated venture, (4) you're a Chattanooga manufacturing, Volkswagen-adjacent, or Tennessee Valley business, (5) you're a TN resident who genuinely wants to run your business where you live, or (6) you're relocating to TN for its combination of no-personal-income-tax and business-friendly labor laws. For everyone else, form in your home state or in Wyoming and skip the TN F&E Tax overhead.

Legally yes — Tennessee does not restrict LLC formation to residents. The only TN-resident requirement is the registered agent (a commercial agent like Eleet AI satisfies this via our Tennessee address). However, the economics rarely work for non-residents because of the Franchise & Excise Tax on the LLC entity itself. A non-resident-owned TN LLC with zero TN nexus still owes the $100 minimum franchise tax annually plus the $300 annual report — $400/yr minimum. If the LLC earns ANY TN-source income, the 6.5% excise tax kicks in. The foreign-qualification trap also applies: if you operate your business mainly in another state (employees there, office there, services delivered from there), that state will require you to register your TN LLC as a foreign LLC, adding another filing fee and another registered agent. Plus TN will still want its $400/yr F&E minimum regardless of where you operate. Non-residents forming in TN should also know that TN is more aggressive than most states about auditing out-of-state LLC members for TN-source income. If you're considering TN for privacy, Wyoming is cheaper ($60/yr) and more private (anonymous members under W.S. § 17-29-201). If you're considering TN for asset protection, Delaware ($300/yr franchise tax with no excise tax on pass-through LLCs) may be better unless your protected assets are actually in TN. Tennessee LLC formation makes financial sense primarily when the LLC's economic center of gravity is genuinely in Tennessee.

In late 2023, a constitutional challenge filed by AFP Industries and joined by other multi-state businesses argued that Tennessee's franchise tax "property-measure" formula — which taxed out-of-state LLCs on the value of property USED IN Tennessee regardless of whether the LLC owned other significant property outside the state — violated the dormant Commerce Clause under the US Constitution. Rather than defend the formula through years of litigation, the Tennessee General Assembly passed Public Chapter 950 in May 2024, which (a) eliminated the property-measure calculation going forward, leaving only the apportioned net worth measure, and (b) authorized refund claims for franchise tax paid on the property measure during tax years ending on or after March 31, 2020. Refund claims had to be filed with the TN Department of Revenue between May 15 and November 30, 2024. Single-entity refunds could be substantial — one Tennessee manufacturer reported a $4.5M refund. The practical effect for founders: franchise tax calculations going forward use only the apportioned net worth measure with a $100 minimum, which usually favors small LLCs (most have net worth under $40,000, so they pay the $100 minimum). For LLCs formed after 2024, there's no refund eligibility but also no property-measure tax to worry about. This is relatively recent TN-specific tax law that competitor formation guides almost universally don't mention because they haven't been updated since the 2024 legislation.