LLC Cost in Tennessee – How Much to Pay for an LLC


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Perhaps you are hoping to form an LLC in Tennessee. People assume that starting an LLC is difficult and costly. However, it’s generally not difficult, and the cost would vary across states. We have all the info you need to know about the cost of forming an LLC, particularly the LLC cost in Tennessee.

Tennessee LLC Cost of Filing

Here are the costs involved in forming an LLC in Tennessee.

Cost of Filing Formation Certificates

The Tennessee Certificate of Formation is responsible for the majority of the cost, which could also vary depending on whether you’re forming a domestic LLC or a foreign LLC. Still, you can file both at the Tennessee Secretary of State.

Tennessee Domestic LLC

  • Online Filing costs $300.
  • Annual Report filing costs a minimum of $300 to a maximum of $3000
  • Name Reservation fee costs $20
  • By Mail: Fill out the application form, and send it to Secretary of State’s office at 6th FL – Snodgrass Tower ATTN: Corporate Filing, 312 Rosa L. Parks AVE, Nashville, TN 37243.
  • $50.00 per member in existence on the date of the filing, with a minimum fee of $300.00 and a maximum fee of $3,000.

Tennessee Foreign LLC

  • By Mail: Fill out the application form, and send it to Secretary of State’s office at 6th FL – Snodgrass Tower ATTN: Corporate Filing, 312 Rosa L. Parks AVE, Nashville, TN 37243.
  • $50.00 per member in existence on the date of the filing, with a minimum fee of $300.00 and a maximum fee of $3,000.
  • Annual Report filing costs a minimum of $300 to a maximum of $3000
  • Name Reservation fee costs $20

Note that filing online is ideal, not only because you need to go to the Secretary of State office, but also it would be faster. You won’t have to wait in a queue in doing so.

Tennessee LLC Formation Service or Registered Agent Fee

You need a registered agent to form an LLC in Tennessee, hence, added costs for service fees. Here are three of the best LLC services on our list that will provide you with registered agents to ease your worries.

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Business Permits and Licenses

The business licenses depend on your business’s activity and location and are renewed yearly. As such, the cost will vary. Check the Tennessee Department of Revenue for regulatory boards or agencies requiring licensing.

Taxes Payable to Tennessee Department of Revenue

To register an LLC in Tennessee, an LLC must pay several taxes to the federal and Tennessee governments. Let’s take a look at some of the important taxes that are to be paid by LLCs in Tennessee. An LLC in the state of Tennessee pays two types of taxes to the Tennessee State Department of Revenue:

State Income Tax

Someone who has an LLC doesn’t have to pay any Income Tax on the earnings. Instead, the LLC is bound to pay the State Income Tax on the Stock Dividends & any Interest received from the bonds or notes. Such type of Income tax is usually known as Hall Income Tax.

State Sales & Use Tax

The state of Tennessee levies Sales & use tax on tangible goods & services provided by an LLC. The State Sales & Use tax rate in Tennessee is 7%.

Tennessee Franchise & Excise Tax

The State of Tennesse has one more type of tax, which needs to be paid by the LLC. This tax is called the Franchise & Excise Tax. This tax is levied on certain legal entities, such as an LLC to enable them to exist & do business in the state. Although it is called the Franchise tax, it is an essential tax that an LLC has to pay at the time of filing. The current Franchise & Excise tax in the state of Tennessee is 6.5%

Federal Self-Employment Tax

All the members who run the LLC are self-employed members; because they pay themselves through the LLC. Federal Self Employment Tax, also known as Social Security or Medicare tax, is paid by all such members or managers. The Federal self-employment tax rate in Tennessee is 15.3 percent.

Federal Income Tax

If you are in the state of Tennessee, you must pay Federal Income Tax, in addition to the State Income Tax. The amount of the Federal Income Tax depends upon your earnings, the income tax bracket your LLC falls, the deductions, & the manner/ mode of filing.

You pay Federal Income Tax on all the profits your LLC makes after calculating the deductions & allowances such as Healthcare or Retirement Plans.

Employee & Employer Taxes

An LLC that has several employees on payroll has to pay the Employee-Employer taxes. These taxes are calculated on the basis of various factors, e.g., the amount earned, number of employees, etc.

Cost Comparison between states

Tennessee is surrounded by many states, namely Kentucky, Virginia, North Carolina, Georgia, etc. Each of these states has a different rate of taxes levied on LLCs. Let us take a look at this comparative chart.

StatesFiling FeeAnnual/Biennial FeeSales Tax
Tennessee$300+$3007%
Kentucky$40$156%
Virginia$100Not Required5.3%
North Carolina$125$2004.75%
Georgia$100$504%

Based on the kind of industry you LLC operated in, your LLC will be liable to some other taxes & duties. For Example, if your LLC is in the sector of import & export, you have to pay the import-export duty. You should consult with a professional to verify the tax rates or business costs of registering an LLC in Tennessee.

Other Costs

F.A.Qs

Can I start an LLC for free?

It is possible to form an LLC without professional help, but forms still have associated costs, regardless of where your LLC is formed.

Is an LLC expensive?

It is difficult to say whether forming an LLC is expensive. Nevertheless, the cost could be anywhere from $40 to $500. If you refuse to hire professionals, you’ll still have expenses like form fees to cover.

Does an LLC need a bank account?

The need to separate personal money from business funds, thus necessitating the creation of a business bank account for your LLC.

How Much Does It Cost to Maintain an LLC in Tennessee

To maintain an LLC in Tennessee you will need to pay an annual fee of $300 along with state sales & use tax at 7%, state franchise & excise tax at 6.5% and federal taxes.

One of the primary expenses associated with maintaining an LLC in Tennessee is the annual report fee. This requirement ensures that the state has up-to-date information on the entity and its members. Regular reporting allows the government to facilitate communication and ensure that the company is abiding by all regulations and laws. LLC owners in Tennessee should be prepared to pay an annual fee, typically not excessive but necessary to keep their entities in good standing.

Additionally, another vital expense is the registered agent fee. A registered agent is someone who is responsible for receiving official documents and legal notices on behalf of the LLC and ensuring they are promptly delivered to the appropriate individuals. Appointing a registered agent helps maintain transparency and accountability, but it comes with a fee. Choosing the appropriate registered agent is crucial to guarantee efficient communication and compliance, thereby ensuring smooth operations for the LLC.

Furthermore, LLCs in Tennessee face an annual franchise tax, which is often calculated based on the company’s net worth or its value as a percentage of equity. While this tax may vary depending on the state’s regulations, it is an essential aspect of maintaining the LLC’s legal status. This tax, however, should be considered in the broader context of the significant benefits that come with operating as an LLC, including personal liability protection. The ability to separate personal assets from those of the business is particularly vital for entrepreneurial ventures where risk is inherent.

Apart from government fees and taxes, it is essential to consider other potential costs associated with maintaining an LLC. For instance, legal and accounting services may be necessary to ensure compliance with relevant laws and regulations, as well as to handle necessary filings and documentation. Depending on the complexity of the company’s operations and industry sector, obtaining professional assistance may be prudent to avoid any potential legal and financial pitfalls.

While understanding the costs associated with maintaining an LLC is crucial, it is equally important not to overlook the numerous advantages of operating under such a legal structure in the state of Tennessee. By maintaining an LLC, entrepreneurs gain limited personal liability protection in the event of legal actions or debts taken on by the business. Additionally, this business structure presents tax advantages by allowing pass-through taxation, meaning profits and losses can be distributed equally among members and reported on their personal income tax returns. Such benefits make the LLC structure a worthwhile endeavor for those seeking to prioritize risk management and maximize their business’s economic efficiency.

In conclusion, establishing and maintaining an LLC in Tennessee incurs certain costs as an ongoing commitment. However, when evaluating these expenses, one must consider the breadth of advantages that come with operating under such a structure. Forming an LLC provides entrepreneurs with liability protection, tax benefits, and a flexible business structure that allows for growth. As such, while financial considerations are important, the long-term benefits often far outweigh the associated costs, making it a viable choice for aspiring business owners in Tennessee.

In Conclusion

The cost of Tennessee is much lower compared to other forms of business. Apart from the state filing fees and annual taxes, you might bear the cost of the registered agent. Compare the price of professional LLC services and choose the most affordable one.


About Author & Editorial Staff

Steve Goldstein, founder of LLCBuddy, is a specialist in corporate formations, dedicated to guiding entrepreneurs and small business owners through the LLC process. LLCBuddy provides a wealth of streamlined resources such as guides, articles, and FAQs, making LLC establishment seamless. The diligent editorial staff makes sure content is accurate, up-to-date information on topics like state-specific requirements, registered agents, and compliance. Steve's enthusiasm for entrepreneurship makes LLCBuddy an essential and trustworthy resource for launching and running an LLC.

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