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

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.

If you are starting a business in Tennessee, there are a variety of fees you will need to pay. Some of these costs are one-time fees and others are recurring. While you do not have to pay an attorney or professional service company to set up your LLC, it can help to have some basic information before you begin.

The first step in forming an LLC in Tennessee is to establish an operating agreement. It is a written contract between the members of the LLC, which includes details about the company’s ownership and management. It should be kept with the records of the company. In addition, each member should get a copy of the document. This allows them to confirm their own information.

When forming an LLC, the state of Tennessee requires that you file an annual report. You can do this online or by mail. Although it is a time-consuming process, it is important to keep your LLC in compliance with the state’s laws. Each year, you must make sure that your business is up to date and that you are in good standing with state agencies.

One of the most important forms you will need to file in Tennessee is the Articles of Organization. This document must be filed with the Secretary of State’s Business Services Division. There is a minimum fee of $300 for filing the articles. For LLCs with more than six members, the fee increases by $50 per member.

A Certificate of Existence must also be obtained. A certificate is a document issued by the Tennessee Secretary of State that proves that your LLC is legally established. To request a certificate, you can use the online form or visit the office in person. However, it can take up to two days to receive your certificate.

Depending on the type of business you are opening, you may need a business license. These vary in cost depending on the location of the business and the business’s activity. Businesses with a gross revenue of more than $10,000 will need a standard business license. On the other hand, businesses with a net worth of less than $3000 will need a minimal activity license.

A Tennessee LLC must also pay a franchise tax, which is 0.25% of the owner’s net worth. In addition, it must pay a 6.5% excise tax on its corporate profits. If the business does not generate enough revenue to cover the franchise taxes, it will pay an annual report fee.

Finally, all LLCs in Tennessee must file an annual report. This is due on the first day of the fourth month after the end of the fiscal year. Generally, most businesses close their fiscal year in December and start their next fiscal year in January. Regardless of when you are filing your annual report, you must ensure that you have it in the Secretary of State’s office by the deadline. Having the documents in hand is important so you can update your records and avoid penalties.

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.

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.

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