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

The first step in starting an LLC is filing Articles of Organization with the state of Tennessee. These documents require a filing fee of $300 to $3,000, depending on the number of members. If you’re planning to sell goods and services to the public, you will also need to file an operating agreement. While operating agreements are not legally required, they’re beneficial to the company. If you have any disagreements with your LLC’s other owners, an operating agreement is highly recommended.

To file an annual report, you will need to pay a fee of $20 to the Tennessee Secretary of State. However, it’s important to note that there is no late fee for the annual report. You must also pay a fee of $20 to change your registered agent. You must file your annual reports every year in order to remain in good standing with the state’s office. Your annual report must be filed no later than April 1 to stay in business and avoid falling into trouble with the Tennessee Department of Revenue.

The costs of maintaining an LLC in Tennessee are largely responsible for filing the Certificate of Formation. In some states, you will also need to file federal and state tax returns. You will need to pay a small fee to renew your license annually. In most states, you must file an annual report to stay in good standing with the secretary of state. In Tennessee, the fees for this service range from $0 to $500.

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.

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