Choosing your company’s legal structure is one of the first steps you should take if you intend to launch a business in Tennessee. Creating a limited liability company (LLC) is one well-liked choice. The security of one’s personal assets, tax flexibility, and ease of management are just a few advantages that an LLC can provide. However, it’s crucial to understand the costs involved and any additional criteria before forming an LLC.
A number of variables, including the filing charge, the registered agent fee, the cost of employing a lawyer or using an online legal service, can affect how much it costs to incorporate an LLC in Tennessee. You must submit the Articles of Organization to the Tennessee Secretary of State in order to register an LLC there. Starting in 2021, there will be a $300 non-refundable filing charge. The form can be submitted online or by mail, but you must send the necessary fee along with a cover letter that includes your contact information.
In addition to paying the registration cost, you must designate a registered agent to receive legal notices and other important papers on your LLC’s behalf. Although you are allowed to act as the registered agent, it is advised to use a professional agency or an attorney to avoid any potential legal issues. Depending on the supplier, the fee of a registered agent in Tennessee can range from $50 to $300 annually.
Tennessee requires LLCs to pay various taxes, including the business tax and the state franchise tax. The business tax is based on the LLC’s gross receipts, whereas the franchise tax is based on the LLC’s net worth. Depending on the amount of tax owed, the business tax may be due quarterly or annually and the franchise tax annually. According to their commercial operations and earnings, LLCs may also be required to pay federal income tax, self-employment tax, and sales tax. How Can an LLC Be Created in Tennessee?
1. Pick a name for your LLC that is both available for use and complies with Tennessee’s naming regulations.
2. Appoint a registered agent with a Tennessee residence. 3. Submit the Articles of Organization and the filing fee to the Tennessee Secretary of State. 4. Obtain all licenses and permits required for your business operations.
5. Draft an operating agreement that describes who owns, controls, and runs your LLC. If you have employees or want to hire any, get an Employer Identification Number (EIN) from the IRS.
What Are the Drawbacks of an LLC? Even while an LLC has many advantages, there are a few drawbacks you should be aware of before forming one. The fact that LLCs are liable to self-employment tax, which may be greater than with other business structure types, is a significant drawback. LLCs might only last a short time if they are not properly run or disbanded. Additionally, LLCs might not be the ideal choice for companies that want to raise outside capital or that eventually want to go public.
Can I Register an LLC on My Own? In Tennessee, you can submit an LLC by yourself, yes. To make sure you adhere to all legal obligations and prevent any errors that can later result in legal issues, it is advised to get legal or professional guidance. Long-term time and effort savings can also be achieved by using a lawyer or online legal service.