Limited Liability Companies (LLCs) offer a flexible business structure that combines elements of both corporations and partnerships. This section explores what an LLC is, the types available in Tennessee, and the benefits they offer to business owners.
A Limited Liability Company, or LLC, is a business structure that provides personal liability protection to its owners, known as members. This means members are not personally responsible for the company's debts or lawsuits. An LLC is flexible, allowing members to decide on management structures and profit-sharing. Unlike a corporation, an LLC does not require maintaining corporate records or holding annual meetings.
In contrast to a sole proprietorship or general partnership, an LLC exists as its own legal entity. This setup can attract businesses seeking protection without the complexities of a corporation.
In Tennessee, there are several types of LLCs to consider. A Domestic LLC refers to an LLC established under Tennessee law and operates within the state. In contrast, a Foreign LLC is one formed outside Tennessee but doing business within the state. For those interested in a non-profit goal, a Professional LLC might be suitable, often used by licensed professionals like doctors or lawyers.
Another option is a series LLC, which allows the creation of multiple, separate entities under one umbrella. Each series can have its own assets and liabilities. This type reduces costs and simplifies management, making it attractive for businesses with distinct operations under one ownership.
Forming an LLC offers several advantages. It protects personal assets by separating them from business debts and legal responsibilities. This feature is particularly beneficial for businesses with potential liability risks.
Additionally, LLCs enjoy tax flexibility. By default, they are taxed as a sole proprietorship or partnership, avoiding double taxation. Members can also choose corporate taxation if advantageous for their situation.
Moreover, an LLC has fewer administrative requirements and more flexible management structures compared to corporations. This flexibility allows owners to decide on how profits are shared or how the business is managed. These features make LLCs a popular choice among new businesses.
Starting an LLC in Tennessee requires careful planning and attention to detail. Consider factors like naming your company, appointing a registered agent, and drafting an operating agreement to ensure your LLC is established correctly.
The first step to forming an LLC in Tennessee is selecting a unique and fitting business name. Ensure the name complies with state regulations, such as including "LLC" or "Limited Liability Company" in the title. It is crucial to check business name availability with the Tennessee Secretary of State to avoid duplication. When considering a name, it might be wise to verify if corresponding domain names or social media handles are available, which can aid in securing a strong online presence. Before finalizing, consider trademarking the name to protect it from being used by others.
Every Tennessee LLC must have a registered agent. This individual or business entity is responsible for receiving legal documents on the LLC's behalf. The agent must have a physical street address in Tennessee, not a P.O. Box. Many owners opt to hire registered agent services, which can offer convenience and privacy. These services ensure documents are handled professionally and promptly. If the owner prefers not to use a service, they can act personally as the registered agent, but this may not be ideal if they are frequently unavailable.
An LLC operating agreement outlines the financial and functional decisions of the business. It sets clear rules and guidelines, even though it is not legally required in Tennessee. This document is essential for minimizing disputes among members, as it details responsibilities, voting rights, and profit distribution. It can be especially helpful if the LLC grows or undergoes structural changes. Including information about member buyout agreements or dissolution procedures can prevent potential conflicts. Taking time to draft a comprehensive operating agreement can save significant issues for the LLC in the future.
Forming an LLC in Tennessee involves several steps. Key tasks include submitting necessary documents to the Tennessee Secretary of State, obtaining an Employer Identification Number (EIN), and registering for required state taxes and licenses. Each step is crucial for compliance with state regulations.
To register an LLC in Tennessee, the business must file Articles of Organization with the Tennessee Secretary of State. This document includes essential information such as the LLC's name, address, and details of the registered agent. The filing fee is $50 per member, with a minimum of $300 and a maximum of $3,000.
It is important to ensure the LLC name is unique and distinguishable from other business names on record. This step is crucial for the legal formation of the business and allows the LLC to operate within the state. A detailed guide on how to start an LLC in Tennessee provides further insights.
After filing the Articles of Organization, obtaining an Employer Identification Number (EIN) is necessary. The EIN is like a social security number for the business and is required for tax purposes. The Internal Revenue Service (IRS) issues this number, and it can be obtained online at no cost.
An EIN is needed for opening a business bank account, hiring employees, and filing taxes. It identifies the LLC for federal tax filings and is required even if the LLC does not have employees. Information on how to set up an LLC in Tennessee details the EIN application process.
The LLC must register for Tennessee state taxes and secure any necessary licenses or permits. Required taxes may include sales tax, franchise tax, and excise tax. Registration is done through the Tennessee Department of Revenue, either online or through mail.
Business-specific licenses or permits might also be necessary, depending on the industry and location. This ensures compliance with Tennessee laws and helps avoid penalties. The process may vary, so it's essential to confirm the requirements specific to the business type and location. More details can be found in the article on forming an LLC in Tennessee on FindLaw.
After forming an LLC in Tennessee, staying compliant involves regular filings and managing taxes. Businesses must pay attention to annual reports, taxes, fees, and update records as needed.
Tennessee requires LLCs to file an annual report each year. This report confirms basic information about the business, such as its principal address and registered agent. Filing can be completed online, and the fee is typically $300. Staying on top of these reports helps avoid penalties or even the dissolution of the LLC.
Timely filing of the annual report ensures compliance and keeps the business in good standing. Businesses can file reports through the Tennessee Secretary of State's website.
LLCs in Tennessee must manage different state taxes such as the franchise tax and excise tax. These taxes are based on the net worth and the income of the business, respectively. Additionally, if the LLC sells goods, it must handle sales tax and use tax.
Employers must deal with employer taxes as well. To ensure everything is in order, some LLCs find it helpful to work with a tax professional. You can find further details about these taxes on the Tennessee State Government business setup page.
It’s vital to keep LLC records current. If there are changes to the LLC name, address, or ownership details, these need to be updated promptly with the state. Beneficial ownership information report updates are critical if ownership changes occur.
Accurate records help avoid legal issues and ensure compliance. Using an online service can simplify this process for many LLCs. For detailed guidance on updates, refer to how to set up an LLC in Tennessee on Forbes.
By staying proactive in these areas, LLC owners in Tennessee can maintain smooth business operations.
Successfully managing banking and finances is crucial for Tennessee LLCs. Setting up a dedicated business bank account helps in tracking and managing finances, while understanding different taxation options ensures compliance and optimization of tax liabilities.
Setting up a business bank account separates personal and business finances, which is important for legal protection and simplified tax preparation. LLC members should gather essential documents, such as the LLC's operating agreement and the Employer Identification Number (EIN).
Choosing the right bank depends on factors like fees, services, and convenience. Business accounts often offer benefits like lower transaction fees and business loans. Maintaining a separate business account also aids in clearer financial records and credibility with clients and suppliers.
LLCs in Tennessee have flexible taxation options, which can impact taxes owed. By default, an LLC is taxed as a pass-through entity, meaning profits pass to the members' personal tax returns. This can be beneficial for members at a lower personal tax bracket.
LLCs may also opt to be taxed as an S Corporation or C Corporation. Each choice has implications: S Corporations avoid self-employment taxes on dividends, while C Corporations might suit businesses planning to reinvest earnings, although they face double taxation on profits distributed as dividends.
It is advisable to consult with the Tennessee Department of Revenue or a tax advisor to make informed decisions about taxation, considering both state regulations and business structure to optimize financial outcomes.
When setting up an LLC in Tennessee, it's essential to understand the options for special types of LLCs. This includes registration processes for foreign businesses, professional practices, and different partnership styles.
Businesses from outside Tennessee that want to operate within the state must register as a foreign LLC. They must file the Application for Certificate of Authority and provide a Certificate of Existence from their home state. This process ensures legal operation across state lines and compliance with Tennessee laws. Foreign LLCs also need to maintain a registered agent within Tennessee, ensuring they have a local representative for legal documents and correspondence.
For certain professions, such as law or medicine, a Professional LLC or PLC is required. These entities follow similar registration as standard LLCs but must adhere to additional professional regulations. A Series LLC allows for separate divisions, or "series," within the business, each with distinct liabilities and assets. This setup is useful for businesses with multiple product lines or real estate assets, allowing for better organization and liability protection.
Non-Profit LLCs can operate with a charitable mission but must adhere to specific state requirements, such as registering as a 501(c)(3) if seeking tax-exempt status. Special partnerships like Limited Partnerships (LP) and Limited Liability Partnerships (LLP) offer different structures, where the latter provides liability protection for all partners. Each type of entity, including the obligated member entity, has its own set of registration steps and compliance requirements. Understanding these distinctions helps businesses choose the right structure for their mission and goals.
Setting up an LLC in Tennessee involves various steps and specific requirements. Processing times, costs, and tax implications are important factors to consider. This section addresses common questions related to forming an LLC in Tennessee.
Establishing an LLC in Tennessee involves several steps. Choose a business name, appoint a registered agent, and file the articles of organization. Draft an operating agreement, obtain an EIN from the IRS, and comply with local business requirements. For more detailed guidance, visit how to start an LLC in Tennessee.
The processing time for forming an LLC in Tennessee can vary. Typically, if filed online, it takes about 24 hours to process. Mail filings might take longer. Planning ahead ensures timely completion of the registration process.
LLCs in Tennessee are subject to a franchise and excise tax. The franchise tax is based on either the net worth or real and tangible property in Tennessee, while the excise tax is on the net earnings of the LLC.
Yes, you can register an LLC entirely online in Tennessee through the Secretary of State's website. Access the online registration portal to submit the necessary documents and pay the filing fee.
The cost to form an LLC in Tennessee involves a filing fee for the articles of organization. This fee is $50 per member, with a minimum fee of $300 and a maximum fee of $3,000. Details on the costs are available here.
Single-member LLCs in Tennessee have similar filing requirements to multi-member LLCs. Filing the articles of organization and registering for any necessary licenses are required. An operating agreement is strongly recommended even for single-member LLCs.
Founder Exclusive Deal:
Up to 3,500 bonus and 3% cash-back on all card spend [3], 6 months off payroll, and 50% off bookkeeping for 6 months, free R&D credit
Get StartedFounder Exclusive Deal: Up to 3,500 bonus and 3% cash-back on all card spend [3], 6 months off payroll, and 50% off bookkeeping for 6 months, free R&D credit
*Every is not a bank. Banking services provided by Thread Bank, Member FDIC. The Every Visa Business Debit Card is issued by Thread Bank, pursuant to a license from Visa U.S.A. Inc. and may be used anywhere Visa cards are accepted.
For Every customers with deposit accounts on Thread Bank, your deposits qualify for up to a maximum of $2,500,000 in FDIC insurance coverage when placed at program banks in the Thread Bank deposit sweep program. Your deposits at each program bank become eligible for FDIC insurance up to $250,000, inclusive of any other deposits you may already hold at the bank in the same ownership capacity. You can access the terms and conditions of the sweep program at go.thread.bank/sweepdisclosure and a list of program banks at go.thread.bank/programbanks. Please contact customerservice@thread.bank with questions on the sweep program.”
**Terms and conditions apply to the Cashback rewards program. Cashback earned will be credited to your account daily. ATM transactions, the purchase of money orders or cash equivalents, and account funding made with your debit card are not eligible for Cashback. Please refer to the Rewards Terms and Conditions for more details. No minimum opening deposit or minimum balance required.
***Your deposits qualify for up to $3,000,000 in FDIC insurance coverage when placed at program banks in the Thread Bank deposit sweep program. Your deposits at each program bank become eligible for FDIC insurance up to $250,000, inclusive of any other deposits you may already hold at the bank in the same ownership capacity. You can access the terms and conditions of the sweep program at https://go.thread.bank/sweepdisclosure and a list of program banks at https://go.thread.bank/programbanks. Please contact customerservice@thread.bank with questions regarding the sweep program.
[1]Yield is an annualized 4-week T-bill rate when held to maturity as of [08/21/24] [date must be within the last 7 days] . The rate shown is subject to price fluctuation and is net of fees. T-bills are purchased at a discount to par (par= $1,000), with the price being subject to market fluctuation. The amount of T-Bills available at a particular yield will depend upon the sellers’ offer size; any remaining cash balance after the purchase may not earn the same yield. In general the bond market is volatile, and fixed income securities carry interest rate risk. Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income securities also carry other risks, including inflation risk, liquidity risk, call risk, and credit and default risks for both issuers and counterparties.
[2]Yield as of [08/21/24]. The SEC yield for a money market fund is calculated by annualizing its daily income distributions for the previous 7 days. You should consider the investment objectives, risks, charges, and expenses of a money market fund carefully before investing. This and other information is found in the fund’s prospectus. Please read the prospectus before investing. An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although a money market fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in a money market fund. Yields fluctuate and past performance is no guarantee of future results.
[3] Atomic Invest LLC (“Atomic”), through a clearing relationship with Pershing LLC (“Pershing”) offers a cash sweep program. Funds in transit to or from Program Banks are generally not FDIC-insured. The Sweep Program is administered by Pershing, LLC. Deposits at each Program Bank are insured by the FDIC up to $250,000 for each insurable capacity. Based on eligibility criteria, the two FDIC-insured programs (“Bank Deposit Programs”) offered are 1) Dreyfus Insured Deposits (DIDI) and 2) Liquid Insured Deposits. Funds deposited into each sweep program, in aggregate, are eligible for up to $2,500,000 of FDIC insurance. The sweep programs can be configured so that once the funds reach one or more Program Banks (up to $250,000 for each insurable capacity at up to ten Program Banks), then the next Bank Deposit Program is initiated. Although certain types of accounts, such as trust accounts may be eligible for additional FDIC insurance based on the number of beneficiaries, funds will be allocated to each Program Bank in such a way that provides up to $250,000 of FDIC insurance for individual accounts and $250,000 of FDIC insurance for trust and other corporate account types, in each case per Program Bank. If clients elect to exclude one or more Program Banks from receiving deposits the amount of FDIC insurance available through the Atomic Invest account may be lower. Clients are responsible for monitoring their total assets at each Program Bank, including existing deposits held at Program Banks outside of the Atomic Invest account, to ensure FDIC insurance limits are not exceeded, which could result in some funds being uninsured. For more information on FDIC insurance please visit www.FDIC.gov. Deposits held in Program Banks are not protected by SIPC. For more information see Pershing’s Terms and Conditions and the Atomic Invest Form ADV Part 2A.
Every, Inc. has an engagement with Atomic Invest, LLC (“Atomic Invest”), an SEC-registered investment adviser, to bring you the opportunity to open an investment advisory account. Investment advisory services are provided by Atomic Invest. Companies which are engaged by Atomic Invest receive compensation of 0% to 0.85% annualized, payable monthly, based upon assets under management for each referred client who establishes an account with Atomic Invest (i.e., exact payment will differ). Atomic Invest also shares a percentage of compensation received from margin interest and free cash interest earned by customers with Every, Inc.. Every, Inc. is not a client of Atomic Invest, but our engagement with Atomic invest gives us an incentive to refer you to Atomic Invest instead of another investment adviser. This conflict of interest affects our ability to provide you with unbiased, objective information about the services of Atomic Invest. This could mean that the services of another investment adviser with whom we are not engaged could be more appropriate for you than Atomic invest. Neither Atomic Invest nor Atomic Brokerage, LLC (FINRA registered broker-dealer and member of SIPC), nor any of their affiliates is a bank. Investments in securities are Not FDIC insured, Not Bank Guaranteed, and May Lose Value. Investing involves risk, including the possible loss of principal.
Before investing, consider your investment objectives and the fees and expenses charged by Atomic Invest and/or Atomic Brokerage. Advisory services through Atomic Invest are designed to assist clients in achieving a favorable outcome in their investment portfolio. They are not intended to provide tax advice or financial planning with respect to every aspect of a client’s financial situation and do not include investments that clients may hold outside of Atomic Invest. For more details about Atomic Invest and/or Atomic Brokerage, please see the Form CRS, Form ADV Part 2A, the Privacy Policy, and other disclosures. Custodial and clearing services are provided to Atomic Invest and Atomic Brokerage by Pershing LLC.
