How To File An LLC
Launch your business in Tennessee with ease! Our guide on filing an LLC breaks down the process, from choosing a name to navigating state regulations.
BUSINESS
Building Your Dream Business: A Step-by-Step Guide to Creating Your Tennessee LLC
Starting your own business is an exciting journey, and forming a Limited Liability Company (LLC) in Tennessee* can provide you with valuable legal protections and flexibility. This step-by-step guide will walk you through the process of creating your Tennessee LLC, from conducting a business name search to applying for an Employer Identification Number (EIN) with the IRS.
*Most of these steps are applicable in most other states
Step 1: Conduct a Business Name Search
The first step in creating your Tennessee LLC is to choose a unique and legally available business name. The name must include "Limited Liability Company" or abbreviations like "LLC" or "L.L.C." To ensure your chosen name is available, perform a search on the Tennessee Secretary of State's website. This prevents potential conflicts and ensures your business identity is distinct.
https://tnbear.tn.gov/Ecommerce/FilingSearch.aspx
Step 2: Secure a Business Address
To maintain your privacy and protect your home address from public records, consider obtaining a separate business address. You can rent a virtual office or use a registered agent service to provide an official business address. This also ensures you receive important legal documents in a secure and professional manner.
I opened an account at Postal Annex....
Step 3: Choose a Registered Agent
One crucial decision when forming your Tennessee LLC is selecting a registered agent. A registered agent, also known as a statutory agent, plays a pivotal role in your LLC's compliance with state regulations. Here, you have two primary options: you can either designate yourself or your LLC as the registered agent, or you can opt for a professional registered agent service. Each choice has its own set of advantages and disadvantages.
Using Your LLC as the Registered Agent:
Pros:
Cost-Effective: Appointing your LLC as the registered agent is often the most cost-effective choice, as there are no additional fees involved.
Direct Control: You maintain direct control and oversight over your LLC's compliance matters and legal documents.
Privacy: Your LLC's address is used as the registered agent's address, which may help protect your home address from public records.
Cons:
Limited Availability: Your LLC must have a physical address in Tennessee where it can receive legal documents during regular business hours.
No Backup: If your LLC is unavailable to accept documents for any reason, such as during business hours, you might miss important legal notices.
Using a Professional Registered Agent Service:
Pros:
Availability: Registered agent services are available during regular business hours, ensuring that legal documents are received promptly.
Privacy: Using a service protects your home address and ensures your privacy.
Reliability: Professional services are dedicated to the role, reducing the risk of missing critical documents.
Cons:
Cost: Professional registered agent services come with an annual fee, which can be an added expense for your LLC.
Lack of Direct Control: You relinquish some control over the process and rely on the service to manage legal documents.
Ultimately, the choice between using your LLC as the registered agent and employing a professional service depends on your specific needs, budget, and level of comfort with managing compliance matters. Regardless of your decision, appointing a registered agent is a critical step in ensuring that your LLC receives essential legal documents and remains in good standing with the state of Tennessee.
Personally, I chose to use my LLC as the Registered Agent.
Step 4: File Your LLC with the Secretary of State
Filing your LLC with the Tennessee Secretary of State is a pivotal step in the process. You can complete this step online, by mail, or in person. Prepare the necessary forms, which typically include the Articles of Organization, and submit the required filing fee. Be sure to provide accurate and up-to-date information, including your business address and registered agent details.
https://tnbear.tn.gov/Ecommerce/RegistrationType.aspx
Step 5: Obtain an EIN from the IRS
To open a business bank account, hire employees, or handle tax matters, you'll need an Employer Identification Number (EIN) from the IRS. You can apply for an EIN online, by fax, or via mail. This unique number is essential for tax purposes and allows you to separate your personal and business finances.
Step 6: Create an Operating Agreement
While not mandatory, drafting an Operating Agreement is highly recommended. This internal document outlines the management and ownership structure of your LLC, including member responsibilities and profit distribution. Having an Operating Agreement can help resolve disputes and prevent potential issues down the road.
Step 7: Create a Banking Resolution (If Required)
Depending on your specific banking needs and financial arrangements, it may be necessary to create a banking resolution for your Tennessee LLC. A banking resolution is a formal document that authorizes certain individuals, typically members or managers of the LLC, to open and manage the business bank account. Banks often require this document to establish the account, ensuring clear lines of authority for financial transactions. Check with your chosen financial institution to determine if a banking resolution is needed, and if so, prepare the document according to their requirements. This step helps streamline your financial operations and ensures a smooth transition to managing your business finances. Here is a link to a banking resolution template:
https://www.delawareinc.com/blog/what-is-a-banking-resolution-document/
Step 8: Open a Business Banking Account
Opening a dedicated business banking account is a vital step in managing your Tennessee LLC's finances efficiently. A separate business account ensures a clear distinction between personal and company funds, making record-keeping and tax compliance easier. Here's how to go about it:
Research Financial Institutions: Start by researching and comparing various banks or credit unions to find the one that best suits your LLC's needs. Consider factors like account fees, minimum balance requirements, online banking capabilities, and location convenience.
Gather Required Documents: Different financial institutions may have varying requirements, but generally, you'll need the following documents to open a business account:
Articles of Organization (from Step 4)
Employer Identification Number (from Step 5)
Your LLC's Operating Agreement (from Step 6)
Personal identification (e.g., driver's license or passport)
Any additional documents as specified by the bank
Visit the Bank: Schedule an appointment or visit the bank in person, if required. Bring all the necessary documents with you and consult with the bank's representative to ensure you're following their account-opening procedures.
Choose the Right Account Type: Select the type of business account that aligns with your LLC's needs, whether it's a checking account, savings account, or a combination of both. Consider any associated fees and account features.
Deposit Funds: Make an initial deposit into the account to activate it. This will typically be your LLC's capital contribution or an amount required by the bank.
Set Up Online Banking: Many banks offer online banking services, which can greatly simplify financial management. Set up online access to monitor your account, transfer funds, and pay bills easily.
Establish Financial Management Procedures: Implement robust financial management procedures for your LLC. This includes keeping accurate records of all financial transactions, regularly reconciling your account, and ensuring all expenses and income are properly categorized.
Comply with Ongoing Requirements: Continue to meet all the bank's requirements and maintain compliance with their policies to avoid potential issues with your business account.
Having a dedicated business banking account not only streamlines your financial operations but also ensures that your LLC's finances are handled professionally and in accordance with legal and tax requirements. It's an essential step in the journey of establishing your Tennessee LLC.
Step 9: Comply with Ongoing Requirements
After forming your LLC, remember to stay compliant with Tennessee's ongoing requirements. This includes filing an annual report with the Secretary of State, paying any applicable state taxes, and adhering to federal tax obligations.
Conclusion
Creating your own LLC in Tennessee involves several steps, from conducting a business name search to obtaining an EIN. By following this step-by-step guide, you'll navigate the process with confidence and ensure that your business is on a solid legal foundation. Building your dream business is within reach, and your Tennessee LLC is a crucial step toward achieving your entrepreneurial goals.
Disclaimer: The information provided in this blog is for general informational purposes only and should not be construed as legal advice. It is not a substitute for professional legal advice or services. The creation of a limited liability company (LLC) involves complex legal matters and regulations that may vary by jurisdiction. If you have specific legal concerns or questions regarding forming an LLC in Tennessee or any other legal issues, it is advisable to consult with a qualified attorney or seek guidance from the appropriate state agencies. While we strive to provide accurate and up-to-date information, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, or suitability of the information contained herein. Any reliance you place on the information provided is strictly at your own risk. We disclaim all liability for any actions taken or not taken based on the content of this blog. Always seek professional legal advice for your specific situation.