Tennessee Taxes

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Tennessee LLC Taxes

How to form an LLC in Tennessee
This Quick Start Guide is a brief overview of how to form an LLC in Tennessee.

Detailed Lessons:

5. EIN Number
6. Annual Report
7. Taxes ← you are here

 

Tennessee LLC costs:
State LLC filing fee: $300 (one-time fee)
Annual report fee: $300 (every year)

Need help?
Hire a company to form your Tennessee LLC:
Northwest ($39 + state fee) or LegalZoom ($149 + state fee)

(check out Northwest vs LegalZoom)

LLCs formed in Tennessee are liable to pay franchise tax and must also register with the Tennessee Department of Revenue.

Furthermore, dependent on your type of business, you will most likely need to register your LLC with your County Clerk for local taxes.

Franchise tax is 0.25% of the greater of net worth or real and tangible property in Tennessee. The franchise tax has a minimum payment of $100.

The excise tax is 6.5% of the net taxable income made in Tennessee.

Calculating your tax obligations in Tennessee – (especially if you have employees) – can be complicated and if done improperly can negatively impact your LLC.

Hire a Professional

Taxes can be challenging and we recommend you get help from a tax professional once your LLC is formed.

Hiring a tax professional will not only help you keep your LLC in compliance with the State, but will also give you an advisor to go to for other business questions.

Whether you realize a profit or lose money, you will still need to file tax documents every year.

This is not something to be taken lightly. If you want to run a serious business and not run into trouble with the State, you should get assistance in filing your taxes properly.

How to Find a CPA/Accountant

A referral from a friend or someone else you trust is usually the best way to find someone to do your tax return.

You can also ask co-workers, acquaintances from local clubs or organizations you belong to, your neighbors, and other business people.

You could also ask your Twitter, Facebook, LinkedIn or other social media friends and maybe find a trusted name from a friend of a friend.

It’s as easy as typing into your social media account, “Hey – anyone know of a good accountant? I just formed a new LLC!”

If you can’t get a personal referral, then try doing a search for “accountant” or “certified public accountant” on Yelp.
www.yelp.com

Look for Compatibility

You should want someone who’s a good fit for your company, makes you feel comfortable, and is willing to answer all of your questions.

It should be someone you like personally as well as professionally.

It’s ok to take your time to find the right person.

We recommend talking with 2-3 people before making a final decision.

Resources

Tennessee Department of Revenue
http://www.tn.gov/
Phone: 615-253-0700
Email: [email protected]

Office of Small Business Advocate
http://www.comptroller.tn.gov/OSBA/
Phone: 615-401-7806
Email: [email protected]

Matt Horwitz
Founder & Educator, LLC University®
Forming an LLC shouldn't be so complicated. Our step-by-step guide will make the process a breeze – and no complex legal jargon! LLC University® teaches people how to form an LLC for free in all 50 states. We hope you find our free guides and resources helpful in your business journey.
Disclaimer: Nothing on this page shall be interpreted as legal or tax advice. Rules and regulations vary by location. They also change over time and are specific to your situation. Furthermore, this comment section is provided so people can share their thoughts and experience. Please consult a licensed professional if you have legal or tax questions.

6 Comments

  1. Jay Skibinski February 18, 2019

    I have an LLC in another state, but since have become a Tennessee resident. What is the process to transfer my LLC to Tennessee? What is the cost?

    If it cannot be transferred, what is the simplest, cost-effective process to follow?

    Thanks!

    reply
    • Matt Horwitz February 18, 2019

      Hey Jay, about half of the states allow for domestication/conversion (converting an LLC from one state to another), but this is not the case with Tennessee. Your options are to register your existing LLC as a foreign LLC in Tennessee or form a new Tennessee LLC and dissolve your existing one. The benefit of the foreign LLC filing is it keeps the LLC’s history (EIN, bank account, etc.). Disadvantage is cost since you have to maintain the domestic LLC (Registered Agent, Annual Report, apportioned state income tax return, if applicable) in addition to maintaining the foreign LLC filing in Tennessee. Disadvantage of new Tennessee LLC is you’re “starting over”. Benefits are cost over the years to come. Hope that helps.

      reply
      • Jay Skibinski February 18, 2019

        Matt, many thanks for the prompt response and content. Greatly appreciated! I hope I can retain my LLC bank account and have the number changed to the new EIN, too.

        reply
        • Matt Horwitz February 18, 2019

          Hi Jay, if you’re going to form a new LLC and dissolve the old, you’d want to open a new bank account. It can be with the same bank, but if you use the same, it’s not ideal, since you’re treating the LLCs like they’re the same, which they are not. They are two separate entities. Hope that helps.

          reply
  2. Ricky Kailiponi February 18, 2019

    Thank you for these lessons. It has been extremely helpful. I appreciate your work.

    reply
    • Matt Horwitz February 18, 2019

      It’s great to heat that Ricky! You’re very welcome.

      reply

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