How to Form an LLC in Tennessee: Complete 2026 Guide
Tennessee is one of only nine U.S. states with no state income tax on wages, salaries, or investment income. The Hall Income Tax on dividends and interest was fully repealed in 2021. However, forming a Tennessee LLC costs more upfront than most states: the filing fee starts at $300 for LLCs with 1–6 members, filed with the Tennessee Secretary of State. Tennessee's economy is booming — Nashville, Memphis, and Knoxville are among the fastest-growing metro areas in the Southeast.
The thing you need to know: franchise and excise taxes still apply. While Tennessee has no income tax on personal earnings, LLCs doing business in Tennessee owe two business-level taxes: a franchise tax (0.25% of Tennessee-apportioned net worth, minimum $100) and an excise tax (6.5% on net earnings with a $50,000 standard deduction). These are filed together on Form FAE170 with the Tennessee Department of Revenue. Additionally, the annual report costs the same as the formation fee ($300 minimum), making Tennessee one of the more expensive states for ongoing LLC maintenance.
Tennessee LLC at a Glance
| Item | Detail |
|---|---|
| State filing fee | $300 minimum (1–6 members); +$50 per member over 6; max $3,000 |
| Annual report | $300 minimum (same structure as formation fee) |
| State income tax | None (no personal income tax) |
| Franchise tax | 0.25% of net worth ($100 minimum) |
| Excise tax | 6.5% on net earnings ($50K standard deduction) |
| Sales tax | 7% state + local (avg combined 9.56%) |
| Standard processing | 1 business day (online) |
| Registered agent | Required (physical Tennessee address) |
| Operating agreement | Not required by law, strongly recommended |
What You Need Before Filing in Tennessee
Tennessee LLCs are filed online through the Tennessee Secretary of State's TNCaB (Tennessee Charity and Business) portal. You need:
- LLC name that includes "Limited Liability Company," "LLC," or "L.L.C." and is distinguishable from existing Tennessee entities. Search the Tennessee Business Entity Search to check availability.
- Registered agent with a physical street address in Tennessee (P.O. boxes not accepted). Called "agent for service of process" in Tennessee. The agent must be available during normal business hours. You can serve as your own agent if you have a Tennessee street address.
- Articles of Organization details: LLC name, registered agent name and Tennessee street address, management structure (member-managed or manager-managed), number of members (this determines your filing fee), principal office address, and organizer name and address.
- Member count: Tennessee calculates the filing fee based on the number of members. Count your members before filing: 1–6 members = $300; each additional member above 6 costs $50 more.
Step-by-Step: Forming a Tennessee LLC in 2026
Step 1: Choose and Verify Your LLC Name
Search the Tennessee Business Entity Search to confirm your name is available. Your name must include "Limited Liability Company," "LLC," or "L.L.C." and cannot be deceptively similar to an existing Tennessee entity. Tennessee does not offer a formal name reservation for LLCs — file your Articles of Organization promptly to secure your name.
Step 2: Appoint a Registered Agent
Every Tennessee LLC must have a registered agent ("agent for service of process") with a physical street address in the state. The agent receives legal papers and state correspondence on your behalf. You can name yourself (if you have a TN address), a trusted person, or a commercial registered agent service.
Our pick: Northwest Registered Agent — $39/year and includes a Tennessee street address. Given Tennessee's $300/year annual report, saving on registered agent fees helps offset the high recurring costs.
Step 3: File Your Articles of Organization
File online through the TNCaB portal. The filing fee is $300 for LLCs with 1–6 members ($50 per additional member over 6, max $3,000). Online filings are typically approved within 1 business day. Credit/debit cards incur a 2.29% service fee; e-check (ACH) payments have a flat $0.95 fee.
The Articles of Organization require:
- LLC name
- Registered agent name and Tennessee street address
- Principal office address
- Management type (member-managed or manager-managed)
- Number of members (determines filing fee)
- Organizer name and address
Step 4: Register for Franchise and Excise Tax
Register with the Tennessee Department of Revenue through the Tennessee Taxpayer Access Point (TNTAP). Most Tennessee LLCs owe franchise tax (0.25% of net worth, $100 minimum) and excise tax (6.5% on net earnings). These are filed annually on Form FAE170, due April 15th for calendar-year filers.
Step 5: Get Your EIN (Federal Tax ID)
Apply for a free EIN from the IRS at IRS.gov. You need an EIN to open a business bank account, hire employees, and file federal taxes. The online application takes 5–10 minutes and you receive your EIN immediately.
Step 6: Create Your Operating Agreement
Tennessee does not legally require an operating agreement, but you should have one. It establishes member ownership percentages, profit/loss distribution, voting procedures, and what happens if a member leaves. Banks often require a copy when opening a business account.
Step 7: Get a Local Business License
Tennessee's business license requirements depend on your gross receipts: no license needed if under $3,000/year; minimal activity license ($15) for $3,000–$100,000; standard license for over $100,000. Check with your county clerk for local requirements and fees.
Step 8: Open a Business Bank Account
Keep personal and business finances completely separate. Bring your Articles of Organization, EIN letter, operating agreement, and a photo ID to the bank. Major banks in Tennessee include Pinnacle Financial Partners, First Horizon, and Regions Bank.
Tennessee LLC Formation Costs: Full 2026 Breakdown
Required Costs
| Fee | Amount | When |
|---|---|---|
| Articles of Organization | $300 (1–6 members) | One-time |
| Annual Report | $300 (1–6 members) | Yearly |
| Franchise Tax | 0.25% of net worth ($100 min) | Yearly |
| Excise Tax | 6.5% of net earnings | Yearly |
| Registered Agent | $39–$299/year | Yearly |
Optional Costs
| Service | Cost |
|---|---|
| Registered Agent Change (with annual report) | $20 |
| Business License (minimal activity) | $15 |
| Operating Agreement (template) | $0–$49 |
| EIN (IRS) | Free |
Year-One Cost Estimate
| Item | DIY | With Northwest | With Bizee |
|---|---|---|---|
| State filing fee | $300 | $300 | $300 |
| Franchise tax (minimum) | $100 | $100 | $100 |
| Registered agent (year 1) | $0 (self) | $39 | $0 (included) |
| Formation service | $0 | $0 (included) | $0 |
| Year-one total | $400 | $439 | $400 |
Ongoing annual costs: $300 (annual report) + $100+ (franchise tax) + excise tax (varies) + $39–$299 (registered agent renewal). Tennessee's ongoing costs are significantly higher than most no-income-tax states.
Tennessee LLC Taxes: What to Expect
No Personal Income Tax
Tennessee has no personal income tax on wages, salaries, dividends, interest, or capital gains. The Hall Income Tax (which previously taxed dividends and interest) was fully repealed effective January 1, 2021. This means all investment income, retirement distributions, and Social Security benefits pass through your LLC tax-free at the state level.
Franchise Tax
The franchise tax is 0.25% of your LLC's Tennessee-apportioned net worth (total assets minus total liabilities). The minimum franchise tax is $100, regardless of whether your LLC is active or inactive. The alternative property-based measure was repealed in April 2024. Filed on Form FAE170, due April 15th for calendar-year filers.
Excise Tax
The excise tax is 6.5% on your LLC's net taxable income generated within Tennessee. A $50,000 standard deduction applies, meaning the first $50,000 of net earnings is effectively tax-free. This is Tennessee's substitute for a corporate income tax and applies to LLCs, corporations, and limited partnerships.
Sales Tax
Tennessee has a 7% state sales tax — the highest state rate in the country. Combined with local additions, the average rate is about 9.56%. If your LLC sells taxable goods or services in Tennessee, you must collect and remit sales tax. Groceries are taxed at a reduced 4% state rate.
Self-Employment Tax
Like all states, LLC members pay 15.3% federal self-employment tax on net earnings (12.4% Social Security + 2.9% Medicare). This applies regardless of state tax policy.
Tennessee Annual Report Requirements
Every Tennessee LLC must file an Annual Report with the Secretary of State. Key details:
- Fee: $300 minimum (1–6 members); +$50 per member over 6; max $3,000
- Due date: First day of the 4th month after your fiscal year ends (April 1st for calendar-year LLCs)
- Grace period: 60 days after the due date
- Filing method: Online through the TNCaB portal
- First report: Due in the year following the year of approval
- Late penalty: Administrative dissolution or revocation after the 60-day grace period. Loss of good standing and potential personal liability.
The annual report confirms your LLC's current information and member count. Set a calendar reminder for March 1st to avoid missing the deadline.
DIY vs. Formation Service: What Makes Sense?
Tennessee's TNCaB portal is straightforward and filings are approved within 1 business day. DIY is viable if you're comfortable navigating the separate franchise/excise tax registration with the Department of Revenue.
However, a formation service adds value when:
- You want a professional registered agent address (not your home address in public records)
- You need help coordinating the franchise/excise tax registration
- You want automatic annual report reminders (the $300 minimum is too costly to miss)
- You're forming from out of state and need local Tennessee expertise
Our Recommended Formation Services
Northwest Registered Agent — $39 + $300 state fee. Includes registered agent for one year, a Tennessee street address for privacy, mail forwarding, and compliance alerts.
Bizee (formerly Incfile) — $0 + $300 state fee. Free LLC formation with first-year registered agent included. Good budget option to offset Tennessee's high state fees. Renewal registered agent is $199/year.
Frequently Asked Questions
How Much Does It Cost to Form an LLC in Tennessee?
The minimum state filing fee is $300 (for 1–6 members). With a registered agent service like Northwest ($39), your total year-one cost is $439 (including $100 minimum franchise tax). Ongoing annual costs include $300 (annual report) plus franchise and excise taxes.
Does Tennessee Have State Income Tax?
No. Tennessee has no state income tax on wages, salaries, dividends, interest, or capital gains. The Hall Income Tax was fully repealed in 2021. However, LLCs owe franchise tax (0.25% of net worth, $100 min) and excise tax (6.5% on net earnings with a $50K deduction).
What Are Tennessee's Franchise and Excise Taxes?
The franchise tax is 0.25% of your LLC's Tennessee-apportioned net worth ($100 minimum). The excise tax is 6.5% on net earnings with a $50,000 standard deduction. Both are filed together on Form FAE170, due April 15th for calendar-year filers, with a 7-month extension available.
How Long Does It Take to Form a Tennessee LLC?
Online filings through the TNCaB portal are typically approved within 1 business day. Mailed filings take 3–5 business days.
Why Is Tennessee's LLC Filing Fee So High?
Tennessee's $300 minimum fee (plus the $300/year annual report) is among the highest in the country. This is the trade-off for having no personal income tax. The state generates revenue through high filing fees, franchise/excise taxes, and one of the highest sales tax rates nationally (avg 9.56%).
Is Tennessee a Good State for an LLC?
For Tennessee residents, yes — no income tax on personal earnings, a booming economy, and fast online filing. For non-residents seeking a no-income-tax state, Wyoming ($100 filing, $60/year) or South Dakota ($150 filing, $55/year) are significantly cheaper. Tennessee is best for businesses with actual Tennessee operations, customers, or employees.
Next Steps: Form Your Tennessee LLC
If Tennessee is the right fit:
- Use an online formation service to file through the TNCaB portal correctly
- Budget $439 for year one: $39 (Northwest) + $300 (state filing fee) + $100 (minimum franchise tax)
- Register for franchise/excise tax through TNTAP immediately after formation
→ Form Your Tennessee LLC with Northwest for $39 + State Fees
→ Form Your Tennessee LLC with Bizee for $0 + State Fees
Related guides: How to Form an LLC · LLC Formation Cost · Best LLC Formation Services · LLC Formation Comparison · Northwest Registered Agent Review · Georgia LLC · North Carolina LLC · Florida LLC · Texas LLC · Washington D.C. LLC
Frédéric Deltour
Entrepreneur · Business Consultant · Certified Professional Trainer
22+ years of entrepreneurship & 3 international companies founded, Frédéric brings real-world business expertise to our site. Certified holistic coach & therapist trainer, published author, and recognized authority featured in Le Parisien, IMDb, Goodreads, and international encyclopedias.