Forming an LLC in Tennessee is not an easy task and one needs the services of an expert at hand. This can be done through the service of a legal firm that can assist you in getting registered as an LLC. If you are planning to start a new business or expand your existing business, then it makes sense to get registered as an LLC. The advantages of being an LLC compared to a sole proprietorship are that you are able to limit the liability of your business and also benefit from many tax benefits.
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A sole proprietorship is a legal structure where the owner controls all the business decisions making him a virtual slave. There is no requirement for any annual report and no provision for carrying inventory. All these advantages are provided by the state in return for paying the annual state fee.
However, an LLC in Tennessee does not enjoy all the facilities available in a sole proprietorship. The owner need not pay the annual state fee and he does not have to file an annual report. In an LLC, one need not pay the filing fee for naming his business entity and there is no requirement for any separate legal structure. As long as the LLC has not been dissolved, the legal arrangement remains in place.
How to Form an LLC in Tennessee
A separate structure must be kept for the business licenses. In an LLC in Tennessee there is a separate licensing board which checks the credentials of the license applicants. The license must comply with the laws of the state and the requirements for obtaining business licenses. The board also issues the business licenses. An individual who has a license can open a branch office either in the same building as the original or in another location. He can conduct transactions in the office and can receive funds on credit as long as the transactions are carried out with the consent of the owner of the office.
An LLC in Tennessee is treated as a separate entity from the owners and if it is sued, the owner of the LLC will be the defendant and he is responsible for paying the expenses of the defense. In certain circumstances, the tax consequences faced by the individual owning the LLC will be different from the ones faced by a sole proprietor. This is because in the case of sole proprietorship, the tax is passed on only to the owner of the company whereas the LLC pays the tax to the legal structure and in case of an LLC in Tennessee, the tax is passed down to the individual owners of the LLCs.
The law allows for the formation of a limited liability company, even if the total number of members is small. In case the total number of LLCs owned by one person is larger than 25 then that person is required to register himself as a member of the Tennessee Business Owners Association. In order to be registered as a member, one has to comply with the other requirements of being an individual and providing personal information as well. Apart from these, an LLC in Tennessee also requires its members to pay the annual registration or filing fees and pay a reasonable amount of administrative fees.
Although there are several other legal structure that allows the residents to save on their taxes, an LLC in Tennessee is considered to be the most beneficial one as it does not levy corporate or personal income tax. It also offers the limited liability protection and in return it attracts higher rates of interest and also attracts some good incentives. If you run an LLC in Tennessee and if you have less than one partner then your personal assets will be taxed only once and hence, there is no double taxation. The only thing that you will have to pay is the tax under the income tax scheme of your state. If you operate the business through a bank account, it is compulsory for you to open a TANIF bank account and furnish the relevant information requested by the state in order to maintain the status of your business.
An LLC in Tennessee can be established through a simple process that does not take long. All that it requires is for the registered agent to complete the formalities and file the appropriate documents. Once all the documents are filed in the right manner, it is the duty of the registered agent to maintain contact with the Secretary of State and file reports on the business activities of the LLC. Reporting must be done on a yearly basis and all the annual reports must be filed along with the payment of the administrative fee. It is the duty of the registered agent to report any changes made to the address of the principal office and also to change the name of the principal office if the same is changed.
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