How to Start a Business in Tennessee (2023 Guide) – Forbes Advisor

Choosing the right business

The type of business you choose for your company depends mainly on the ownership structure of the business as well as the future of the business.

  • If you are the sole owner of the business, you can run a sole proprietorship or a single member LLC. You do not have to register as a sole proprietor. If you want legal and financial separation from your business, you can register an LLC.
  • If you are a small business with multiple ownersYou can register for a limited partnership (LP), limited liability partnership (LLP) or LLC. LLPs are most common for licensed professionals such as attorneys or accountants.
  • For more complex business, you can probably choose between an LLC and a corporation. A corporation is usually necessary if you want to bring in investors, and it makes it easier to sell the company in the future.

File articles of incorporation or charter

You can register a business in Tennessee online through the Secretary of State’s office. When registering a business in Tennessee, file your articles of incorporation or charter to establish your organization.

Articles of Organization normally open an LLC, while a charter opens a corporation. The cost to file articles of incorporation for a new LLC in Tennessee is a minimum of $300 ($50 per member, with a minimum of $300 and a maximum of $3,000).

You must provide basic information about your LLC, including:

  • Main business address
  • Business name
  • Number of members
  • Closest month of fiscal year
  • Duration of the LLC
  • Registered Agent (RA) name and address
  • Business management structure

Choose a registered agent

A registered agent is a person or business designated to receive and file legal and financial documents with the state for your business. You can list yourself or another member of the business’s management, or you can work with a professional Tennessee registered agent to handle the legal documents for a fee.

Member managed and admin managed

If you register an LLC, note that your business is member-managed or manager-managed. In this case, “managed” refers to the control of business operations (as opposed to the lower-level “management” position). Here are the differences between member-managed and manager-managed businesses:

Member-managed means that all LLC members (owners) operate the company automatically. It is the most common operating structure for small business.

Administrator-managed means that you appoint the administrators of the company. They may or may not be members, and not all members need to be administrators. This structure works best for a company that wants to attract silent investors, has multiple owners and wants to consolidate leadership among the few, or hire an experienced operator who does not own the business.

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