Tennessee is a great state for starting a business, especially if you are considering forming a Limited Liability Company (LLC). An LLC provides personal asset protection and a favorable tax structure that complements most businesses. In this article, we discuss the steps required to form a single-member LLC in Tennessee and provide advice on how to do it right.
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What is a Single-member LLC?
An LLC is a business structure that combines the benefits of a corporation and partnership. It is perfect for small business owners to gain personal liability protection and shield their personal assets from lawsuits, debts, and obligations.
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A Single-member LLC is a company that has only one owner, as the name implies. Forming a Single-member LLC in Tennessee is an ideal way for entrepreneurs to structure their business under a sole proprietorship or partnership type, while taking advantage of the protection and benefits of Limited Liability Companies.
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Step-by-Step Guide for Forming a Single-member LLC in Tennessee
Here are the five steps to follow to form a single-member LLC in the state of Tennessee:
Step 1: Choose a Name for Your Single-member LLC
First and foremost, choose an exclusive name unique to business. The name must include identifiers like “Limited Liability Company” or “LLC”.
You should also ensure that your chosen business name complies with Tennessee business naming requirements with Secretary of State. You can also check its availability with the Tennessee Secretary of State's online service.
Step 2: Choose a Registered Agent for Your Single-member LLC
Select a registered agent or a company authorized to carry out official business communication and filings of your Single-member LLC in Tennessee.
The registered agent must reside within the state, with a registered street address, which they should continuously maintain while serving in that capacity. Choosing the right registered agent is important in eliminating inactive or terminated registered agents during your business proceedings.
Step 3: File Your Single-member LLC's Articles of Organization
The next step is to file an ”Articles of Organization" with the Tennessee Secretary of State. This contains all the essential business information, such as your business name, registered agent, and business address.
The simplified statement of information that accompanies your Article of Organization should include:
* Your chosen business name
* Your registered agent or address for business communication.
* Your business address
* Filing fee of $300
Your completed and submitted Article of Organization with the Secretary of State is filled out through their streamlined process or Application of Heath Online electronic learning platform for entrepreneurs.
Step 4: Draft Your Single-member LLC's Company Operating Agreement
While not necessary, an operating agreement is a crucial business document outlining the agreed guidelines on rules and guidelines on business proceedings by the members of the Single-member LLC on financial and fiduciary management such as members' ownership interests, voting rights, and the roles of managing members.
Drafted yourself or with the assistance of corporate attorneys or service companies, your operating agreement solidifies decision-making during business transactions and resolves any useful cases by business members.
Step 5: Register for Federal and Tennessee’s State Tax Identifications
Single-member LLC's can take the structure of either sole-proprietorships or corporations. As such, you should register for employer identification number necessary to report your business revenues and any federal taxes owed of or sales or use practitioner license for sales tax purposes.
You can register for a federal EIN number for free through the Internal Revenue Service, or apply for authorization to offer product or services with the Tennessee Department of Revenue's website.
Conclusion
Forming a Single-member LLC in Tennessee is a great choice for entrepreneurs who want personal liability protection, flexibility of money and property management, and reasonable tax regulations.
To ensure a smooth process, follow the five steps to keep your business in good legal standing within the state. An effective business attorney or business incorporation service company can guide you through state regulations and maneuver state and local compliance in record time. Their assistance makes it possible to choose beneficial options in perpetuity whilst limiting exposure to legal and business obligations.
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