Borrower Portal
Mission Transition: Essential Steps to Launch Your Tennessee LLC for Veterans
Transitioning from military service to life as a small business owner is a mission unlike any other.
It requires the same dedication, strategy, and courage that you’ve shown throughout your military career, and brings new challenges and opportunities as your business idea grows.
For many veterans in Tennessee, the path to entrepreneurship begins with forming a Limited Liability Company (LLC).
Choosing to start an LLC in Tennessee offers a blend of flexibility, protection, and potential tax advantages, making it an attractive option for veterans ready to embark on their business journey. However, the process of establishing an LLC can seem overwhelming with all of the different information available online.
In this article, we’ll outline the basics of setting up your new business for success with an LLC and some special considerations for you as a veteran business owner.
To get step-by-step support on setting up an LLC in TN, check out our mini-course “How to File an LLC in Tennessee” for free today.
Understanding the Basics of an LLC
Many new business owners often begin by simply delivering a service, consulting, or performing jobs as an individual (or sole proprietor in business entity terms.)
This is often the simplest way to start, but it puts you personally at risk, should someone get hurt on the job, file legal action against you, or any number of things that could occur while doing business with you.
Instead, what’s often the easiest way to start a business (while protecting your personal assets) is to start or “file” an LLC.
A limited liability company (or “LLC”) balances the flexibility of a partnership or sole proprietorship structure with the increased risk protection of a corporate structure.
LLC owners (known as “members”) enjoy limited liability, meaning personal liability to the company includes only what members have invested and does not extend beyond it to cover corporate losses or debts. This provides a level of protection when operating a business and lessens the risk to your personal assets.
What this means for you, is that by setting up your business as an LLC, you’re putting some minimal protections in place between your business assets and your personal assets.
Pre-Planning Your Tennessee LLC
Assuming you’ve completed your market research, identified your ideal customers, and the opportunities for your product or service in your target market, you’re ready to start setting up your Tennessee LLC.
Here’s what you’ll need to do before filing the paperwork with the state:
- Select your Business Name
- Establish a Business Address
1. Business Name Selection
One of the first steps in setting up any business entity is selecting a name. Your business name must be unique or distinguishable from the names of other businesses registered in Tennessee.
You can visit the TN Secretary of State’s Business Name Availability Database to search if your business name is available or already in use by a business chartered in the state.
2. Establish a Business Address
In addition to a business name, you will need to identify your business address. In Tennessee, a business’s location address cannot be a post office box.
Building structures of brick and mortar will have a physical location address. If your business is online, your location address is the physical place where your records are maintained. (This may be your home office, rented space, or other location where records are maintained.)
Your mailing address is where you will receive letters and other important documents from the Department of Revenue.
The Legal Steps to Forming Your LLC
Once you know that your Business Name is available and you’ve determined “which address” will be used for the business, you can begin the process of filing your LLC.
For a step-by-step walkthrough on setting up your LLC in TN, enroll in our online mini-course “How to File an LLC in Tennessee.”
Here are the general steps for forming your LLC:
- Register Your Business with the Secretary of State
- Apply for an Employer Identification Number (EIN)
1. Register Your Business with the Secretary of State
Any business operating in Tennessee (corporation, limited partnership, limited liability company, or business trust chartered/organized in Tennessee) must register with the Secretary of State and file annual reports.
2. Apply for an Employer Identification Number (EIN)
An employer identification number (EIN) is also known as a federal tax identification number and is used to identify a business entity.
Generally, businesses need an EIN. However certain business structures do not need to provide an EIN and use a social security number (SSN) instead.
Click here for more information on how to apply for an employer Identification number (EIN).
Conclusion
Setting up an LLC for your Tennessee business venture is just one of the many ways you can ensure your business foundation is set up for success as a veteran business owner.
Now that you’ve read –
- Why your business needs an entity like an LLC to protect your personal assets,
- The pre-planning steps of finding an available Business Name and Address for your company,
- And, the steps to form an LLC with the TN Secretary of State
You should be able to complete the paperwork and filing process online.
To get step-by-step support on setting up an LLC in TN, check out our mini-course “How to File an LLC in Tennessee” for free.
Frequently Asked Questions
1. What Is an LLC?
A limited liability company balances the relative ease and flexibility of a partnership or sole proprietorship structure with the increased risk protection of a corporate structure. Like corporate shareholders, LLC owners (known as “members”) enjoy limited liability, meaning personal liability to the company includes only what members have invested and does not extend beyond it to cover corporate losses or debts.
By default, members of an LLC pay taxes as a share of personal income just as owners of a sole proprietorship or general partnership would—this is often referred to as a “pass-through” tax structure. An LLC can elect to be taxed as a C corporation C-corp or S corporation (S-corp) if it meets certain requirements. Many small business owners choose LLCs for their simplicity and flexibility.
2.How much does it cost to file an LLC in Tennessee?
The state of Tennessee charges $50 per existing member when you establish your LLC, with a minimum fee of $300 and a maximum of $3,000.
3. How do I file an LLC in Tennessee?
Domestic LLCs submit Form SS-4270, while foreign entities complete SS-4233. Forms can be submitted online through the Secretary of State website or by mail. You’ll pay a minimum of $300 and a maximum of $3,000 for LLC formation or authority to do business in Tennessee.
4. What are the benefits of filing an LLC?
Business entities such as LLCs and corporations help to protect their owners from liability for business debts. LLCs are popular because they are generally more flexible and easier to maintain than corporations.
5. What are the different types of LLCs to set up?
When determining how to start an LLC, there are several types of LLCs to choose from. Knowing the LLC structures available is essential for selecting a business model that most closely aligns with the nature of your company and how you intend for it to operate.
These LLC structures include:
-
- Single-member LLC: This LLC is owned and operated by a single person. While similar to a sole proprietorship, this LLC provides additional tax benefits and liability shielding.
- Multimember LLC: Standard LLCs with more than one member, often divided into manager-managed or member-managed entities.
- L3C: These entities, also known as “low-profit liability companies,” act as a bridge between nonprofit LLCs and for-profit LLCs where the business cause remains the primary focus rather than earnings.
- Series LLC: Series LLCs are tiered business structures where the topmost LLC owns a series of lower-tiered LLCs through limitless segregation. Each LLC in the series operates mostly independently of one another; their assets are also primarily separated.
- PLLC: A specialized LLC, this business formation type is only available to certain licensed professionals.
- Restricted LLC: Restricted LLCs are not taxed during the first 10 years of formation. Likewise, they cannot make distributions to members. It must be stated in the articles of organization that the LLC will be restricted.
