LLC Formation Attorney in Tennessee

Filing articles of organization with the Tennessee Secretary of State creates the entity. By itself, that is not much protection. The liability shield people form an LLC for depends on running the company like a real company — a separate bank account, a registered agent that actually receives service, and an operating agreement that lines up with how decisions get made and money moves.

So the work I do is the entity-choice call, the articles and registered-agent setup, EIN coordination, and the operating agreement — plus the franchise-and-excise tax baseline every new Tennessee owner should understand before the first year closes. Spending a bit more at formation is cheaper than untangling a thin LLC later.

The simplest case is one owner. A single-member LLC passes its profit and loss straight through to your personal return — usually a Schedule C — and most solo founders, consultants, and small real-estate investors belong here.

Add a second owner and the structure changes in ways that matter. Capital contributions get tracked per member, distributions follow the operating agreement rather than raw ownership percentages, and the tax filing moves to a partnership return on Form 1065. A manager-managed LLC is a third option, where the members appoint a manager instead of running things day to day — common when one person operates the business and the others are passive money.

The practical issue is not the form; it is who owns the company and how they expect to be treated. Bringing in a co-founder, a passive investor, or a family member changes both the legal structure and the tax filing, and those terms are far cheaper to settle before the money or the property goes in than after. And where the new money is genuinely passive, bringing in investors can be a securities offering that needs its own structure and filings.

Tennessee taxes most LLCs in a way a lot of new owners are not expecting. Franchise tax is generally measured under Tenn. Code Ann. § 67-4-2106, and excise tax is imposed under Tenn. Code Ann. § 67-4-2007. Put simply: the state taxes the entity on a net-worth measure and on its net earnings, separate from anything owed on the owner's personal return.

There are real exemptions — FONCE (the family-owned non-corporate entity exemption), the obligated-member exemption, nonprofit treatment, and others — and whether one fits depends on who owns the LLC, what it holds, and how it earns. This is one of the first things I look at, because the right entity and tax posture is hard to bolt on after the fact. I coordinate the tax-election side with your CPA; the legal side makes sure the documents match the plan.

S-Corp is a federal tax election, not a separate kind of company — an LLC can make it. It usually starts to make sense once the business earns enough that the self-employment-tax savings beat the cost and hassle of running real payroll.

The election goes in on IRS Form 2553, and the timing is unforgiving: it generally has to be in place no later than two months and 15 days into the tax year it applies to (IRC § 1362), though there is a late-relief path under Rev. Proc. 2013-30 when the deadline slips. Missing that window is common, which is why I raise the timing early rather than at filing. And electing S-Corp does not get a Tennessee LLC out of franchise-and-excise tax.

Most owners make the election call with their accountant. My job is to make the entity documents support it — the operating agreement or bylaws, a defensible reasonable-compensation structure, and the governance the election assumes.

The problems I get called to clean up almost never show at filing. They surface later: an online operating agreement that does not match how the business actually runs; a missed S-Corp election deadline; an LLC doing business in another state that never registered as a foreign entity there; or articles, registered agent, and operating agreement that nobody updated when the membership changed.

Every one of these is fixable. Each is also more expensive and more disruptive to fix after the fact than to get right at the start. That is the whole argument for doing formation deliberately instead of treating it as a form to submit.

Most formations move from the first call to filed articles within about a week. The operating agreement follows once the members have actually agreed on contributions, governance, distributions, and exit — I do not draft that part in a vacuum.

For straightforward single-member and multi-member formations, I offer flat-fee or capped pricing, so the cost is clear going in. Where a matter is more involved than that, I will say so before the work starts.

None of this is one-size-fits-all. The right structure for a given LLC depends on its owners, the tax election, what the company will hold, and how it will actually be run — which is a conversation about specifics, not a template. If you are forming or cleaning up a Tennessee LLC, reach out and we can work through it.

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