Choose the right business entity
The business entity you choose for your company depends largely on the ownership structure of the business, as well as the potential future of the business.
- If you are the sole owner of the business, you may operate a sole proprietorship or a single member LLC. You don’t have to register a sole proprietorship. If you want to be legally and financially separate from your business, you can register a limited liability company.
- If you are a small business with multiple owners, you can register as a limited partnership (LP), limited liability partnership (LLP) or limited liability company. LLPs are most commonly found with licensed professionals such as lawyers or accountants.
- for more complex business, you may choose between an LLC and a corporation. If you want to attract investors, you usually need a company, which may make it easier to sell the company in the future.
File Articles of Organization or Articles of Association
You can register a Tennessee business online through the Office of the Secretary of State. When you register a corporation in Tennessee, you will need to file an Articles of Organization or Articles of Association to form your corporation.
The Articles of Organization formally start the LLC, while the Articles of Association start the Corporation. The fee to file Articles of Association for a new Tennessee LLC is a minimum of $300 ($50 per member, minimum $300, maximum $3,000).
You will need to provide basic information about your LLC, including:
- Principal business address
- Company Name
- number of members
- Fiscal Year End Month
- Duration of LLC
- Registered Agent (RA) name and address
- Enterprise Management Structure
Select registered agent
A registered agent is the person or business appointed to receive and file legal and financial documents for your business in this state. You can list yourself or another member of the business management, or you can work with a professional Tennessee registered agent who handles legal documents for a fee.
Member Management and Manager Management
If you register an LLC, you must be aware of whether your business is managed by members or by managers. “Management” in this context refers to control over business operations (as opposed to the lower-level “management” position). The following are the differences between member-managed and manager-managed businesses:
Membership management means that all members (owners) of the LLC automatically run the company. This is the most common operating structure for small businesses.
Manager management means that you appoint the manager of the company. They may or may not be members, and not all members need to be managers. This structure is best for companies looking to attract silent investors, having many owners and looking to cement a leadership position among a few, or needing to hire experienced operators who are not business owners.
