Cost to Form and Maintain a Tennessee LLC (2026)

Tennessee is among the more expensive states for LLC formation and ongoing maintenance. The trade-off: zero personal income tax on pass-through earnings. This page covers all costs for forming and maintaining a Tennessee LLC.

Formation Costs (One-Time)

Expense	Amount	Notes
Articles of Organization (Form SS-4270)	$300/member (min $300)	Filed at sos.tn.gov
2-member LLC filing fee	$600	$300 x 2 members
3-member LLC filing fee	$900	$300 x 3 members
Name reservation (optional)	$20	Holds name 4 months
EIN	Free	IRS (irs.gov)
Our formation service (optional)	$199	Plus state fee separately

Minimum to form (single-member, DIY): $300

Ongoing Annual Costs

Expense	Amount	Frequency	Notes
Annual Report	$300 minimum	Annual (April 1)	Filed via TNBEAR
Franchise & Excise Tax	$300 minimum	Annual	6.5% excise + 0.25% franchise
Registered agent	$99	Annual	Billed annually, separate from formation
Business insurance	$500-$3,000+	Annual	Varies by industry

Minimum annual maintenance: $600 ($300 Annual Report + $300 minimum F&E tax)

The Franchise & Excise Tax Explained

Tennessee's franchise & excise (F&E) tax is the biggest ongoing cost for Tennessee LLCs:

Excise tax: 6.5% of net income (Tennessee taxable income) Franchise tax: 0.25% of the greater of:

• Net worth (tangible property plus equity), OR
• Real and tangible property owned in Tennessee

Minimum combined: $300 (even if your LLC earns nothing) Due: 15th day of the 4th month after fiscal year end (April 15 for calendar-year LLCs) Form: FAE 170 (filed with Tennessee Department of Revenue)

How Tennessee Compares

State	Formation	Annual Fees	Entity-Level Tax	Income Tax on Members
Tennessee	$300 min	$300 report + $300 min F&E	6.5% + 0.25%	None (0%)
Colorado	$50	$25/year	None	4.4% flat
Indiana	$95	$32/2 years	None	3.05% + county
Florida	$125	$138.75/year	None	None (0%)
Wyoming	$100	$60/year	None	None (0%)
Texas	$300	$0	Margins tax (variable)	None (0%)
California	$70	$800 franchise + $20	$800 minimum	1%-13.3%

When Tennessee's Structure Saves Money

Tennessee LLC costs are higher upfront and annually, but the zero personal income tax creates savings at certain income levels:

Break-even analysis (single-member LLC, sole income):

• At $50,000 net income: Tennessee total = ~$3,550 (F&E: $3,250 + report: $300) vs. Colorado = $2,225 ($25 report + $2,200 state income tax)
• At $100,000 net income: Tennessee = ~$6,800 vs. Colorado = $4,425
• At $200,000 net income: Tennessee = ~$13,300 vs. Colorado = $8,825
• At $500,000+ net income: Tennessee F&E becomes significant, but still no personal income tax

Tennessee favors: Businesses with low net worth/property but high personal income from multiple sources (W-2 + LLC), or when members live in Tennessee and benefit from zero income tax on ALL income (not just LLC).

Hidden Costs

1. $300 per member filing fee — A 5-member LLC costs $1,500 to form (not $300)
2. $300 minimum F&E even with no income — Dormant LLCs still owe $300/year in F&E tax
3. Sales tax complexity — Tennessee has a 7% state rate + local rates up to 2.75% (combined up to 9.75%)
4. Annual Report + F&E are separate — You file and pay for both, totaling $400 minimum
5. Nashville/Davidson County business tax — If operating in Nashville, additional business tax requirements

FAQ

Why is Tennessee more expensive than Colorado or Indiana?

Tennessee substitutes entity-level fees and taxes for personal income tax. If you only consider state-level costs, Tennessee is more expensive. If you consider the zero personal income tax on all your other income (investment, W-2, etc.), the total picture may favor Tennessee for high earners.

Is the $300 Annual Report the same as the F&E tax?

No. They're separate filings and separate payments. Annual Report ($300 min) filed via TNBEAR. Franchise & Excise Tax ($300 min) filed via Tennessee DOR (Form FAE 170). Total minimum: $600/year.

What if my LLC has no income?

You still owe the $300 minimum F&E tax and the $300 Annual Report. Dormant Tennessee LLCs cost a minimum of $600/year to maintain — a significant consideration vs. Colorado ($25/year) or Indiana ($16/year effective).

Should I form in Tennessee or another state?

If you live in Tennessee and benefit from zero personal income tax across all income sources (not just LLC), Tennessee makes sense. If you're forming purely to save on LLC costs and don't live here, other states are cheaper. See our Tennessee vs Delaware and Tennessee vs Wyoming comparisons.