Tennessee LLC Operating Agreement — Key Provisions

Tennessee does not require filing an operating agreement, but the Tennessee Revised LLC Act gives operating agreements broad authority. Without one, statutory defaults apply — which may not match your intentions, especially regarding franchise & excise tax allocation. For formation and compliance.

Why It's Critical in Tennessee

Tennessee-specific reasons an operating agreement matters:

1. F&E tax allocation — The franchise & excise tax hits the entity, but how it's funded (member capital calls, reduced distributions) should be defined in the agreement
2. Statutory defaults — Without an agreement, the Tennessee Revised LLC Act defaults apply (equal sharing, equal management)
3. Member buyouts — Given the high cost of adding members ($300 per member at formation), addressing ownership changes is essential
4. Banking requirements — Tennessee banks require operating agreements for LLC accounts

Tennessee-Specific Provisions to Include

• F&E tax funding: How the LLC pays the annual $300+ franchise & excise tax (from LLC funds, member contributions, or distribution reduction)
• April 1 compliance: Who is responsible for the Annual Report filing
• Member addition costs: How to handle the economic impact when new members join (no additional state per-member fee after formation, but operating agreement should address capital contribution)
• Dissolution and winding up: the Tennessee Revised LLC Act provisions

FAQ

Do I file the operating agreement with Tennessee?

No. It's a private internal document. Not filed with the SOS or Tennessee DOR.

Can a single-member LLC have one?

Yes. Essential for banking, veil protection, and succession planning.