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Choosing the right entity
The business entity you choose for your company mainly depends on the business ownership structure and the future potential of the business.
- If you are the sole owner of the business, may operate as a sole proprietorship or a single-member LLC. You do not need to register as a sole proprietorship. If you want legal and financial separation from your business, you can register an LLC.
- For small businesses with multiple owners, Limited Partnership (LP), Limited Liability Partnership (LLP), or LLC. LLPs are most common for licensed professionals such as lawyers and accountants.
- For more complex businesses, you may choose between an LLC and a legal entity. If you want to attract investors, you usually need a legal entity, which may make it easier to sell your company in the future.
Submit your organization’s articles of incorporation or charter
Tennessee allows you to register your business online through the Office of the Secretary of State. When you register your business in Tennessee, you file a articles of incorporation or charter to form the company.
The Articles of Incorporation formally establishes the LLC while the Charter establishes the corporation. The cost to file a new Tennessee LLC charter is $300 minimum ($50 per member, $300 minimum, $3,000 maximum).
You must provide basic information about your LLC, including:
- Company main address
- trade name
- Membership
- Closing month
- Term of LLC
- Registered Agent (RA) name and address
- Business management system
Choosing an enrollment agent
A registered agent is a person or company designated to receive and file legal and financial documents relating to business with the state. You can list yourself or another member of your business’ management team. Alternatively, you can work with a professional Tennessee Enrollment Agent who will handle your legal documents for a fee.
Member management and manager management
When registering an LLC, you need to be careful whether your business is member-managed or manager-managed. “Managed” in this context refers to managing business operations (as opposed to lower-level “management” positions). Here’s the difference between a member-managed business and a manager-managed business:
Membership management means that all members (owners) of the LLC automatically run the company. This is the most common operational structure for small businesses.
Manager management means appointing a company manager. You may or may not be a member. Not all members need to be managers. This structure is ideal for companies that want to attract taciturn investors, have many owners and want to consolidate a small management team, or need to hire experienced operators who are not business owners.
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