Single-Member Tennessee LLC — Formation & Tax Guide

A single-member Tennessee LLC has one owner, costs $300 to form, and pays a minimum $600/year in state obligations (Annual Report + F&E tax). The trade-off: zero personal income tax on pass-through earnings. For formation, see how to form a Tennessee LLC. For all types, see overview.

Cost Reality

• Formation: $300 (one member × $300)
• Annual: $600 minimum ($300 report + $300 F&E)
• 5-year total minimum: $3,300 ($300 + 5 × $600)

Compare: Colorado single-member LLC 5-year cost: $175 total. The difference is Tennessee charges no personal income tax.

Tax Treatment

• Federal: Schedule C (disregarded entity)
• Tennessee: F&E tax on LLC entity (6.5% excise + 0.25% franchise, $300 min)
• Personal income tax: $0 (Tennessee has none)

FAQ

Is $600/year minimum too expensive for a side business?

It depends on income. If your LLC earns $20,000+, the $600 cost is 3% — reasonable. If earning under $5,000, the fixed $600/year is proportionally high. Consider whether you actually need a Tennessee LLC vs. forming in a cheaper state (if you have nexus flexibility).