Tennessee LLC vs Corporation
Both provide liability protection. Both owe Tennessee's franchise & excise tax. The difference is governance flexibility and federal tax treatment. For LLC formation, see how to form a Tennessee LLC.
Key Tennessee-Specific Points
- Both LLCs and corporations owe Tennessee F&E tax (6.5% excise + 0.25% franchise, $300 min)
- Both are exempt from personal income tax at the member/shareholder level
- Formation fees differ: LLC is $300/member; corporation is a flat fee
- Ongoing: both file Annual Reports ($300) and F&E returns
Quick Comparison
| Factor | Tennessee LLC | Tennessee Corporation |
|---|---|---|
| F&E tax | Yes ($300 min) | Yes ($300 min) |
| Personal income tax | None | None |
| Annual Report | $300 (April 1) | $300 (April 1) |
| Management | Flexible | Board + officers |
| Default federal tax | Pass-through | C-corp (double taxation federally) |
FAQ
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Get StartedIs there a tax difference between LLC and corporation in Tennessee?
At the Tennessee level: minimal — both owe F&E tax. At the federal level: significant. LLC passes through (one level of tax); C-corp faces double taxation (corporate + dividend).