Tennessee LLC Operating Agreement
The Tennessee LLC Operating Agreement is the core document that is referred to when issues
concerning a Tennessee limited liability
company (“LLC”) need to be resolved.
The LLC
Operating Agreement is the most important document for your Tennessee LLC.
In the case of a single member LLC, without the formality
of an LLC Operating Agreement, the LLC can closely resemble
a sole proprietorship, which does not limit your personal
liability for business debts of the LLC.
With respect to a multi-member LLC, the LLC Operating Agreement reflects the agreement among the members with
respect to the affairs and management of the LLC and governs
the relationship amongst the members of the LLC. By having
an LLC Operating Agreement, the members will be provided
with a clear set of rules that all members have agreed upon
greatly reducing the likelihood of disagreement between
them in the future. A LLC Operating Agreement will also
greatly reduce financial and management misunderstandings,
and make sure your business is governed by your own rules
-- not default rules created by the state of Tennessee.
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Whether your LLC
will have one or more members, will be managed by its members
or by elected managers, or will be granting one or more
members an interest in the LLC for the performance of services,
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agreement tailored to the needs of your business.
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Tennessee LLC.
The LLC operating
agreement does not have to be filed with any state agency.
All states, including the state of Tennessee will enforce
valid operating agreements entered into among LLC members.
The operating agreement will only be enforced against the
persons who are parties to the agreement. Therefore, it
is extremely important that all members of an LLC sign the
operating agreement.
Your Tennessee
Limited Liability Company
LLC Filing Office
Secretary
of State
312 8th Ave. North
6th Floor, Snodgrass Tower
Nashville, TN 37243
Tel: 615-741-2286
www.tennessee.gov/sos/bus_svc/index.htm
Check Name Availability
Entity or Franchise
Level Tax
Limited partnerships and LLCs taxable as partnerships
are subject to the franchise and excise taxes in Tennessee. Neither a general partnership nor a single-member
LLC whose sole member is a corporation is subject to the
tax. The franchise
tax is imposed at the rate of 25 cents per $100 or major
fraction thereof, of a taxpayer’s net worth.
Net worth is defined as the difference between a
taxpayer’s total assets and total liabilities. An excise tax of 6% is imposed on the net earnings
from business done in Tennessee.
Tennessee imposes an annual fee of $50 per member
of the LLC. Tennessee also requires all partnerships and
LLCs to pay an annual 6 percent tax on stock dividends and
bond interest received.
State LLC Act
The Tennessee LLC Act is contained in Title 48, Chapter 201-248
of the Tennessee Code.
On June 1, 2005, Tennessee Governor
Phil Bredesen signed into law the Tennessee Revised Limited
Liability Company Act (the "New Act"), which became
effective on January 1, 2006.
The New Act applies only
to (i) any LLC formed in Tennessee on or after January 1,
2006 and (ii) any LLC formed in Tennessee before January
1, 2006 that files an amendment to its articles of organization
in which it elects to be governed by the New Act. The Old
Act continues to govern all LLCs formed in Tennessee before
January 1, 2006 that do not elect to be governed by the
New Act.
Important Statutory
Rules
LLC Management
One of the most significant changes from the
Old Act to the New Act is the change in available management
structures for LLCs. The Old Act contained two possible
management structures for LLCs: member-managed and governor-managed.
Under the New Act there are three possible LLC management
structures. The first is a member-managed structure, which
is similar to the member-managed structure under the Old
Act in that members have powers like those of general partners
of a general partnership. The second structure is a manager-managed
structure, in which the members elect managers that have
powers similar to those of general partners of a limited
partnership. The third is a director-managed structure,
in which the LLC has a board of directors and officers like
a corporation. Also, the requirement that each LLC have
an individual acting as Chief Manager, as well as the concept
of having a Chief Manager at all, have both disappeared
in the New Act. If there is to be a chief executive, that
person may now be called any title desired by the LLC.
Admission of Members
Unless otherwise provided, new interests in the LLC must
be issued with the consent of all the members. Unless otherwise
provided in the Operating Agreement, the admission of a
transferee as a member must be approved by the members holding
a majority of the capital interests of the LLC.
Amending the Operating Agreement
Unless
otherwise provided in the Operating Agreement, amendments
to the Operating Agreement require approval of a majority
of members.
Dissolution
Under
the New Act, the termination of a membership interest never
automatically triggers the dissolution of an LLC.
GET A CUSTOMIZED TENNESSEE
LLC OPERATING AGREEMENT IN MINUTES
