I recently decided to incorporate a new business venture, so I formed a new limited liability company (LLC). I have written before on whether or not you should incorporate. Generally, I feel that incorporating is beneficial only after your landlording business grows and increases in complexity. That said, I wanted to share with you my recent experience in setting up an LLC here in Tennessee.
It has been over ten years since I last formed an LLC. As I recall at that time there was a lot of paperwork to be filled out, checks to be written and mail to be sent. The whole process took weeks before everything was finalized.
This is not so anymore. The internet has made the incorporation process here in Tennessee very easy and very quick. You can almost do it all right from your laptop. If you want to form an LLC in Tennessee, here is what you need to do.
First, get a binder and a three-hole punch so you can neatly organize all of the papers for your LLC.
Second, go to the Tennessee Secretary of State’s website and fill out the online form to start a new LLC. Fill in your company’s name, address, registered agent and a few other questions and pay the filing fee. Your Articles of Organization will automatically be ready to print and download. Be sure to print and download a copy of those Articles of Incorporation, they are important. Also be sure to print out your filing receipt as you will need that later. Put these in your binder. You are now good to go as far as the Tennessee Secretary of State is concerned.
Third, go to the IRS website to obtain an Employer Identification Number (EIN). This number is used much like a social security number and will be the identifying number used when opening your bank account, filing 1099’s and your income taxes. Complete the questionnaire and print out your new EIN and associated paperwork. Place the EIN paperwork in your binder. You are now all set as far as the IRS is concerned.
In less than an hour, you have completed what used to take several days if not weeks. But there is one more formal step.
You must record your Articles of Organization at your local register’s office in the county where the LLC’s primary address is located. This means that you physically need to take the Articles of Incorporation and the receipt you printed from the Secretary of State’s website to the Register of Deed’s office. For example, I am in Shelby County, TN so I recorded mine in the Shelby County Register of Deeds Office. Driving to and from the Register’s Office and recording the document took less than an hour and cost only $10 (bring cash). You should get a printout of the book and page number where the document is recorded. Place that in your binder as well.
Once these three steps are complete, you are ready to go in the eyes of Federal, State and Local jurisdictions. Easy.
There are of course other documents that will also go in your binder. You will need an operating agreement along with minutes from shareholders and officers. I suggest consulting with an attorney on those but they are generally not too difficult to set up.
I hope other states make it as easy to set up a corporation as Tennessee does. You folks from other states, let me know with your comments.
And if you want a S corp, rather than a C corp, you need to file the papers “Election to be an S Corp” with the IRS.
For an LLC, you do not need that extra step. But there are advantages to each.