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LLC vs Sole Prop Calculator for Tennessee

What forming an LLC costs in Tennessee (TN), and how the state fee changes the sole proprietor vs LLC + S-Corp comparison.

Tennessee LLC costs

LLC filing fee (one-time)$300
Annual report / franchise fee$300
State fees in the first year$600
Top state income tax rateNone on wages

What an LLC costs in Tennessee

Forming an LLC in Tennessee costs $300 in state filing fees, followed by about $300 a year in annual report or franchise fees — roughly $600 in state fees in the first year.

Fees change, and some states charge extra for expedited filing, publication or name reservation. Confirm the current amounts with Tennessee's business filing office (usually the Secretary of State) before you file.

Sole prop vs LLC + S-Corp in Tennessee: a worked example

Take the calculator's default numbers — $80,000 of revenue and $15,000 of expenses, so $65,000 of profit — and enter Tennessee's $300 annual fee in the state fee field. The estimated tax is $23,484 as a sole proprietor versus $20,373 as an LLC taxed as an S-Corp: about $3,112 a year in favor of the LLC.

Where the difference comes from: as a sole proprietor, all of your profit is subject to self-employment tax (15.3% on 92.35% of profit). With an S-Corp election the calculator assumes half of the profit is paid to you as a salary that carries payroll tax and the rest is taken as a distribution that doesn't. It then adds Tennessee's fee plus a flat $800 overhead allowance to the LLC side.

In the year you form the LLC, add the one-time $300 filing fee to the fee field too — the first-year saving shrinks by that amount.

These are simplified estimates: a flat 22% federal income tax rate, and a 50/50 salary split the IRS may not accept as a reasonable salary for your work. This is general education, not tax or legal advice — talk to a CPA before electing S-Corp status.

Tennessee income tax and your business

Tennessee doesn't levy a state income tax on wages, so sole proprietors and LLC owners there mainly face federal income tax plus self-employment or payroll tax. That makes the state LLC fee the main Tennessee-specific number in this comparison.

Some states also charge entity-level taxes or minimum fees on LLCs or S-Corps, so check Tennessee's rules for the structure you choose.

Open the LLC vs Sole Prop Calculator to run your own numbers.

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