FAQ · Straight answers to the questions Tennessee LLP owners ask most.
Tennessee LLP Frequently Asked Questions
Straight answers to the questions people actually ask about forming and running a Tennessee limited liability partnership — what the LLP is, how it protects the partners, how it is taxed, and what the state requires to keep it in good standing.
One price: $199.00/yr covers your formation, your registered agent, and your annual report, plus the $250.00 state filing fee, at cost.
State agency: Tennessee Secretary of State, Division of Business Services
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Tennessee LLP
The Basics of a Tennessee LLP
What is a limited liability partnership?
Start with an ordinary general partnership, file a registration with the state to layer on a liability shield, and what you have is a limited liability partnership. It is still a partnership at its core — owned by partners, run under a partnership agreement, and taxed as a partnership — but the registration means a partner is generally not personally liable for the firm's debts or for the other partners' wrongful acts simply because they are a partner.
What law governs Tennessee LLPs?
Tennessee LLPs are governed by the state's Revised Uniform Partnership Act, found in Title 61 of the Tennessee Code. That act sets out how partnerships operate, how a partnership registers as an LLP, and the scope of the liability shield the registration provides.
How is an LLP different from an LLC?
Both offer a liability shield and pass-through taxation. The difference is structural: an LLC is owned by members and can be manager-managed, while an LLP is owned and run by partners under a partnership agreement. Professional practices often prefer the LLP because their licensing and malpractice frameworks are built around the partnership model. The choice usually comes down to profession, governance preferences, and how the owners want to be described.
Who forms Tennessee LLPs?
LLPs are most common among licensed professionals who practice together — accountants, attorneys, architects, engineers, and physicians, among others. But Tennessee does not restrict the LLP form to licensed professions. Any general partnership that wants the liability shield can register as an LLP.
Liability, Ownership, and Management
What does the liability shield actually protect?
The shield protects a partner from personal liability for partnership obligations and for the wrongful acts of the other partners, simply on account of being a partner. So if one partner commits malpractice, the other partners' personal assets are generally protected from the resulting claim, even though the firm's assets are still exposed.
What does the shield not protect?
It does not protect a partner from liability for their own negligence or misconduct, and it does not erase debts a partner personally guarantees. If you cosign a loan for the firm, you are personally responsible for that loan regardless of the shield. Commingling personal and partnership finances can also give a court a reason to look past the entity.
How is an LLP managed?
By default, all partners share in managing the business and have equal say, unless the partnership agreement provides otherwise. That is one of the LLP's defining features compared with a limited partnership: every partner can participate in management while keeping the liability shield. The partnership agreement can concentrate management in a smaller group if the partners prefer.
Can an LLP have just one partner?
No. A partnership by definition requires at least two partners. If a firm drops to a single owner, it is no longer a partnership and cannot continue as an LLP. A sole owner who wants a liability shield would typically use a single-member LLC instead.
Taxes and Money
How is a Tennessee LLP taxed federally?
By default, an LLP is taxed as a partnership. The firm itself pays no federal income tax; instead it files an informational partnership return (Form 1065) and issues each partner a Schedule K-1 showing their share of income, which the partners report on their personal returns. This pass-through treatment avoids the double taxation that a C-corporation faces.
Does Tennessee tax the LLP?
Tennessee does not impose a broad personal income tax on wages and ordinary business income. However, LLPs may be subject to the state's franchise and excise tax, administered by the Tennessee Department of Revenue, depending on the firm's activities and structure. Franchise and excise tax is separate from the Secretary of State registration, and you should confirm your firm's obligations with a CPA.
Do the partners pay self-employment tax?
Generally, partners who are active in the business pay self-employment tax on their distributive shares of the firm's ordinary income, because they are treated as self-employed rather than as employees. The exact treatment depends on each partner's role and the firm's structure, which is another reason to work with an accountant.
Does the LLP need its own bank account?
Yes, in practice. Keeping the firm's money separate from the partners' personal money is essential to preserving the liability shield and to clean bookkeeping. Banks will want the filed LLP registration, the EIN, the partnership agreement, and ID for the authorized signers to open the account.
Compliance and Ongoing Requirements
Does a Tennessee LLP have to file an annual renewal?
Yes. Tennessee LLPs must keep their registration current, generally renewing each year by the April 1 deadline with the Division of Business Services. The renewal maintains the LLP's registered status and updates the state's record. Letting it lapse puts the registration and the liability shield at risk.
Does an LLP need a registered agent?
Yes. Every registered LLP must name and continuously maintain a registered agent with a physical Tennessee street address, available during business hours to receive legal process. A qualifying partner can serve, or the firm can use a commercial registered agent service.
Is a written partnership agreement required?
Tennessee does not require you to file a partnership agreement, and you never file it with the state. But you should have one in writing. Without it, the state's default partnership rules govern everything — including an equal profit split regardless of contributions — and those defaults rarely match what the partners intend.
What if the partners want to close the firm?
To dissolve, the partners wind up the business — settling debts, distributing remaining assets, and closing accounts — and file to cancel the LLP's registration with the Secretary of State. Handling the wind-up properly protects the partners from lingering obligations and cleanly ends the firm's compliance duties.
Frequently asked questions
Can a foreign (out-of-state) LLP do business in Tennessee?
Yes, but it generally must register as a foreign LLP with the Tennessee Secretary of State and appoint a Tennessee registered agent before transacting business in the state. The firm keeps its home-state formation and simply adds Tennessee authority. Isolated activities usually do not trigger the requirement, but establishing a real presence in Tennessee does.
Do I need an EIN for my Tennessee LLP?
Yes. Because an LLP is taxed as a partnership, it must file a partnership return and use an Employer Identification Number rather than any individual's Social Security number. The EIN is free from the IRS, is required to open a business bank account and hire employees, and can be obtained online in about ten minutes.
How many partners can a Tennessee LLP have?
A Tennessee LLP needs at least two partners and has no upper limit. Because Tennessee assesses the LLP registration and renewal fees per partner within a statutory minimum and maximum, the number of partners affects what the firm pays, but it does not cap the firm's size.
Can I convert my existing general partnership into an LLP?
Yes. Registering as an LLP is essentially the act of taking an existing general partnership and adding the liability shield by filing with the Secretary of State. Many partnerships operate informally at first and register as an LLP once they want protection from each other's liabilities.
What is the difference between an LLP and an LP?
A limited partnership (LP) has two classes of owners: general partners who manage and carry full liability, and limited partners who invest but stay out of management to limit their liability. An LLP has a single class of partners who can all participate in management while keeping the liability shield. If you want all owners active in the business, the LLP fits; if you want passive investors alongside active managers, the LP does.
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Form Your Tennessee LLP ($199.00/yr All-In)