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Forming an LLC for Your Tennessee Hair Salon: The Complete Filing Guide

The parent guide gives you the short version: Tennessee prices an LLC by the head, $50 per member with a $300 minimum, and charges the same structure again on every annual report. This page is the long version. It walks through choosing between an LLC, a sole proprietorship and a corporation in Tennessee terms, the assumed name split between the Secretary of State and the county clerk, the three Tennessee tax layers that follow formation, and the handful of dates that keep a Tennessee salon LLC in good standing year after year.

Researched from Tennessee state sources. Our guides are free. We may earn a commission when you use a partner service, at no additional cost to you.

LLC, sole proprietorship, or corporation for a Tennessee salon

The parent guide gives the short version of this choice. Here is the long one. A sole proprietorship is what you are by default if you open a salon in your own name and file nothing with the Secretary of State: there is no formation step, and legally there is no business separate from you, which means the salon's debts, lease obligations, and legal claims reach your personal assets. A Tennessee sole proprietor's trade name runs through the county business tax license rather than a state assumed name filing, covered below, and neither filing creates a shield at all. One genuine advantage sits on this side of the ledger: sole proprietors and general partnerships do not file the franchise and excise tax return described in the taxes section, which is a real, if modest, point in favor of the simpler form for a solo operator.

A limited liability company creates a separate legal entity between you and the salon. Formed properly and kept separate, it holds the business's debts and claims at the business level instead of following you home. Two limits deserve plain words. The shield covers the business's obligations; it does not protect you from claims about your own work behind the chair, and it weakens if you run the salon's money through your personal accounts, which is why the bank account section below matters. Tennessee also prices this structure differently from almost every other state: the filing fee and the annual report both scale with your member count, so the member list on your formation form is a pricing decision, not just paperwork.

A corporation is the third route: a separate entity formed with the Secretary of State, owned through stock, and run with more formal machinery, directors, officers, and records, than most single salon operations need. Its Tennessee charter filing fee is a flat $100, which undercuts the LLC minimum on day one, but a corporation carries the same franchise and excise tax filing as an LLC and governance formalities the LLC skips. It earns its keep for multi location groups and outside investors. For a first salon, the LLC is the structure Tennessee owners usually land on, and it is the one the rest of this page walks through. Whichever you choose, remember that the entity is separate from licensing: your Board shop license, your designated manager filing, and your stylists' cosmetologist licenses are still required, exactly as the Tennessee hub lays out.

Filing the Articles of Organization: Form SS-4270

You form a Tennessee LLC by filing Articles of Organization, Form SS-4270, with the Tennessee Secretary of State. The filing fee is $50 for each member in existence on the filing date, with a minimum of $300 and a maximum of $3,000. Work through the pieces in order:

1. Choose the legal name. It must carry an LLC designator and be distinguishable from names already on file with the state. If the name you want is not ready to file yet, a name reservation on Form SS-9425 holds it for $20.
2. Set the structure the form asks for. The Articles state your fiscal year ending month, which fixes your annual report deadline for the life of the company, whether the LLC is member managed or manager managed, the number of members at filing, and the registered agent and registered office where official papers for the company are received. Choose the fiscal year deliberately: a December year end makes the annual report due April 1.
3. File Form SS-4270 and pay the per member fee. You file online through the Secretary of State's Tennessee Charity and Business filing system, or by mail or in person in Nashville. A one member LLC pays the $300 minimum. A four member LLC pays the same $300, because four members at $50 each is $200 and the minimum controls. Only at seven members does the per member math pass the floor. Filing creates the entity; it does not license the salon, and it does not finish your tax setup.
4. Keep the filing confirmation. Your bank, your landlord, and your payment processor will all ask for proof the LLC exists. Save the stamped confirmation with your lease and licenses.

One Tennessee point the formation guides miss: forming the LLC is not the end of the Secretary of State relationship. Tennessee LLCs file an annual report every year, charged on the same per member structure with the same $300 minimum, due on or before the first day of the fourth month after your fiscal year closes. Budget the $300 as a fixed annual cost of the Tennessee LLC form, not a one time fee, and read the calendar section below before you choose your fiscal year.

The assumed name: Secretary of State filing or county license

If your salon operates under a name different from your LLC's legal name, Tennessee calls that an assumed name, and where you register it depends on your structure, the detail out of state guides routinely get wrong. Registered entities, meaning corporations, LLCs, and limited partnerships, file the assumed name with the Secretary of State on Form SS-4402 for $20. The registration runs five years, renews on Form SS-4481 for another $20, and a change is filed on Form SS-4403 for $20. Sole proprietors and general partnerships do not file an assumed name with the Secretary of State at all: the trade name a sole proprietor works under runs through the county business tax license instead.

An assumed name registration is a public notice filing, not a trademark and not a license. It does not stop anyone else from using a similar name, and it does not create your entity. It is practical paperwork: the name on your shop license application, your business tax license, your lease, and your signage should tell one consistent story, because clients, inspectors, lenders, and your bank all read them side by side, and a mismatch is a small thing that stalls bigger things, including the loans on our Tennessee business loans page. If you later change the name on the Board's shop license only, the Board charges a $10 name change fee under its fee rule. If your storefront name is exactly your LLC's legal name, you may not need an assumed name filing at all.

Your EIN from the IRS

Your EIN is the business's federal tax ID, issued by the IRS. You need one to open the business bank account, to run payroll once you hire, and to register the employer accounts described below. It is free, and it issues online in one session. Apply directly through the IRS and ignore any website that offers to obtain one for a fee; those sites charge for a form the government gives away. A single member LLC can technically operate on the owner's Social Security number for some purposes, but the bank account, the payment processor, and the Department of Labor employer registration all run more cleanly on an EIN, and handing your personal number to every vendor is a habit worth avoiding from day one. Apply early, right after the LLC is formed, so the EIN never becomes the bottleneck when you sign a lease or set up payroll.

Tennessee tax accounts: business tax, sales tax, and franchise and excise tax

Tennessee has three state tax layers for a salon, and they are easy to confuse because two of them have similar names. The first is the business tax, a privilege tax on gross receipts administered by the Department of Revenue. Service businesses file under Classification 3, at a state rate of 0.1875 percent of gross receipts, with a $22 minimum tax per location. Cities may levy the business tax as well at their own adopted rates, so many Tennessee salons file a state return and a city return on the same receipts. You register through TNTAP, the Department's online system, and the license itself is issued locally: a $15 business license registration fee to the county clerk, and to the municipal clerk as well if your city levies the tax, for each new business. A location with gross receipts over $3,000 and under $100,000 holds a minimal activity license; at $100,000 or more you need a standard business license. The Department is blunt about the order of operations: a business may not operate until the required license is obtained and posted. The return itself is due annually on the 15th day of the fourth month after your fiscal year ends.

The second layer is sales tax, and for hair services it mostly does not apply. Tennessee taxes retail sales of tangible personal property and a short list of services the statute names, and beauty services are not on that list, so you do not collect sales tax on service receipts. Product is different: shampoo, retail cosmetics, and anything else you sell off the shelf is taxable at the 7 percent state rate plus your local option rate, which runs as high as 2.75 percent, for a combined rate as high as 9.75 percent. You register for sales tax through the same TNTAP account, and you itemize services and products separately on every ticket so tax is collected only on the products.

The third layer reaches entities only. An LLC or corporation files an annual franchise and excise tax return, Form FAE 170. The franchise tax runs 0.25 percent of Tennessee net worth with a $100 minimum, and the excise tax runs 6.5 percent of Tennessee taxable income. Sole proprietors and general partnerships do not file that return. Around those three layers, the employer accounts are lighter than in most states: Tennessee has no state income tax on wages, so there is no state withholding to set up, and your first hire registers you with the Department of Labor and Workforce Development for unemployment insurance, with wage reports filed quarterly after that and a new employer premium rate of 2.7 percent of taxable wages for most industries. The workers compensation side of hiring, including the five employee coverage line, is covered in our Tennessee salon insurance guide.

The business bank account, and keeping the separation real

Open a business bank account in the LLC's name as soon as the EIN arrives, using your formation confirmation, your EIN letter, and your assumed name registration if you filed one. Then run everything through it: card settlements, booth rent, payroll, product purchases, rent. The liability separation you paid the per member fee for is only as strong as the separation you actually keep. Money that flows back and forth between the salon and your personal account blurs the line the LLC exists to draw, and it makes your bookkeeping, your business tax and sales tax returns, and any future loan application harder than they need to be, because Tennessee's gross receipts and net worth taxes are both computed from records you keep rather than from anything the state can see on its own. Pair the account with the insurance decisions in our Tennessee salon insurance guide, and your salon's legal and financial structure is genuinely in place rather than filed and forgotten.

Your Tennessee LLC annual duties calendar

• First day of the fourth month after your fiscal year ends, every year: the LLC annual report to the Secretary of State, April 1 for a December year end, charged on the per member structure with the $300 minimum. Missed reports lead to administrative dissolution; reinstatement is Form SS-9410 at $70 on top of the reports and fees owed.
• 15th day of the fourth month after your fiscal year ends: the business tax return under Classification 3, and the franchise and excise return, Form FAE 170, for the LLC.
• Every two years: Board license renewals, the cosmetology shop license at $75 and each cosmetologist license at $60, on the cycles in the parent guide, with the designated manager filing kept current.
• Every five years: assumed name renewal on Form SS-4481 for $20, if your salon trades under a name different from the LLC's legal name.
• On the Department of Revenue's schedule: sales tax returns through TNTAP for retail product sales only; services carry no sales tax.
• Every quarter, once you have employees: unemployment wage reports to the Department of Labor and Workforce Development. Tennessee has no wage income tax, so there is no state withholding return to add to the pile.
• As things change: keep your registered agent and address current with the Secretary of State, and your assumed name filings matched to the name on your storefront, shop license, business tax license, and bank account.

That calendar is the whole recurring burden of a Tennessee salon LLC at the state level, and its shape is the state's own: the annual report and the two Revenue returns all land in the same spring window for a December year end filer. The expensive mistakes are not missed fees. They are the skipped annual report in a year nothing was owed beyond it, discovered at a loan closing or a lease renewal, and the personal card swiped for salon expenses until the entity and the owner are the same pile of money again.

This page is general information researched from official Tennessee and federal sources, not legal, tax, or insurance advice. Requirements, fees and forms change; verify the current rules with the agency or regulator linked above before you file, sign or spend.

Frequently asked questions

How much does it cost to form an LLC in Tennessee?

The Articles of Organization, Form SS-4270, cost $50 for each member in existence on the filing date, with a minimum fee of $300 and a maximum of $3,000, paid to the Tennessee Secretary of State. A single member LLC pays the $300 minimum, and the per member math only passes the floor at seven members.

Does a Tennessee LLC file an annual report, and what does it cost?

Yes. The annual report is due on or before the first day of the fourth month after your fiscal year closes, which is April 1 for a December year end, and the Secretary of State charges it on the same per member structure as formation: a $300 minimum up to a $3,000 maximum, increasing $50 per member for every member over six.

Where do I file a DBA for a salon in Tennessee?

It depends on your structure. A registered entity such as an LLC or corporation files an assumed name with the Secretary of State on Form SS-4402 for $20, and the registration runs five years. A sole proprietor or general partnership does not file an assumed name with the Secretary of State at all; the trade name runs through the county business tax license instead.

What happens if my Tennessee LLC is administratively dissolved?

You reinstate it. Reinstatement is filed on Form SS-9410 and costs $70, on top of the annual reports and fees the LLC owes for the missed years. Until the LLC is reinstated, the entity behind your shop license, lease, and bank account is not in good standing, which is why the annual report belongs on a calendar rather than in a drawer.

Does a Tennessee LLC pay franchise and excise tax?

Yes. An LLC or corporation files an annual franchise and excise tax return, Form FAE 170, with the Department of Revenue. The franchise tax runs 0.25 percent of Tennessee net worth with a $100 minimum, and the excise tax runs 6.5 percent of Tennessee taxable income. Sole proprietors and general partnerships do not file that return.