If you are seeking advice about starting a new business, you may hear “You need to form an LLC.” And it is true that limited liability companies (LLCs) have become the almost default entity for entrepreneurs. There are several reasons why you may want to create an LLC for your new business, but it is important to understand the pros and cons of LLCs, how high a priority it should be and whether you even need to create an LLC at all. You may be just fine without one or the benefits may not justify the costs.

One thing is true, it is very easy to form an LLC in Tennessee. You can do it yourself online through the Tennessee Secretary of State’s website. Start now, and in a matter of minutes you can be in business. While companies like LegalZoom have promoted online incorporation services, you can cut out middle person and go directly to the above site in Tennessee.

The Tennessee Department of Economic and Community Development has also prepared an excellent Tennessee Smart Start Guide that provides helpful information, especially for first-time business owners. 

BUT, the decision as to what type of business entity to create is an important one. For most, it’s not overly complicated but the wrong choice or a mistake preparing the articles of organization can cause problems or be expensive down the road. There are lots of good free resources available online to educate yourself about LLCs like Nolo and the Small Business Administration. If you are not sure about the process, we strongly encourage to consult with an attorney before starting.

For example, we recently helped a client that had formed a single member LLC himself, prepared his own operating agreement and then entered into a separate contract to add another member. He ended up with multiple inconsistencies between the articles of organization, operating agreement and the side agreement that could have caused major problems. The owners were still on the same page, but the documents didn’t reflect their deal. Fortunately, their business began to grow quickly, and they realized they didn’t completely understand the legal issues involved.

Hopefully, the formation and registration of your LLC is just the beginning. This step can be easy. But as a small business owner you want to make sure you get it right from the start. Please feel free to contact us if we can help in any way.