1. What Is Tennessee “LLC Franchise Tax”?
In Tennessee, what founders call “LLC franchise tax” is usually part of a combined
system called
Franchise & Excise Tax.
For most Tennessee LLCs, the recurring annual filing is not an “annual report” with the
Secretary of State—
it’s a tax return filed with the
Tennessee Department of Revenue.
The franchise tax is generally based on your company’s net
worth,
and the excise tax is generally based on your company’s net
earnings.
Even if you have a small business or low activity, you still need to understand filing
rules—especially
because some entities owe a minimum franchise tax if they remain registered.
2. Who Must File Tennessee Franchise & Excise Tax
Tennessee generally requires LLCs (and other entity types) to register for and pay Franchise & Excise Tax if they are chartered, qualified, registered in Tennessee, or doing business in Tennessee. Exemptions exist, but you should confirm eligibility before assuming you’re exempt.
Typical entities that file
- Limited Liability Companies (LLCs) registered or doing business in Tennessee
- Corporations (C-Corps and S-Corps)
- Limited partnerships and certain other business trusts
- Multi-member structures operating in Tennessee (subject to rules/exemptions)
3. Franchise Tax: How It’s Calculated
Tennessee’s franchise tax is generally based on your business net worth. Net worth is commonly understood as total assets minus total liabilities (as derived from your books and records).
Franchise tax rate + minimum
- Rate: typically 0.25% (25 cents per $100) of the franchise tax base
- Minimum: commonly a $100 minimum franchise tax for registered entities
- Important: a company may still owe the minimum franchise tax even if it is inactive but remains registered
If you only remember one thing: Tennessee franchise tax is typically net worth-based with a $100 minimum for many registered entities.
4. Excise Tax: What It Is + How It Works
Tennessee’s excise tax is generally based on your company’s net earnings for the tax year. This is different from franchise tax (net worth) and is closer to what people think of as “income-based tax.”
Key excise tax basics
- Rate: commonly 6.5% on net earnings for applicable taxpayers
- Base: generally tied to federal taxable income with Tennessee adjustments (excise tax overview)
- Owner misconception: “LLC = no excise tax” is not always true in Tennessee
What can change what you owe?
- Your taxable year (calendar vs fiscal)
- Apportionment (multi-state operations)
- Credits and adjustments
- Whether you qualify for an exemption (ex: certain entity categories / FONCE, etc.)
STAY COMPLIANT
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Get Compliance Help5. Due Dates + Extensions + Estimated Payments
Tennessee Franchise & Excise Tax returns are generally due on the 15th day of the fourth month following the close of your tax year. For many calendar-year businesses (Jan 1–Dec 31), the common due date is April 15.
Common calendar-year example
- Tax year ends: December 31
- Return due: April 15 (15th day of the 4th month after year-end)
- Pay by due date: to avoid penalties and interest
Extensions + estimated payments (quick overview)
- Extension: Tennessee offers a filing extension (commonly up to 7 months)
- Estimated payments: may be required quarterly if your combined liability meets certain thresholds
- Best practice: extension = more time to file, not always more time to pay
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Most problems happen when founders forget one of these: (1) LLC stays registered but becomes “inactive,” (2) franchise minimum still applies, (3) missed due date triggers penalties. Fix it by setting a recurring annual reminder and keeping clean books.
6. How to File on TNTAP (Step-by-Step)
Step 1: Confirm you’re registered and have access
Ensure your business is registered for Tennessee taxes and you can access the state’s online portal (TNTAP). If you’re newly registered, you may need to complete initial registration steps before filing.
Step 2: Gather your core details
Prepare your LLC legal name, FEIN/EIN, Tennessee account info (if applicable), your tax year dates, and your financial statements/books for net worth and net earnings.
Step 3: Prepare and submit the Franchise & Excise return
Many businesses file the Franchise & Excise return electronically. The return is commonly referred to as FAE 170 in instructions and guidance.
Step 4: Pay any balance due
If your return results in a tax payment, pay it by the due date. Save proof: confirmation number, payment receipt, and a copy of the submitted return.
Step 5: Store everything in a compliance folder
Keep your annual filings together. When a bank/payment processor asks for verification, you can quickly provide proof of good standing and tax compliance.
7. Exemptions + Common Compliance Mistakes
Tennessee provides specific exemptions for certain entity types and scenarios. If you think you qualify, confirm the exemption and submit any required exemption application/claim through the state process.
Common mistakes founders make
- Assuming “LLC = exempt”: many Tennessee LLCs are subject unless a specific exemption applies
- Ignoring minimum franchise tax: staying registered can trigger a minimum tax even if inactive
- Missing the annual due date: late filing/payment can trigger penalties and interest
- Not keeping proof: no receipt/confirmation can create issues later with banks and vendors
8. Penalties, Interest & Good Standing
Missing Tennessee Franchise & Excise filing or payment deadlines can lead to penalties and interest (penalty guidance). Beyond the money, it can affect your good standing and create compliance flags.
- Franchise tax: net worth-based, often with a minimum tax for registered entities
- Excise tax: net earnings-based (where applicable)
- Penalties: late filing and late payment penalties can apply
- Good standing impact: compliance affects banking, payments, and vendor onboarding
| Compliance Item | Typical Timing | Notes |
|---|---|---|
| Franchise & Excise Tax Return | 15th day of 4th month after year-end | Commonly April 15 for calendar-year filers |
| Estimated Payments (if required) | Quarterly | Applies when thresholds are met |
| Minimum Franchise Tax | Annually | May apply even when inactive if still registered |
| Exemption Claim (if eligible) | As needed | Confirm criteria before relying on it |
9. Federal Compliance That Impacts Tennessee LLCs
1. Federal tax return (IRS)
Your Tennessee LLC’s federal tax filing depends on classification (IRS LLC tax rules): single-member LLCs often report on the owner’s return, partnerships file an informational return, and S-corp elections follow S-corp filing rules. These federal schedules often influence your overall compliance calendar.
2. EIN (Employer Identification Number)
Many LLCs use an EIN to open bank accounts, hire employees, and work with payment processors. Keeping EIN confirmations and tax documentation organized helps with compliance proof.
3. BOI updates (Corporate Transparency)
If your ownership or key information changes, you may need to update beneficial ownership information (where applicable). This is separate from Tennessee taxes but often comes up during annual reviews.
4. Other recurring federal obligations
- Payroll tax filings if the LLC has employees
- Information returns (such as 1099 forms) when required
- Clean bookkeeping for audits, banking, and compliance reviews
10. Conclusion
The biggest takeaway: in Tennessee, what founders call “LLC franchise tax” is usually part of Franchise & Excise Tax. Many LLCs registered or doing business in Tennessee must file annually and pay applicable taxes—unless a valid exemption applies.
With FormLLC, you can stay compliant without confusion—our team helps you follow the right schedule, file correctly, and keep your business in good standing.
11. Frequently Asked Questions
In many cases, yes. Tennessee generally requires LLCs registered or doing business in Tennessee to file Franchise & Excise Tax unless a specific exemption applies.
The franchise tax is commonly calculated at 0.25% of the applicable franchise tax base, with a $100 minimum for many registered entities.
Tennessee excise tax is generally based on net earnings and is commonly imposed at 6.5% for applicable taxpayers, with specific adjustments and possible deductions depending on the year and rules.
The return is generally due on the 15th day of the fourth month after your tax year ends. For calendar-year businesses, a common due date is April 15.
Often, yes—especially if the LLC remains registered with the Tennessee Secretary of State. Some entities may still owe the minimum franchise tax even when inactive. Confirm your status and any exemptions before skipping a filing.
Yes. Tennessee provides multiple exemptions for certain entity types and situations. If you qualify, you usually need to apply/claim the exemption properly (often through TNTAP) to keep your records clean.
Many businesses file Tennessee Franchise & Excise Tax electronically through the state’s tax portal (TNTAP). Save your submission and payment confirmations for compliance proof.
