Kentucky vs Tennessee LLC: fees, taxes, and which to pick
Data last updated: Apr 21, 2026Kentucky charges $40 to form an LLC; Tennessee charges $300. Day-one sticker price is only part of the story, since most of the real cost comes from the annual obligations that stack up each year you keep the LLC open.
Over a rolling three-year window, Kentucky runs about $890 less in total state fees than Tennessee. Whether that gap matters depends on whether you actually operate in one of these states or are weighing a non-resident filing.
Both states impose an entity-level annual tax on every LLC (Kentucky: $175 minimum; Tennessee: $100 minimum). The difference is the floor, not whether the tax exists.
For most small operators the choice is not really between these two states at all. It is between forming where the business actually operates and trying to route through a non-resident filing. The data below shows what each option actually costs.
Key differences at a glance
- Kentucky costs $260 less to form ($40 vs $300).
- Kentucky is $210 per year cheaper to maintain ($290 vs $500).
- Tennessee has no state individual income tax; pass-through LLC income flows to members without a state layer. The other state does tax at the member level.
Where each state fits
For most filers, forming in the state you actually operate from is the right call. The side-by-side below shows where the two states meaningfully diverge.
What each state offers that the other does not
Only Tennessee
- No state income tax
Both states
- Online filing
- No publication requirement
- Operating agreement not statutorily required
Three-year cost, side by side
Rough estimate of the state-facing cost to form and keep an LLC through three years. Both totals include a $100 per year registered-agent estimate.
Running total includes the one-time filing fee and annual ongoing costs (report fee or franchise tax plus a $100/year registered agent estimate).
What it costs under your specific situation
The table below runs the same LLC through four common scenarios. "Non-resident" rows assume a typical home-state foreign LLC registration adds about $200 per year of stacked cost; the real number depends on which state you live in and ranges from $50 to over $800 depending on jurisdiction.
| Scenario | Year 1 | Each year after | 3-year total |
|---|---|---|---|
| You live in Kentucky, business operates there No foreign LLC registration needed. You pay Kentucky fees only. | $330 | $290 | $910 |
| You live in Tennessee, business operates there No foreign LLC registration needed. You pay Tennessee fees only. | $800 | $500 | $1,800 |
| Non-resident forming in Kentucky with operations elsewhere You pay Kentucky's fees plus a typical home-state foreign LLC registration of about $200 per year. | $530 | $490 | $1,510 |
| Non-resident forming in Tennessee with operations elsewhere You pay Tennessee's fees plus a typical home-state foreign LLC registration of about $200 per year. | $1,000 | $700 | $2,400 |
Kentucky vs Tennessee: full comparison
| Dimension | Kentucky | Tennessee |
|---|---|---|
| Online filing Can you file the formation document online? | Yes | Yes |
| Online approval time Standard, non-expedited | 1 business day | 1 business day |
| Expedited option Neither state offers paid expedite | Not offered | Not offered |
| Annual report Required in addition to tax | Required, $15 | Required, $300 |
| State-imposed annual tax Franchise, privilege, or LLC tax minimum | $175 minimum | $100 minimum |
| State income tax On pass-through LLC income at member level | Yes | No |
| Publication requirement Newspaper publication after formation | No | No |
| Operating agreement Required by state statute | Recommended, not required | Recommended, not required |
| Foreign LLC fee Cost to register as a foreign LLC in this state | $90 | $300 |
| State sales tax General statewide rate | 6.0% | 7.0% |
Taxes in Kentucky and Tennessee
How each state handles entity-level tax on LLCs. Pass-through classification means member-level income tax also applies at each member's residence state.
Kentucky tax
$175 minimum annual tax (gross-receipts-or-gross-profits basis). State income tax applies to member-level pass-through income. Corporate rate 5.0%.
Tennessee tax
$100 minimum annual tax (net-worth basis). No state income tax. Corporate rate 6.5%.
Ongoing compliance
The recurring filings each state requires after formation.
Kentucky
Annual report $15, due 06/30 each year. Registered agent required in Kentucky.
Tennessee
Annual report $300, due on your anniversary month. Registered agent required in Tennessee.
Formation process, side by side
What actually happens from the moment you start filing to the moment you're in good standing. Use this as a checklist.
Kentucky
- Check business-name availability on the Kentucky entity search.
- Appoint a registered agent with a physical Kentucky street address.
- File Articles of Organization for a Profit Limited Liability Company (Form KLC) for $40.
- Wait for approval. Online typically 1 business days. No paid expedite offered.
- Adopt an operating agreement (recommended, not required by Kentucky statute).
- Apply for a federal EIN (free from the IRS).
- Open a business bank account to separate personal and business finances.
- File your first annual report and pay $15 when it comes due.
Tennessee
- Check business-name availability on the Tennessee entity search.
- Appoint a registered agent with a physical Tennessee street address.
- File Articles of Organization – Limited Liability Company (Form SS-4270) for $300.
- Wait for approval. Online typically 1 business days. No paid expedite offered.
- Adopt an operating agreement (recommended, not required by Tennessee statute).
- Apply for a federal EIN (free from the IRS).
- Open a business bank account to separate personal and business finances.
- File your first annual report and pay $300 when it comes due.
Before you pick either state
A few things that apply no matter which state you choose. These trip up enough first-time filers that they're worth stating explicitly.
Registered agent is non-negotiable. Both Kentucky and Tennessee (and every other US state) require every LLC to designate a registered agent with a physical street address in the state of formation. You can serve as your own agent if you live in the state; otherwise a commercial agent runs $50 to $125 per year. Using your own home address makes it part of the public record.
Forming elsewhere does not escape your home state's tax. If you live and operate a business from your home state, forming the LLC in Kentucky or Tennessee does not avoid your home state's income tax. The moment you transact business at home, your home state requires a foreign LLC registration, and state tax liability follows your residence regardless of where the entity sits on paper.
EIN applications are free. The IRS issues Employer Identification Numbers directly at no cost. Any service charging you to "get your EIN" is reselling a free form submission. Single-member LLCs with no employees technically don't need one for federal tax, but nearly every bank requires an EIN to open a business account.
Operating agreement matters more than the state you pick. A well-drafted operating agreement governs member ownership, management, profit splits, buy-sell terms, and dissolution. Without one, your LLC runs on the state's default rules, which are rarely what you want. California, Maine, Missouri, and New York require a written one by statute; every other state treats it as strongly recommended.
Agency contacts
Kentucky Secretary of State, Business Filings
- Website
- www.sos.ky.gov/bus
- Phone
- (502) 564-3490
- Business Filings, Kentucky Office of the Secretary of State, P.O. Box 718, Frankfort, KY 40602-0718
- Office
- Room 154, Capitol Building, 700 Capital Avenue, Frankfort, KY 40601
- Hours
- 8:00 AM to 4:30 PM Eastern, Monday to Friday
Tennessee Secretary of State, Business Services Division
- Website
- sos.tn.gov/business-services
- Phone
- (615) 741-2286
- TNSOS.CORPINFO@tn.gov
- 312 Rosa L. Parks Avenue, Snodgrass Tower 6th Floor, Nashville, TN 37243
- Office
- 312 Rosa L. Parks Avenue, Snodgrass Tower, Nashville, TN 37243
- Hours
- 8:00 AM to 4:30 PM Central, Monday to Friday
Kentucky Department of Revenue
- Website
- revenue.ky.gov
- Phone
- (502) 564-4581
- 501 High Street, Frankfort, KY 40601
- Hours
- 8:00 AM to 5:00 PM Eastern, Monday to Friday
Tennessee Department of Revenue
- Website
- www.tn.gov/revenue.html
- Phone
- (615) 253-0600
- 500 Deaderick Street, Nashville, TN 37242
- Hours
- 8:00 AM to 4:30 PM Central, Monday to Friday
Frequently Asked Questions
-
Is it cheaper to form an LLC in Kentucky or Tennessee?
Kentucky is cheaper at formation ($40) than Tennessee ($300). Ongoing costs are also different: $290 vs $500 per year. Total over three years: $910 vs $1,800.
-
Can I form an LLC in Kentucky if I live in Tennessee?
Yes, but your Tennessee business will almost certainly need to register as a foreign LLC in Tennessee too, which means paying Tennessee's foreign registration fee and any ongoing Tennessee obligations on top of the Kentucky ones. The "form elsewhere to save" math usually doesn't work for operating businesses; it only works when you have no physical operations tied to any specific state.
-
How long does it take to form an LLC in Kentucky vs Tennessee?
Kentucky online: 1 business day; Tennessee online: 1 business day. Kentucky does not offer paid expedite. Tennessee does not offer paid expedite.
-
Which state has lower taxes for an LLC, Kentucky or Tennessee?
Kentucky: state income tax applies to member-level pass-through income, plus a $175 minimum entity-level tax. Tennessee: no state income tax, plus a $100 minimum entity-level tax.
-
Do both states require a registered agent?
Yes. Every US state (and DC) requires every LLC to maintain a registered agent with a physical street address in the state. Kentucky and Tennessee both have this requirement. You can serve as your own agent if you live in the state; most out-of-state filers use a commercial agent for $50 to $125 per year.
-
Which state should I pick if I run an online business from home?
Form in the state you actually live in. Your home state's Department of Revenue treats your residence as nexus regardless of where the LLC is filed, which means you owe state income tax there anyway. Forming in Kentucky or Tennessee to escape your home state's tax doesn't work; it adds paperwork. The non-resident filings make sense when you genuinely operate nowhere in particular: international founders, purely passive holding entities, or real-estate LLCs owning property in other states.
Full state guides
More Kentucky and Tennessee comparisons
More Kentucky vs ...
Sources
- Filing fee: www.sos.ky.gov/bus/business-filings/Pages/Fees.aspx · verified April 21, 2026
Kentucky Secretary of State Business Filings Fees page: Articles of Organization (domestic LLC) filing fee is $40. Same fee for online filing through FastTrack and mail filings. Payable by cash, check to Kentucky State Treasurer, prepaid account, or debit/credit card. - Expedited filing: www.sos.ky.gov/bus/business-filings/Pages/Fees.aspx · verified April 21, 2026
Kentucky Secretary of State does not offer a separate paid expedited service for Articles of Organization. Online filings through FastTrack typically process within 1 business day (next-business-day for after-hours submissions), which serves as the de facto fastest available pathway. Recorded as offered: false. - Annual report fee: www.sos.ky.gov/bus/business-filings/Pages/Annual-Reports.aspx · verified April 21, 2026
Kentucky Secretary of State Annual Reports page: $15 filing fee, due between January 1 and June 30 each year. Failure to file by June 30 results in administrative dissolution. KRS 14A.6-010 establishes the filing requirement. - Franchise tax: revenue.ky.gov/Business/Corporation-Income-and-Limited-Liability-Entit… · verified April 21, 2026
Kentucky Department of Revenue: Limited Liability Entity Tax (LLET) imposed on all entities afforded limited-liability protection under state law (KRS 141.0401), including LLCs, corporations, S corporations, and limited partnerships. LLET is the lesser of 0.095% of Kentucky gross receipts or 0.75% of Kentucky gross profits, with a $175 minimum. Entities with gross receipts and gross profits both at or below $3M pay only the $175 minimum. Classified here as a franchise-style tax with a flat $175 annual minimum. - Foreign LLC registration fee: web.sos.ky.gov/forms/corp/FBE-Certificate%20of%20Authorization_Foreign… · verified April 21, 2026
Kentucky Form FBE Certificate of Authority for Foreign Business Entity: $90 filing fee. Same fee for online (FastTrack) and mail filings. - Operating agreement requirement: law.justia.com/codes/kentucky/chapter-275/section-275-003/ · verified April 21, 2026
Kentucky Revised Statutes Chapter 275 (Limited Liability Companies) defines an operating agreement as any agreement among members that may be written or oral. No statute requires LLCs to adopt a written operating agreement. Recorded as not required. - Publication requirement: law.justia.com/codes/kentucky/chapter-275/ · verified April 21, 2026
Kentucky does not require newspaper publication of LLC formation. KRS Chapter 275 contains no publication mandate. - Sales tax rate: revenue.ky.gov/Business/Sales-Use-Tax/pages/default.aspx · verified April 21, 2026
Kentucky Department of Revenue: statewide sales and use tax rate is 6% with no local sales tax jurisdictions. The 6% rate applies uniformly across the state. Local occupational license taxes (net profits or payroll) apply separately at the city and county level but are not sales taxes. - Corporate income tax rate: revenue.ky.gov/Business/Corporation-Income-and-Limited-Liability-Entit… · verified April 21, 2026
Kentucky corporate income tax is a flat 5% (KRS 141.040) for tax years beginning on or after January 1, 2018. Applies to C corporations and to LLCs electing corporate tax treatment. Separate from LLET, which applies at the entity level to all limited-liability entities. - Business name search: web.sos.ky.gov/ftsearch/ · verified April 21, 2026
Kentucky Secretary of State Business Entity Search (FastTrack Search). Use before filing Articles of Organization to confirm name availability. - Online filing portal: onestop.ky.gov/Pages/default.aspx · verified April 21, 2026
Kentucky Business One Stop portal, the official state gateway for online LLC formation via the FastTrack filing system. Online filings typically process within 1 business day. - Filing fee: law.justia.com/codes/tennessee/title-48/limited-liability-companies/ch… · verified April 21, 2026
Tenn. Code Ann. §48-249-1007(a)(1): Initial filing fee = $50 × number of members, minimum $300, maximum $3,000. The default reported value is the $300 statutory minimum (applies to LLCs with 1-6 members). Justia mirror used because sos.tn.gov PDFs and some tn.gov pages returned 403/timeouts; language matches the SOS Form SS-4270 fee instructions. - Filing fee: sos-prod.tnsosgovfiles.com/s3fs-public/document/SS-4270%20LLC_0.pdf · verified April 21, 2026
Tennessee SOS Form SS-4270 (Rev. 01/25) Articles of Organization instructions confirm $50/member with $300 minimum, $3,000 maximum. If the articles prohibit the LLC from doing business in Tennessee, the flat fee is $300 regardless of member count. - Expedited filing: sos.tn.gov/businesses/faqs · verified April 21, 2026
Tennessee Secretary of State does not offer paid expedited processing for LLC Articles of Organization. Online filings through TNBear/TNCaB typically complete within 1 business day, which serves as the de facto expedited pathway. Recorded as 'offered: false'. - Annual report fee: law.justia.com/codes/tennessee/title-48/limited-liability-companies/ch… · verified April 21, 2026
Tenn. Code Ann. §48-249-1007(a)(2): Annual filing fee = $50 × number of members as of the annual report date, minimum $300, maximum $3,000. Due the first day of the fourth month after fiscal year close. Reported value is the $300 statutory minimum. - Franchise tax: www.tn.gov/revenue/taxes/franchise---excise-tax.html · verified April 21, 2026
Tennessee Department of Revenue Franchise & Excise Tax page. LLCs are subject to both taxes. Franchise tax: 0.25% of Tennessee apportioned net worth with $100 minimum (property-measure alternative repealed by Public Chapter 950, effective tax years ending on/after Jan. 1, 2024). Excise tax: 6.5% of Tennessee-sourced net earnings. Tenn. Code Ann. §67-4-2007 (excise), §67-4-2105 (franchise). - Operating agreement requirement: law.justia.com/codes/tennessee/title-48/limited-liability-companies/ch… · verified April 21, 2026
Tenn. Code Ann. §48-249-203: An operating agreement need not be in writing (except as articles or a prior operating agreement provision require). Tennessee law permits but does not require adoption of a written operating agreement. - Foreign LLC registration fee: sos-prod.tnsosgovfiles.com/s3fs-public/document/SS-4233%20COA%20LLC.pd… · verified April 21, 2026
Tennessee SOS Form SS-4233 Application for Certificate of Authority (Foreign LLC). Fee = $50 × number of members, minimum $300, maximum $3,000 (same statutory formula as domestic filing fee). Recorded $300 minimum. - Publication requirement: sos.tn.gov/businesses/faqs · verified April 21, 2026
Tennessee does not require newspaper publication of LLC formation. Confirmed by absence of such requirement in Tenn. Code Ann. §48-249-202 (Articles of organization) and SOS FAQ. - Business name search: tnbear.tn.gov/Ecommerce/NameAvailability.aspx · verified April 21, 2026
Tennessee Business Information Search (TNBear). Use before filing Articles of Organization to confirm name availability. - Sales tax rate: www.tn.gov/revenue/taxes/sales-and-use-tax.html · verified April 21, 2026
Tennessee Department of Revenue: statewide sales and use tax rate is 7% (general rate); 4% state rate on food and food ingredients. Local option adds up to 2.75%, for combined rates up to 9.75%. - Corporate income tax rate: www.tn.gov/revenue/taxes/franchise---excise-tax.html · verified April 21, 2026
Tennessee excise tax rate is 6.5% of Tennessee-sourced net earnings. Reported here as the state's functional corporate income tax rate; applies to C-corps, LLCs taxed as corporations, and (for entity-level excise only) to default-classified LLCs.