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Tennessee Single-Member LLC Operating Agreement

Create a Tennessee single-member LLC operating agreement with state-specific guidance on Revised LLC Act defaults, franchise and excise tax, and liability protection.

Introduction

A single-member LLC operating agreement is the internal document where you, as the sole owner of a Tennessee LLC, set the rules for how your business runs, how profits are handled, and what happens if you close the business later. Tennessee does not require it to be in writing, and an oral or implied agreement is legally valid, but a written one is the clearest evidence that you are running a real business, not just using the LLC as a personal wallet. Tennessee also combines a Secretary of State report tied to member count with a separate franchise and excise tax tied to net worth and income, so understanding your ongoing obligations matters from the start.

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Key Things to Know

  1. 1

    Tennessee does not require an operating agreement to be in writing. An oral or implied operating agreement is valid, and a single-member LLC that adopts one is bound by it (Tennessee Code Annotated Section 48-249-203).

  2. 2

    Without an operating agreement provision, Tennessee law allocates distributions among members in equal shares, not based on capital contribution. This becomes relevant the moment you add a second member (T.C.A. Section 48-249-305).

  3. 3

    A charging order is Tennessee's exclusive statutory remedy for a judgment creditor against a member's LLC interest (T.C.A. Section 48-249-509), but no Tennessee case confirms this applies identically to single-member LLCs, and courts can still pierce the LLC on a showing of control, wrongdoing, and causation (Youree v. Recovery House of East Tennessee, LLC, Tenn. 2025).

  4. 4

    Tennessee LLCs generally owe two separate annual costs: a franchise tax of 0.25% of net worth (minimum $100) plus an excise tax of 6.5% of net earnings above a $50,000 deduction, both paid to the Department of Revenue, regardless of whether the LLC is profitable.

  5. 5

    A single-member LLC owned by one individual is usually NOT exempt from Tennessee's franchise and excise tax. The exemption for disregarded entities applies only if the sole member is itself classified as a corporation, which an individual owner never is.

  6. 6

    The duty of loyalty cannot be eliminated (though specific activities can be carved out), the duty of care cannot be unreasonably reduced, and the obligation of good faith and fair dealing cannot be eliminated, only defined by a reasonable standard (T.C.A. Sections 48-249-403, 48-249-205).

  7. 7

    The operating agreement itself is not filed with the state. You form the LLC by filing Articles of Organization (Form SS-4270) with the Tennessee Secretary of State for a fee of $50 per member, with a $300 minimum, and you separately file an Annual Report each year using the same fee formula.

Key decisions before you file

Before you file a LLC Operating Agreement in Tennessee, a few decisions shape the document: which option to choose and what each one means. The LLC Operating Agreement guide walks through them.

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Tennessee-Specific Provisions

Use this together with the complete LLC operating agreement template, which covers the standard provisions your agreement also needs: capital contributions, management structure, meetings, transfers, withdrawal, and dissolution. The sections below cover only what is specific to Tennessee law.

1. Governing Law

This Agreement is governed by and construed in accordance with the laws of the State of Tennessee, including the Tennessee Revised Limited Liability Company Act, Tennessee Code Annotated Sections 48-249-101 through 48-249-1133. This Agreement need not be in writing to be valid under Tennessee law, but the Members have elected to set it forth in writing.

2. Allocation of Distributions

Unless otherwise stated elsewhere in this Agreement, distributions shall be allocated among the Members in equal shares, as provided by Tennessee Code Annotated Section 48-249-305 in the absence of a contrary provision in this Agreement. This Section applies automatically if a Member is later admitted and this Agreement is not amended to state a different split.

3. Fiduciary Duties

A Member of a member-managed Company owes the Company and the other Members a duty of loyalty and a duty of care, as described in Tennessee Code Annotated Section 48-249-403. This Agreement may identify specific activities that do not violate the duty of loyalty, and may reasonably define the duty of care, but may not eliminate the duty of loyalty, unreasonably reduce the duty of care, or eliminate the obligation of good faith and fair dealing, as required by Tennessee Code Annotated Section 48-249-205.

4. Annual State Obligations

The Company acknowledges that Tennessee law separately requires: (a) an Annual Report filed with the Tennessee Secretary of State each year, due on or before the first day of the fourth month following the close of the Company's fiscal year, at a fee based on the number of Members (Tennessee Code Annotated Section 48-249-1017); and (b) a franchise and excise tax return filed with the Tennessee Department of Revenue, unless the Company qualifies for a statutory exemption. These are ongoing state obligations not satisfied by this Agreement.

5. Execution

This Agreement is effective as of the date signed below. Tennessee law does not require an LLC operating agreement to be notarized or witnessed to be valid. The provisions above are effective because they are set forth in this written, signed Agreement.

[MEMBER] Signature: _____________________ Date: _____________

Printed Name: _____________________

Tennessee Requirements for LLC Operating Agreement

Formation and Governing Law (Tennessee Code Annotated § 48-249-101 et seq.)

This Agreement is governed by the Tennessee Revised Limited Liability Company Act, Tennessee Code Annotated Title 48, Chapter 249 (T.C.A. Section 48-249-101 et seq.). The Operating Agreement need not restate or "acknowledge" the Act to be effective; Tennessee law fills any gap the Agreement leaves open.

Operating Agreement Authority (Tennessee Code Annotated § 48-249-203)

Under T.C.A. Section 48-249-203, an operating agreement need not be in writing to be valid and may be oral or implied, except to the extent the Articles of Organization or a written provision of the agreement itself specifically requires otherwise. A single-member LLC that adopts an operating agreement is bound by it, and the LLC itself is bound even though it does not separately sign the agreement.

Articles of Organization Compliance (Tennessee Code Annotated § 48-249-202)

Tennessee Code Annotated Section 48-249-202 sets out the information the Articles of Organization must contain, including the LLC's name, registered agent, and management-structure election (member-managed, manager-managed, or director-managed). The Operating Agreement should be drafted consistently with these elections, particularly the management-structure designation, since that election is made on the Articles of Organization itself, not in the Operating Agreement.

Member-Managed vs. Manager-Managed Structure (Tennessee Code Annotated § 48-249-401)

A Tennessee LLC is member-managed by default unless the Articles of Organization designate manager-managed or director-managed status (T.C.A. Section 48-249-401). In a member-managed LLC, each member has equal management rights, and ordinary matters are decided by majority vote of the members. Tennessee is one of the few states that also offers a director-managed option, under which a board of directors elected by the members runs the LLC through a required president, similar to a corporation.

Fiduciary Duties (Tennessee Code Annotated § 48-249-403)

Members in a member-managed LLC owe only the duty of loyalty and the duty of care (T.C.A. Section 48-249-403(b)-(c)). The Operating Agreement may identify specific activities that do not violate the duty of loyalty and may reasonably define the duty of care, but may not eliminate the duty of loyalty, unreasonably reduce the duty of care, or eliminate the separate obligation of good faith and fair dealing (T.C.A. Section 48-249-205).

Profit and Loss Allocation (Tennessee Code Annotated § 48-249-305)

The Operating Agreement should establish how distributions are allocated among members. Absent a contrary provision in the Articles of Organization or the Operating Agreement, Tennessee law allocates distributions among members in equal shares, regardless of the size of each member's capital contribution (T.C.A. Section 48-249-305). The Operating Agreement can set a different, contribution-based or other split.

Voting Rights and Decision-Making (Tennessee Code Annotated § 48-249-402)

By default, matters relating to the LLC's business are decided by majority vote of the members in a member-managed LLC, or majority vote of the managers or directors in a manager-managed or director-managed LLC (T.C.A. Section 48-249-401). Separately, T.C.A. Section 48-249-402 governs which members, managers, or officers have authority to bind the LLC to third parties in the ordinary course of business, a related but distinct topic from voting. The Operating Agreement can set different voting thresholds for specific decisions.

Indemnification and Liability Limitations (Tennessee Code Annotated § 48-249-115)

The LLC may indemnify a member, manager, or officer who acted in good faith and reasonably believed their conduct was in the LLC's best interest, and must indemnify a person who was wholly successful in defending a proceeding (T.C.A. Section 48-249-115). Indemnification is not available for a proceeding in which the person was adjudged liable to the LLC, for an improper personal benefit, for a breach of the duty of loyalty, or for acts not in good faith involving intentional misconduct or a knowing violation of law.

Series LLC Provisions (Tennessee Code Annotated § 48-249-309)

If establishing a series LLC, the Operating Agreement must include specific provisions regarding the establishment and operation of series, as Tennessee is one of the states that recognizes series LLCs.

Frequently Asked Questions

It's the internal document where a Tennessee LLC's sole owner sets the rules for running the business and handling profits. Tennessee doesn't require it to be written, even for a single-member LLC, but a written operating agreement is the clearest proof the LLC is a real business, not just a personal wallet, if a court or creditor ever asks.

Not by blanket legal requirement. Tennessee Code Annotated Section 48-249-203 allows an oral or implied operating agreement, and a single-member LLC that adopts one is bound by it. Without a written one, Tennessee's default rules fill every gap, including how distributions are split once you add a second member.

Tennessee's default LLC rules fill the gap. Distributions get allocated in equal shares among members rather than based on who contributed more capital, which only matters once you bring on a second member, and the LLC is member-managed by default unless the articles of organization say otherwise (T.C.A. Section 48-249-305).

It supports that protection, but doesn't guarantee it on its own. Tennessee law makes a charging order the exclusive creditor remedy against a member's LLC interest, but no Tennessee case has confirmed this applies the same way to single-member LLCs, and courts can still pierce the LLC on a showing of control, wrongdoing, and causation.

Tennessee LLCs typically owe two things: an Annual Report to the Secretary of State ($300 minimum for most LLCs, due the first day of the fourth month after your fiscal year ends) and a franchise and excise tax to the Department of Revenue (0.25% of net worth, minimum $100, plus 6.5% of net earnings above a $50,000 deduction).

No. You file Articles of Organization (Form SS-4270, $50 per member with a $300 minimum) with the Tennessee Secretary of State to form the LLC, but the operating agreement itself is an internal document. You keep it with your own business records; it's never submitted to the state.

Partially. Your operating agreement can identify specific activities that don't violate the duty of loyalty and can reasonably define the duty of care, but it cannot eliminate the duty of loyalty, unreasonably reduce the duty of care, or eliminate good faith and fair dealing entirely (T.C.A. Sections 48-249-403, 48-249-205).