Tennessee Certificate of Authority / The need test
Does your company need a Tennessee certificate of authority?
Tennessee requires a foreign company to hold a certificate of authority once it transacts business here; an LLC pays from $300 for one. The Act lists 11 exceptions, which are not exhaustive, and the Attorney General frames the general test as whether the company's business in the state is merely casual or occasional, or some substantial portion of its ordinary business.
Where each entity looks
An LLC looks to T.C.A. 48-249-902 and a corporation to 48-25-101(b). In the Attorney General's reading the two lists run together, so a company conducting only listed activities needs no certificate.
The LLC list
The LLC Act sets aside defending, settling or maintaining a proceeding, claim or dispute; meetings of members or representatives and other internal affairs; bank accounts; offices or agencies for the company's own securities; selling through independent contractors; soliciting or obtaining orders that need acceptance outside Tennessee to become contracts; creating or acquiring debt, deeds of trust, mortgages and security interests; securing or collecting debts and enforcing security interests; owning real or personal property without more; one transaction completed within a month and not part of repeated transactions of a like nature; and business in interstate commerce.
A proviso on property
One proviso attaches to the property item. Real estate acquired by foreclosing on a mortgage or deed of trust can be managed and rented for a reasonable time without counting, if the owner is trying to liquidate and has no office or agency here beyond an independent one.
Holding an interest
Serving as a member or manager of an LLC does not, by itself, make an outside entity a Tennessee business.
Self-test questions
| Question | If yes |
|---|---|
| Is a bank account the only Tennessee contact? | Bank accounts are an exception |
| Are all sales here made by independent contractors? | That is an exception |
| Do orders become contracts only on acceptance outside Tennessee? | That is an exception |
| Was there a single deal, done within a month, never repeated? | The isolated-transaction exception |
| Is the company only suing, defending or settling? | The proceedings exception |
| Does it only hold meetings of members or representatives? | The internal-affairs exception |
| Does it only lend against property and collect? | The debts-and-security exception |
| Does it only own property, with nothing more? | The bare-ownership exception |
| Is it only a member or manager of an LLC? | Membership alone does not count |
| Is all of its activity interstate commerce? | The interstate-commerce exception |
A yes on any line is an exception. A no on every line sends you to the general test.
The exceptions in four groups
Disputes and internal matters: handling a claim and meeting as members or representatives. Money: bank accounts, a securities office, borrowing against property and collecting what is owed. Selling: independent contractors and orders that bind only on acceptance elsewhere. Everything else: bare ownership, one deal inside a month and interstate commerce.
LLC and corporation side by side
| Point | LLC | Corporation |
|---|---|---|
| Statute | T.C.A. 48-249-902 | T.C.A. 48-25-101(b) |
| Number of listed exceptions | 11 | The Attorney General reads the list alongside the LLC list |
| Is the list exhaustive? | No | No |
| Starting form | Form SS-4233 | Form SS-4431 |
| State fee | $300 to $3,000 | $600 |
The comparison is about the certificate question only.
The general test
For activity off the list the Attorney General asks whether the company's business in the state is merely casual or occasional, or some substantial portion of its ordinary business. The phrasing traces to Lloyd Thomas Co. v. Grosvenor, decided in 1921.
What the list leaves open
By its own words the Act's list is open-ended and answers only the certificate question. A contact may still bring an LLC or its members within Tennessee process, tax or other rules; that is a separate matter.
Offices, workers and warehouses
None of these is on the list, so none is an automatic exception. A Tennessee business lawyer can apply the general test to the arrangement you have.
Why the property rule is narrow
The Act excuses owning property with nothing more, plus a short proviso for rental of real estate acquired by enforcing a mortgage. It does not excuse an active operation built around the property. The line between ownership and operation turns on facts.
Home law is not disturbed
The place of formation keeps deciding the company's governance and its members' liability. Tennessee has no basis for turning the certificate down over differences from its own LLC law.
The cost of guessing wrong
Without a certificate an LLC cannot sue in Tennessee courts and owes 3 times its filing fee for each year or part-year. The fine page shows the arithmetic.
If the answer is yes
File for the certificate. The path is in the full guide, and the form is on the LLC filing page.
Doing-business questions
Is a bank account enough to need a certificate?
No. Bank accounts are on the list of exceptions.
Is the corporation list different?
It sits in 48-25-101(b), and the Attorney General reads it with the LLC list.
How long may an isolated deal take?
It has to be done within one month and not belong to a run of like deals.
Is renting out a building covered by the list?
The list names bare ownership. Whether renting goes further turns on the facts.
Does an exception shield us from Tennessee tax?
No. The list speaks only to the certificate.
Does it depend on the size of the Tennessee business?
Off the list, the test is whether the business is casual or occasional versus a substantial portion of the ordinary business.
Pricing
Get your Tennessee certificate
$199
+ from $300 state filing fee
$300 is the LLC floor on a $50-a-member scale; other entity types pay their own state fee, shown on the fees page. $199 plus the state fee, including your first year of registered agent service; after that the agent service renews at $149 a year.
- An application written for your entity type from your replies
- The home certificate, requested to land inside the window
- A Tennessee agent for service from us, or one you choose
- The endorsed application returned to you as your certificate
- Renewal: after the first year, the agent service renews at $149 a year
Sources
- Tennessee Secretary of State, business forms and fees
- Tennessee Code Annotated 48-249-1007, LLC filing fees (General Assembly bill text restating the section)
- Tennessee Secretary of State, business FAQs
- Form SS-4431, application for certificate of authority, foreign for-profit corporation
- Tennessee Revised Limited Liability Company Act, foreign LLC provisions (Public Chapter 286)
- Tennessee Attorney General opinion 18-28, certificates of authority
- Form SS-4233, application for certificate of authority, foreign limited liability company
Ready for your Tennessee certificate?
Name the entity type and headcount; we write the matching application.