# LLC Decision: Tennessee vs. Wyoming + Foreign

**Status:** Draft / decision pending
**Resident state:** Tennessee
**Operator:** Solo founder of Vaultfire / TheLoopBreaker.com

## TL;DR

For a Tennessee resident running a solo crypto/protocol business, **a Tennessee domestic LLC is usually the better choice** than a Wyoming LLC + Tennessee foreign registration. Wyoming's main benefits (no state income tax, low fees, privacy) are mostly neutralized once you register the foreign LLC in TN — because TN taxes are based on operating nexus, not formation state.

## Cost comparison

### Option A — Tennessee domestic LLC

| Item | Cost |
| --- | --- |
| Articles of Organization filing | $300 (single-member, 1–6 members) |
| Annual Report | $300/year minimum (scales w/ members) |
| Registered Agent (optional, can be self) | $0–$199/year |
| Franchise Tax | $100/year minimum (based on net worth) |
| Excise Tax | 6.5% of net earnings |
| Business Tax License (if gross receipts > $3,000) | $15 + gross receipts tax |
| **First year total** | **~$300–$615** |
| **Annual recurring** | **~$300–$500 + excise** |

Sources:
- [Tennessee LLC Costs (Bizreport, 2026)](https://www.bizreport.com/llc-cost-tennessee)
- [Tennessee LLC Taxes (LLC University)](https://www.llcuniversity.com/tennessee-llc/taxes/)
- [TN.gov — Business Tax Registration](https://www.tn.gov/revenue/taxes/business-tax/registration-and-licensing.html)

### Option B — Wyoming LLC + Tennessee foreign registration

| Item | Cost |
| --- | --- |
| Wyoming Articles of Organization | $100 |
| Wyoming Registered Agent (required, non-resident) | ~$50/year |
| Wyoming Annual Report | $60/year minimum |
| Tennessee Application for Certificate of Authority | $300 minimum (foreign LLC) |
| Tennessee Annual Report | $300/year |
| Tennessee Franchise Tax | $100/year minimum |
| Tennessee Excise Tax | 6.5% of net earnings (same as Option A) |
| TN Business Tax License (if applicable) | $15 + gross receipts |
| **First year total** | **~$760–$1,075** |
| **Annual recurring** | **~$460–$660 + excise** |

Sources:
- [Foreign LLC Fees by State (LLC University)](https://www.llcuniversity.com/foreign-llc-fees-by-state/)
- [Tennessee Foreign LLC (Northwest Registered Agent)](https://www.northwestregisteredagent.com/llc/tennessee/foreign-registration)

## Key insight: why Wyoming doesn't save TN residents money

Tennessee's **Franchise & Excise Tax** is based on where you operate, not where you form. As long as you (the owner) live and work in Tennessee, the LLC has nexus in TN and owes TN taxes regardless of formation state. ([TN.gov Notice 13-16](https://www.tn.gov/content/dam/tn/revenue/documents/notices/fae/13-16fe.pdf))

Wyoming's typical advantages:

- ✅ **No state income tax** — irrelevant; TN already has no personal income tax on wages
- ✅ **Strong privacy** — partially defeated; TN foreign-LLC filing still requires you to disclose ownership info on TN public records
- ✅ **Low filing fees** — wiped out by paying TN's $300 foreign-qualification fee on top
- ✅ **DAO LLC statute** — only matters if you actually decentralize governance
- ✅ **Charging-order protection** — TN also has charging-order protection for LLC interests (TCA §48-249-509)

## When Wyoming + foreign reg might still make sense

1. You have a specific privacy threat model and are willing to pay ~$160+/yr for marginal opacity
2. You plan to relocate to a no-tax state within 1–2 years
3. You're forming a DAO that needs Wyoming's DAO LLC statute
4. You're stacking multiple LLCs with separate purposes

For a solo operator focused on cost, simplicity, and not-securities posture, none of these apply.

## Recommendation

**Tennessee domestic LLC.** Single filing, single tax return, ~$160/year cheaper, equivalent legal protection for your use case. Use this saved money toward the eventual crypto-attorney review of the not-securities positioning doc.

## Open questions for a Tennessee CPA / attorney

- Is the SMLLC excise-tax "self-employment income deduction" available given Vaultfire's revenue mix (x402 fees, future bond fees)?
- Does receiving USDC on-chain trigger TN sales-tax nexus or just business-tax nexus?
- Does Vaultfire require a state Money Transmitter license? (Likely no — bonds are user-custodied, but worth confirming)
- Best entity name to register? "Vaultfire LLC" likely conflicts; "Vaultfire Protocol LLC" or "TheLoopBreaker LLC" are alternatives.

## Status

Decision deferred. Legal pages (ToS, Privacy, Disclaimer) ship first to limit liability immediately, then formation decision happens with full info.
