The Series LLC is also known as a Series Limited Liability Company or SLLC for short. It allows multiple Limited Liability Companies (LLCs) within a master LLC to operate as separate entities with their own names, bank accounts, and record keeping. Each series can conduct business independently in this way because the series LLCs’ articles of formation explicitly allow them to have unrestricted segregation of membership interests, assets, liabilities, and operations.
Different members and managers might run each series, and their rights and responsibilities might vary from series to series. Each individual series may secure contracts, own property, sue, and be sued without affecting the other series under the Series LLC.
The most significant aspect of the Series LLC is the liability protection it provides. Similar to a corporation with subsidiaries, one series’ assets are protected from the liability risks of other series under the master series LLC. What’s particularly attractive about a Series LLC is the level of protection it offers comes without the cost of setting up new legal entities for each series. The SLLC is subject to just one formation filing fee, no matter how many series are a part of it.
Series LLCs is also referred to as an umbrella LLC or holding company. Regardless of the name used, it offers a good deal of flexibility and simplicity. Business owners such as real estate investors with multiple properties, franchisees with multiple locations, and other companies with distinct profit centers might benefit from forming a series LLC to separate and protect each operation.
Where and How Can You Set Up an SLLC?
Not all states allow the formation of Series LLCs, so the structure is not an option for every business everywhere.
States currently allowing the formation of Series LLCs include:
- Alabama
- Arkansas
- Delaware
- Illinois
- Indiana
- Iowa
- Kansas
- Missouri
- Montana
- Nebraska
- Nevada
- North Dakota
- Oklahoma
- Puerto Rico
- South Dakota
- Tennessee
- Texas
- Utah
- Virginia
- Wyoming
Forming a Series LLC works similarly to forming a traditional LLC. It involves filing Articles of Organization in the state for your master LLC. Most likely the state will require that your Articles of Organization express that the LLC is authorized to form a series under it.
You’ll also need to create LLC Operating Agreements to document the rules for the overall operations of the master LLC and for each series you know you want to form. The Operating Agreements for each series will define any unique rules that apply to the individual series. Note that you can add more series as needed in the future.
What Else Should You Know?
While federal regulation considers series to be their own entities for income tax purposes (which means they must file their own tax returns and pay their own tax obligations), tax treatment at the state level could be different.
No matter what legal business structure you’re considering, I strongly encourage you to get trusted professional legal and accounting guidance before making that all-important decision. And after you’ve done your homework and have all the knowledge you need to choose wisely, don’t risk missing anything mission-critical during the formation process.
At CorpNet, we’re here to help you save time and headaches by taking care of all the filing details for you. From Series LLCs to regular LLCs and S Corporations to C Corporations, contact us to cover all your business filing needs!
