States with series LLC statutes [Explained]



Last updated : Aug 26, 2022
Written by : Hans Rutenbar
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States with series LLC statutes

Which states do not recognize LLC?

States That Don't Permit Series LLCs As of this writing, the only state that doesn't allow the formation of an in-state Series LLC is California. California has specific and strict regulations governing business in general, and there is currently no such thing as a California Series LLC.

Does New York recognize series LLC?

The Series LLC was first developed in Delaware in 19961, and the power to create them has been added into the limited liability company laws of several states since. However that number still does not include New York.

Does North Carolina recognize series LLC?

For real estate investors with multiple rental properties, a series LLC can offer additional protections. Forming a series LLC is much cheaper and quicker than setting up a new LLC for each rental property. North Carolina doesn't recognize series LLCs, but you may end up owning property in a state that does.

Is a series LLC a separate legal entity?

Because the Series LLC is a single legal entity, no additional state formation filings are generally required to establish a new series.

Is a series LLC better than an LLC?

A Series LLC gives you all the same benefits as a regular LLC, but it serves as a sort of "umbrella company" with additional flexibility and protections for multiple companies or lines of business within your overall operation.

Does a series LLC need its own EIN?

Employer Identification Numbers (EINs) A Series LLC and each of its established series will need to get a federal employer identification number (FEIN or EIN). You can apply for EINs by filing Form SS-4 with the IRS. You can also apply online at the IRS website.

Does Florida recognize series LLC?

Florida does not recognize “series” LLCs. pursuant to section 605.902(3), F.S., each series will be required to make a separate application for a certificate of authority as if they were a separate foreign LLC here in Florida. Each separate entity would have to disclose managers or authorized person/representative.

Does Georgia recognize series LLC?

Many states allow for the formation of a series LLC, but unfortunately, Georgia isn't one of them. However, if you think you'd benefit from a series LLC, you can form your business in a state that allows series LLCs and then register it in Georgia as a foreign LLC.

Does California allow series LLC?

Although California does not allow the formation of a series LLC, it does allow foreign LLCs (those from another state) to both register and conduct business in that state. Although a series LLC appears to be attractive, offering separate LLCs under one umbrella LLC, there are reasons to be cautious.

Does Virginia recognize series LLC?

Yes. Per VA Code § 13.1-1097, your Virginia Series LLC must appoint a registered agent to accept legal documents on its behalf. Your registered agent should have a physical address in Virginia.

What is a series LLC in Alabama?

An Alabama series LLC (SLLC) is a limited liability company that includes what is referred to as a “master” or “umbrella” LLC and other LLCs that are separate from each other.

Does NJ Allow series LLC?

@John S Lewis , As of Jan 2018, NJ does not have Series LLC provision. Delaware allows series LLCs and you may want to register one entity as a foreign entity in NJ.

Does a series LLC file one tax return?

For now, the IRS regards the Series LLC as one big entity. This means, that each series within the structure is not considered a separate company and therefore does not require separate returns. Of course, you will have to declare any income you've gained from your Series LLC, and we'll elaborate on that below.

How is a series LLC structured?

A Series LLC consists of the “parent” or “umbrella” LLC with one or more series that are established under the parent. Each series has characteristics that are separate from the Series LLC itself and every other series. Each series can have its own assets, members, managers, purpose, and investment objectives.

Can a series LLC be taxed as an S Corp?

A Series LLC Treated as an S-corporation A pass-through entity does not pay taxes, rather the S-corporation passes its income and losses through to its shareholders. The shareholders of an LLC treated as an S-corporation report the earnings and losses of the S-corporation on their personal income tax returns.

Does each Series LLC need its own bank account?

Each LLC in the series must have its own bank account and, since each is producing separate financial statements, each must have separate accounting.

Can Series LLC have different owners?

A series LLC may have different members and managers in each series. The rights and obligations of these members and managers differ from series to series. Each series may enter into contracts, sue or be sued, and hold title to real and personal property.

Is a holding company the same as a Series LLC?

A holding company doesn't actively operate businesses—it simply exists and owns. As a series LLC, the holding company would own all of the individual series beneath its umbrella. Real estate investors with multiple properties sometimes form series LLCs to isolate liability.

How do you name a series LLC?

  1. The name of the series must begin or end with the name of the parent LLC, including any word or abbreviation required by the applicable LLC name statute; and.
  2. The name of the series must contain the phrase “Protected Series” or “protected series” or the abbreviation “P.S.” or “PS.”

Does Delaware allow series LLC?

Delaware has allowed for the creation of a series LLC since 1996. Under the Delaware Limited Liability Company Act (the "DLLCA"), an LLC can create series of members, managers, interests and/or assets by providing for such series structure in the LLC agreement.


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States with series LLC statutes


Comment by Cristie Izarraras

hi Clint Caruth Anderson business advisors and in this segment I'm going to cover series limited liability companies you know I've received quite a few emails over the past week about in from individuals wanting to know whether or not a series LLC is appropriate for their particular type of real estate investing and so I thought I do is I put together a few videos on using a series LLC for your real estate investing in this segment we're going to discuss what is a series LLC okay so the series LLC is a basically a limited liability company but it's designed to address a particular concern that many real estate investors have and that is the cost of setting up multiple LLC's think on this if you had several pieces of real estate you wanted to protect them you would most likely adopt the following scenario you would create several LLC's here and you'd put your properties in each of these LLC's now with this type of plan what we are doing is we're ensuring that if anything happens in any one of these boxes we've minimized our risk exposure to the greatest extent as possible so I could have a lawsuit right here this property comes under assault then the only risk I loss I have is what is associated to this LLC and if it's one property that's it they can't take any more so I could actually lose this limited liability company but all these other ones remain intact and I have asset protection now here's the rub the more LLC's you have the more costs you're going to incur on an annual basis to maintain them so if you're a setup in a state that has a $500 a year annual registration fee and you have three LLC's in my example right now then that's going to cost you fifteen hundred dollars a year to maintain this structure and then on top of that you have the initial setup costs as well that for each LLC that you set up if it was five hundred dollars and it's fifteen hundred I actually was two thousand you lost one it was two thousand dollars to put your plan in place now if you think about it though that's cheap insurance too be able to limit your liability exposure to that one box and not risk everything else I think most of you would say I would gladly pay $500 knowing that if the mother of all lawsuits came down because somebody was I don't know concerned about toxic mold and they make up a fictitious claim against me and the jury buys off on it that they can't take everything that I have because actually the example I just gave you insurance would not cover you however some states have looked at this and thought to themselves is there a better way can we make it so that the individual does not have to occur so many filing fees and if their primary purpose is to limit their liability exposure let's come up with a hybrid entity hence the series LLC the series LLC is designed to provide this level of asset protection without this cost okay what they're looking to do is minimize that so here's how a series LLC works well the series LLC what you're going to do is create a limited liability company but when you file it with the Secretary of State it will be filed as a series LLC now many times this will require that you custom draft your articles of organization some states do have pre-printed state approved forms that you can use to form your LLC other ones you're going to have to draft custom articles but a series LLC when it's incorporated what you're organized what you're doing is you're saying I'm creating this company here this LLC so it's just like a regular LLC but with one little addition and that addition is the ability to create what people will call cells or series now these additional cells or series they're designed to be treated as independent entities that is separate units from this parent company so the first one we'll call as the parent all right this one gets set up first and you would set it up possibly where you the manager here so this is you as a manager and then you're down here as the member okay now after that company is set up just like a traditional LLC would be set up then when it's time to acquire additional real estate and it's going back to my example again we're gonna buy four properties what you will do is create these cells so this would be series one and it would own this property right here then when you buy your second property you would create series number two right here and it would own this property and as you can see we come down here with number three just like that and then of course we'd throw number four on there as well and we've have our properties held accordingly now each of those documents that we're talking about here these separate series what's unique about the series LLC is that when you created that parent you had a full-blown operating agreement okay so it's you know 80 pages long and inside of the operating agreement it specifically authorizes you to create these additional series off of this operating agreement then when it's time to create your series like we've done here you don't have to file anything with the Secretary of State well not in all states in Illinois you'd would but I'll get into that in just a moment in order to create these separate series what you'll typically do is open our or prepare a two-page agreement and in that agreement what it states is the name of the series who's gonna manage it because you can have different managers with these series in fact you can have different members as well such as a series number three when I'm preparing that two-page agreement what I would list in there possibly if I was using a it was a joint venture maybe had some gap funds coming in from someone I might state on this one that 50 percent is owned by the parent LLC that's 50 percent and the other 50 percent here is owned by Jim all right so we're 50/50 members so you can actually have different members in these individual series that you're creating but that operating agree or that two-page agreement that I'm referring to that gets created every time you want to create a new cell those are internal documents no one's gonna know about them until you decide to disclose that information to third parties so there's no additional costs here so that is that is an advantage that people find attractive with the series is that when you set it up you don't have to make another state filing except in Illinois to create these series they can hold property they can conduct business and then should anything happen with an individual series like say number four has the mold problem then this is the only things that that is at risk everything else here is protected and the only only series you risk is that one number four now these two page operating agreements what they actually do the way this works is that they incorporate this 80 page agreement by reference so they say all right for purposes of running this Agreement refer back to the parent LLC operating agreement and that's going to govern the control in the operation of this individual series so there's quite a bit of legalese involved in this to make these work but the premise is that you can have separate distinct units that will prote


Thanks for your comment Cristie Izarraras, have a nice day.
- Hans Rutenbar, Staff Member


Comment by Ramon

hey guys clint coons here and in this video we're going to discuss when you should use and when you should avoid the series limited liability company all right so if you haven't learned enough about series llc's yet be sure to check out the other videos on my channel about this particular business entity form i think it's a great structure if it's used in the right context now there's a handful of states approximately right now a little over 20 states that recognize this form so if you're not living in that state or conducting business in a state that recognizes the series llc then i don't suggest you use it and in fact in the show notes i have a list of the states that recognize series llc's and even some of those that do recognize it you'll note that i tell you don't even attempt to use it in that state because their law is just stupid and it's just going to create problems for you if you use that form in that particular state so let's assume that you're in a state such as texas that recognizes a series llc it has a great statute around the series llc the question then becomes when should you use it versus when you shouldn't well i like to use series llc's for holding rental real estate and so what i tell people is you set up your your parent llc right here here's my parent and then i will create my cells like this to hold individual properties as follows and when i set up this type of structure for a client i'm oftentimes just going to have the parent be the 100 member of each of these cells that i've created so all the income and expenses will flow down to the parent llc and then that's going to typically come down to a wyoming llc down here because we want anonymity of course in our structure which then finally eventually comes down and is taxed to the client so in creating this type of structure it's great because the cells are holding passive assets right they're they're holding the rental properties now as far as where the rank gets collected i've got other videos discussing that but real quick typically what you'll do in a scenario like this is the parent will be the one collecting the rents on behalf of these individual cells or maybe a property management company that you've created or maybe you're using a third party property manager they're sending the income here but when you use this structure you got to make sure you have really good books and records that you're separately accounting for all of the income for each of these cells so when do we use the series llc to hold passive investments people asked me before well could i put a commercial property into one of these cells well yes if you paid it off for cash right and you have no debt on it but if you're going to try to close on it and close with the lender well then that's not really going to work and i'll explain that in a second so another let's say that you had a a car classic car collection you you you bought old types of vehicles right there that's a car if you can't tell um so you could put a vehicle in a cell that would work you could do things like that but again you're holding assets for investments i've had people create these things uh before to to to hold artwork all right they put artwork in there or maybe they have coins things like that they try to gain some asset protection but their coin collection again we're not running an active business so this is how the cells work now beyond that i wouldn't use it and here's why when it comes to active businesses this structure doesn't play well with third parties and what do i mean by that let's say that you want to set up a a business you've got a couple of different business ideas your first business idea that you're going to to run right here is going to be a florist all right so you got a flourisher setting up and then you got a second business over here which is going to be cell phone uh repair business and then maybe you also have uh you do some trucking right whatever you got some different businesses there the problem with the sells in trying to run active businesses number one is going to be setting up bank accounts for each of these cells so unlike the passive uh investing that we were talking about with the residential real estate we're using this bank account with active businesses you don't want to do that you're going to want to get separate bank accounts set up for each of these businesses right because you've got to conduct business out of that account collect payments into that account write bills out of that account so working with banks can be problematic here because banks when they're setting up a bank account they need to see articles of organization they've got to find something tangible and many times with cells there's nothing tangible that they can look at that makes them feel comfortable so that creates a problem for you second issue you're going to run into if you want to d deal with lenders so just like opening up a bank account lenders which are many times banks if they're going to loan you money they're going to look at the property that's held in the name of the cell and they're going to notice that the cell isn't recorded anywhere so that becomes a title cloud for them and it makes them nervous so they don't like to lend to sells themselves or allow you to close on a property in the name of a cell that's when it comes to commercial real estate i tell people do not use this structure for commercial real estate set up independent limited liability companies if you want to buy multi-family or commercial use independent llcs for that the other problem you have with running businesses is let's say you want to get a business loan no so there's been some litigation over this in the past and what happens when it comes to getting a business loan let's say i need a business loan for my truck business over here and i want to borrow a hundred thousand dollars against the business well if you go out to there to get a business loan the way banks encumber or protect themselves is they file what's called a ucc one financing statement and what a ucc one is it's like a lien against real estate but in this case it's a lien against your business assets well because these entities aren't recorded anywhere the secretary of state where this gets filed with the state the bank has no way to attach it to put people on notice so what they end up doing is having to file it against your parent and you don't want that to occur and in the cases that i've seen in the past they disregard all of this with the debt that gets recorded against the parent so that again even if they went this far it creates problems for you so active businesses keep those in separate llc's just like commercial property or multi-family property don't put it through the sell arrangement the seller arrangement should only be used in my opinion for residential real estate or passive investment activity keep it simple like that and you're going to find you're going to be able to get a lot more things done and create less challenges for yourself because if you go down this road and when you're down there you're trying to get that loan


Thanks Ramon your participation is very much appreciated
- Hans Rutenbar


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