What is a series LLC mean [Pictures]

Last updated : Aug 13, 2022

What is the difference between an LLC and a series LLC?

What Is a Series 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.

What is the purpose of a series LLC?

With a Series LLC, a holding company can hold all individual businesses under a single umbrella while mitigating the risk of one business' assets being used to satisfy the debts or liabilities incurred by another of its businesses.

Is a series LLC a good idea?

If you want to make sure your assets have good, solid protection, it's a much better idea to avoid corporate structures that don't provide reliable protection. Avoid series LLCs as a form of protection until a definitive case law is established and rely instead on known, tested entities such as individual LLCs.

What is an example of a series LLC?

Common examples include real estate investors with several rental properties and investment firms with multiple investment strategies. Without a series LLC, these businesses would have to form separate LLCs for each facet of their business to gain the same type of liability protection.

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.

How is a series LLC taxed?

A series LLC owner will file federal taxes in the same way that an LLC does. The series LLC will file a single tax return as the main LLC. All income from the LLCs in the series will be included on the Schedule E portion of the owner's personal tax return.

How many states allow series LLCs?

The Series LLC was initially pioneered by Delaware, a famously pro-business state. Even today, Delaware remains a popular state for entity formation. Other states followed in Delaware's footsteps, and today you can get a Series LLC in Texas, Tennessee, Utah, Nevada, Illinois, Oklahoma, and Iowa.

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.

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 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.

Is a series LLC 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.

Is a series LLC a holding company?

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.

When was series LLC created?

The Series LLC has garnered much attention since it was first introduced in Delaware in 1996, and with good reason. A Series LLC allows owners to save on filing fees by being able to set up as many 'daughter' protected series as the members see fit.

How do you structure multiple LLCs?

Another way to structure multiple businesses under one LLC is to set up a holding company. Under this option, you would create separate LLCs for each new business venture and “hold” them under your primary LLC. This arrangement is also referred to as an umbrella company or parent company.

What is a protected series LLC?

A series limited liability company, commonly known as a series LLC and sometimes abbreviated as SLLC, is a form of a limited liability company that provides liability protection across multiple "series" each of which is theoretically protected from liabilities arising from the other series.

Can a LLC have multiple EIN?

EINs are not limited, so you may apply for as many as you need. You are dividing your business into separate entities. If, after dividing up a business, they operate independently and you form new legal entities for each, then each entity will need a different EIN.

How do you name a series LLC in Texas?

For each cell in the series, we suggest that you add “- Series ___” to the end of the name. For example, cell A would be named “Dallas Real Estate Investments LLC – Series A,” cell B would be named “Dallas Real Estate Investments LLC – Series B,” and so on.

What is a Master LLC in Texas?

Texas law allows for the formation of a “Series LLC.” It is similar to a parent corporation that owns one or more subsidiary, corporations. The Master LLC is formed with the filing of a Certificate of Formation in the Texas Secretary of State's office and paying a $308 filing fee.

Does CA Recognize series LLC?

Some states, like California, do not allow for series LLCs to be formed under state law but series LLCs formed in other states can register with the state and do business in the state.

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.

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a table in this video we need to talk

Thanks for your comment Scotty Pair, have a nice day.
- Abby Delucia, Staff Member

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 Rafael your participation is very much appreciated
- Abby Delucia

About the author

Abby Delucia

I've studied affine geometry at Huston-Tillotson University in Austin and I am an expert in systems philosophy. I usually feel giddy. My previous job was instructional coordinators I held this position for 30 years, I love talking about radio-controlled model collecting and listen to music. Huge fan of Melissa McCarthy I practice skimboarding and collect buttons.