Series LLC Guide
A series LLC is a special kind of LLC that allows the owner to create one LLC with several divisions or “series” within it, each with their own liability, finances, and branding. Starting a series LLC can help you separate out your assets into different LLCs, without the need to maintain more than one LLC.
Currently, you can only start an LLC in the following states: Alabama, Arkansas, Delaware, District of Columbia, Illinois, Indiana, Iowa, Kansas, Missouri, Montana, Nevada, North Dakota, Ohio, Oklahoma, Puerto Rico, South Dakota, Tennessee, Texas, Utah, Virginia, Wisconsin, and Wyoming.
Here’s our guide to starting a series LLC.
What Is a Series LLC?
A special kind of limited liability company, a Series LLC creates multiple “child” LLCs all organized under a single “parent” LLC. Each LLC in the series is insulated from the others—they typically keep separate assets and debts, and may have different members and managers—so liabilities arising as a result of one series shouldn’t jeopardize the others. In other words, starting a series LLC isn’t unlike starting several LLCs, except that you only have to pay to start and maintain one.
A Series LLC can be an excellent choice for managing multiple assets. For example, real estate companies might form a Series LLC in which each member series owns a separate property. Construction companies might create a new series for each major construction project, as in The 123 Main Street Project LLC, A Series of Big Cities USA LLC.
In addition to the limitation of liability to each series member, filing as a Series LLC may cut down on paperwork and other administrative overhead, saving the business money. This is especially true in states where the initial filing fee and any annual report or other compliance fees apply only to the parent LLC, and not to each individual member of the series.
How to Start a Series LLC
To establish a Series LLC, you’ll follow a process that closely resembles starting an ordinary LLC. You’ll choose a business name, designate a registered agent, and file the formation paperwork with the appropriate state department in a state where series LLCs are recognized business entities. You’ll also pay all associated filing fees.
Name Your Series LLC
The naming requirements for a Series LLC and its attendant series vary from state to state. The Series LLC must meet all state naming requirements, which typically include being distinguishable from any other registered entity in the state and not using words reserved for specific industries (like “bank”) or government offices (“federal”).
Child series under the Series LLC must typically be distinguishable only from one another, and many states require that they include the name of their parent Series LLC. Other requirements may include use of the word “series” and use of an identifier.
Choose a Registered Agent
Just a traditional LLC, a series LLC requires you to appoint a registered agent. This is an individual or business that’s agreed to serve as the legal point of contact for your business, receiving legal notices, state reminders, service of process and other critical documents on behalf of your business. Your registered agent must have a physical address in the state where you do business and be available at that address during business hours. It’s an important role.
Typical regulations for Series LLCs indicate the registered agent of the Series LLC also acts as the registered agent for each series. A couple states require the agent to explicitly assent to serving as the agent for each series. Some states provide a formal way to indicate the name and registered office address of a registered agent of a series when that differs from the Series LLC.
File Formation Paperwork
Just like for a traditional LLC, you’ll have to file paperwork with your state government and pay a fee to form your series LLC.
Some states include an optional provision in their Articles of Organization for the Series LLC to organize itself under the relevant state statutes, then expect the Series LLC’s operating agreement to spell out the finer details. Other states have a separate piece of documentation required to establish the individual series of the LLC, such as Alabama’s Protected Series Designation and Illinois’s Certificate of Designation. Delaware has both—their Protected Series are formed via the Series LLC operating agreement, and their Registered Series are formed by filing a Certificate of Registered Series.
States typically provide options to file online or via paper, and the filing fees vary significantly. However, your Series LLC is formed once you’ve filed the required documentation and paid the appropriate filing fees.
Adopt an Operating Agreement
Your Series LLC itself needs an operating agreement, especially in states where it’s the only document establishing the existence, powers, management, and duties of each series. Each series should also have its own operating agreement. It’s a requirement in states like Montana, and even where not required by state statute, the limitation of liability to each series hinges on the capacity for each series to act as an independent entity. That means separate books, separate record-keeping, separate accounts, and yes—separate operating agreements.
Get EINs
You’ll need to get an EIN from the IRS for the series LLC itself and for each of its series. You can get an EIN by filing form SS-4 with the IRS or applying online on the IRS website.
Open Separate Series LLC Bank Accounts
If you want to reap the benefits of a series LLC (namely, the liability protection between each series), then you’ll need to maintain a clear separation between each series. This means opening distinct bank accounts for your series LLC and for each division within it.
Determine Series LLC Reporting Requirements
Most states will require your series LLC to file either an annual or biennial report to keep the state up-to-date on your LLC’s contact information. Usually, you’ll also have to pay a filing fee. These requirements vary by state, and can have confusing deadlines. Some states require only the “parent” series LLC to file a report, while others require each “child” series to file a report.
Obtain Necessary Business Licenses
Many states, as well as numerous cities and counties, require licenses for specific business operations. Depending on the kind of business done by your Series LLC and its series, acquiring licenses and permits to conduct business within the state may be necessary. For this, you’ll need to do a little research. Unfortunately, most states don’t provide one go-to resource for this information. Instead, you’ll want to check your municipality, county, and state websites for requirements.
