What Is a Series LLC?

How the Series LLC Works

What are the Benefits of a Series LLC

Protection:

• The most important benefit of a series LLC is the ability to protect each child series and its assets from the liabilities of the other child series and the master LLC.
• Investors can manage wealth by dividing investments between the child series based on potential return and risk.
• The series LLC is a favorite with real estate investors because it allows investors to separate (and protect) their individual properties.
  
  

Administrative:

• Currently, the child series do not have to file taxes. The master LLC files taxes on behalf of the full series. We strongly recommend working with an accountant familiar with series LLC tax code.
• There is often a reduction in paperwork and costs when compared to starting and operating multiple standard LLCs.
• The series LLC is less complicated and less expensive than creating a corporation with subsidiaries.
  
  

Other Benefits:

• Series LLCs accommodate growth.
• The series LLC allows you to create separate members and managers within each of the child series. Each member and manager can be given different percentages of ownership and separate duties, powers, and rights. 
• Businesses with several profit centers can shield and separate business operations.
• Each individual child series can enter into contracts, acquire, hold and sell assets, sue, grant liens, and grant security instruments.

What Are The Risks of a Series LLC?

The series LLC can carry risk in some situations. It’s best to talk about the possible risk of forming and operating a series LLC with your attorney.

Things to consider:

• If you plan to sell goods or services in a state that does not allow the series LLC, your assets held by the child series might not be protected.
• The series LLC is complex and there haven’t been many court cases to tell us what might happen in certain legal situations.
• It is currently unclear if child series are protected in federal bankruptcy court because the federal Bankruptcy Code may not recognize an individual series as a separate debtor from the master LLC.
• You must follow the regulations carefully when forming and operating a series LLC. If you don’t, the series won’t offer the liability protection you were aiming for.

Which states allow the series LLC?

Regulations for the series LLC vary significantly across the country. While this structure was once rare, 23 jurisdictions now allow for the formation of a series LLC. This expansion is largely driven by the Uniform Protected Series Act (UPSA), a model law designed to provide a standardized legal framework for these entities.

Currently, the following states allow the Series LLC:

• Alabama
• Arkansas
• Delaware
• District of Columbia
• Illinois
• Indiana
• Iowa
• Kansas
• Missouri
• Montana
• Nebraska
• Nevada
• North Dakota
• Oklahoma
• Ohio
• Puerto Rico
• South Dakota
• Tennessee
• Texas
• Utah
• Virginia
• Wisconsin
• Wyoming

There are also a number of states that, while they do not allow for the formation of a domestic series LLC, still recognize series LLCs formed in other jurisdictions (e.g., California, Florida, Colorado, etc.).

We have created a comprehensive guide to make it easier for you to research your state’s requirements for starting and operating a series LLC.

It is important to consult with your attorney to assure you are operating your series LLC within the regulations of your state.

Series LLC State Guides

Forming a series LLC is similar to setting up a “normal” LLC. Many of the steps are the same – they are just more complex.

Series LLC FAQ

Can you change an LLC to a Series LLC?

Yes, in many states that allow the series LLC, you can add individual series by amending your operating agreement. To learn more about how to change an existing LLC into a series LLC in your state, choose your state from the list below.

Does California Allow Series LLCs?

No, but California allows foreign Series LLCs to register as a foreign LLC. Each individual series is required to pay an $800 annual tax. A series LLC will not be granted the individual protection by California courts that are given by states that honor the series LLC structure. 

How does a Series LLC work in Texas?

A Texas series LLC works by separating the assets and operations of individual series LLCs under the umbrella of a master LLC. Each individual series is protected from losses suffered by the other series LLCs and the master LLC. 

Setting up a series LLC in Texas is a straightforward process. We provide an easy to follow step-by-step guide for forming your Texas LLC. 

What is a Master LLC?

A master LLC, also called a parent LLC, is the main LLC that the individual series are connected to. The master LLC is legally protected from liabilities and losses incurred by the series. The master LLC files taxes on behalf of the full series.

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

An LLC is a single limited liability company. A series LLC is a limited liability company with a unique structure. A series LLC consists of a master LLC with one or more individual series LLCs branching off from it. The individual series are protected from liabilities and losses suffered by the other individual series and the master LLC. Read our What is an LLC guide to learn more about setting up an LLC.

How much does a Series LLC cost?

The cost of forming a Series LLC can vary between $50-$1000. Choose your state from the list below for the exact fees for forming a series LLC.

How do I use a Series LLC for real estate?

Most real estate investors use their series LLC to place each investment property into an individual series. This protects each investment property from any losses or lawsuits incurred by a particular property. To learn more about setting up a series LLC for your real estate business, click on your state from the list below.

Does each series in a Series LLC need a separate bank account? 

Yes. To maintain the liability protection of a series LLC, it is critical to keep the finances of each individual series separate. Commingling funds by doing things like paying the bills of “Series A” with the bank account of “Series B” can lead to a court “piercing the corporate veil”.

How does a Series LLC appear on a Title or Deed? 

When a series LLC holds property, the title or deed should specifically name the individual series owning the asset. A common naming convention is: [Master LLC Name], LLC – [Series Name] Series. For example, if your master LLC is “Smith Rentals LLC,” a deed for a specific property might be held by “Smith Rentals LLC – Series A.”  

Is a Series LLC the same as a Protected Series LLC? 

No. A “Protected Series” is a specific type of series LLC created under the Uniform Protected Series Act. The primary difference is that a Protected Series is legally recognized as a separate entity with the power to sue, be sued, and enter into its own contracts. Traditional series LLCs in some states may not have this same level of individual legal standing.

Can I add a series later, or do I have to create them all at once? 

You do not have to create all your series at once. One of the greatest benefits of the series LLC is scalability. You can start with just the master LLC and add “child” series as your business grows or as you acquire new assets. In most states, you add a new series by simply amending your LLC’s operating agreement and, in some cases, filing a simple “Certificate of Designation” with the state.

How is a Series LLC different from a Holding Company? 

A holding company is a traditional LLC that owns several separate LLCs as subsidiaries. A series LLC is a single legal entity that contains various “cells” within it. The series LLC is generally less expensive and requires less paperwork than maintaining multiple independent LLCs under a holding company structure.