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.
What is the difference between a cell and a series LLC?
Each cell LLC has assets separate from the others, while the master LLC controls all the LLCs in the series. Each cell LLC has its own owners (members) and is liable only for its own debts and obligations. A series LLC has been compared to a corporation with several subsidiaries. 2
What is a Master LLC and series 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.
What is a series LLC (SLLC)?
The series LLC (SLLC) includes a master or umbrella LLC and other LLCs which are separated from each other for liability purposes (called "cells." Each cell LLC has assets separate from the others, while the master LLC controls all the LLCs in the series.
Is a series LLC a good option for your business?
As the laws evolve and the business community becomes more comfortable with the concept, the Series LLC may become a more popular option that more business owners and lawyers may wish to familiarize themselves with. What is a Series LLC? How do you form a Series LLC and form or establish a series? What are the main reasons for forming a Series LLC?
What is the purpose of series LLC?
A series LLC is a unique form of limited liability company ("LLC") in which the articles of formation specifically allow for unlimited segregation of membership interests, assets, and operations into independent series.
Are series LLCs worth it?
Benefits of Series LLC's Reduced startup cost. Only one filing fee is required, and an attorney can set up the parent and cells at less cost than setting up multiple LLCs. There are still some additional documents that must be filed for the individual LLCs in the series. Protection of Assets.
What are the 4 types of LLC?
To help answer both of these questions, let's look at the 8 types of LLC:Single-member LLC for the sole-proprietorship (solo entrepreneur) ... Multi-member LLC (member-managed LLC or manager-member LLC) ... Domestic LLC and Foreign LLC. ... Series LLC. ... L3C Company (low-profit LLC) ... Anonymous LLC. ... Restricted LLC. ... PLLC and LLC.
What is an example of a series LLC?
This uniformity of ownership of each protected series causes the profits and losses of each protected series to flow to members directly and not through the mothership LLC. To use a simple example, ABC Capital LLC can be a single-member Delaware Series LLC with Abel Adams as a member.
Does each series LLC need its own EIN?
Organizations Other Than the IRS May Require Separate EINs It's not just the IRS that may require you to have different EINs for each business under your Series LLC. You will be required to have a separate business bank account for each business and banks typically require an EIN to open a business account.
How is a series LLC taxed?
A series organization is not treated as the owner for federal tax purposes of a series or of the assets associated with a series merely because the series organization holds legal title to the assets associated with the series.
What type of LLC is best?
Single-member is the most popular filing type and is the most affordable LLC formation. There is also significantly less paperwork required....This is similar to a sole proprietorship in that the owner is personally responsible for:Company transactions.Taxes.Debts the business owes.
How can I avoid $800 franchise tax?
Tax-Exempt Status. Aside from the above three exemptions, the only legitimate way to avoid paying the $800 franchise tax is to run a sole proprietorship, as they are not subject to the tax.
How do you want to classify your LLC?
LLCs are classified as “pass-through” entities for tax reasons, meaning the business profits and losses will flow through to the personal tax return of each member. An LLC can also elect to be taxed as an S-Corporation or a C-Corporation. To be taxed as an S-Corporation, the LLC must file IRS form 2553.
Which states do not recognize series LLC?
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.
How do you name a series LLC?
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. The name of the series must contain the phrase “Protected Series” or “protected series” or the abbreviation “P.S.” or “PS.”
How do I set up a serial LLC?
SET UP YOUR SERIES LLCSTEP 1: NAME YOUR SERIES LLC. Series LLC naming rules vary from state to state. ... STEP 2: CHOOSE A REGISTERED AGENT. A registered agent is a person or business that sends and receives legal papers on your behalf. ... STEP 3: DOCUMENT YOUR SERIES LLC.STEP 4: CREATE A SERIES LLC OPERATING AGREEMENT.
What states have a Series LLC?
The series LLC is different from a traditional Limited Liability Company (LLC). In fact, the series LLC is not not available in all states and has only been adopted in Delaware, Nevada, Illinois, Iowa, Oklahoma, Tennessee, Texas and Utah.
Is a series LLC the same as 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.
Is a series LLC an S Corp?
A Series LLC Treated as an S-corporation 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. However, there are a few circumstances when an S-corporation may be required to pay taxes.
How much is a series LLC in Illinois?
The standard filing fee for an Illinois LLC Annual Report is $75.00. For a Series LLC with active series, that $75.00 fee is increased by $50.00 for each established series. This reduced fee of $50.00 provides another benefit to organizing as 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. But who uses a Series LLC? One example is rental property owners. A Series LLC can give rental property owners a way to separate their real estate investments from one another. Businesses that operate multiple channels of revenue (or have separate teams or divisions in different states) may determine that a Series LLC is the best fit for their company as well.
What Is a Traditional LLC?
The first Limited Liability Company , or LLC, was formed in Wyoming in 1977. It took the IRS 11 years to recognize this type of business formation. Since then, LLCs have grown in popularity with an average annual growth of 20 percent. One key factor contributing to their popularity is that they provide small business owners with protections when it comes to safeguarding personal assets. This means that a business owner can only lose money invested in the business and will not personally be required to pay back debts or cover damages when facing a lawsuit. Many business owners also prefer forming their business as an LLC due to the flexibility it offers, low-cost involved and less complicated tax preparation, especially when it comes to single-business tax reporting.
Why do people form LLCs?
Since then, LLCs have grown in popularity with an average annual growth of 20 percent. One key factor contributing to their popularity is that they provide small business owners with protections when it comes to safeguarding personal assets. This means that a business owner can only lose money invested in the business and will not personally be required to pay back debts or cover damages when facing a lawsuit. Many business owners also prefer forming their business as an LLC due to the flexibility it offers, low-cost involved and less complicated tax preparation, especially when it comes to single-business tax reporting.
Is a series LLC a good choice?
Whether a Series LLC or regular LLC is the best choice for you, it's good to be cautious and seek professional advice before making any major business decision. So if you have a complex business that you want to simplify and operate as efficiently as possible, you might want to meet one-on-one with a local CPA or seek the advice of a company like Incfile that specializes in LLC formation with state-specific expertise. The right decision could save you money, time and years of legal headaches.
Is a series LLC worth it?
If a Series LLC is available to you, it’s definitely worth thinking further about whether your business model could benefit from it. Especially if you are a startup or individual who wears many hats in your company operations (as lots of entrepreneurs do these days), forming a Series LLC could save you plenty of time and administrative effort that you could devote to growing your business.
Can a series LLC go bankrupt?
You might also think that a Series LLC would offer you full bankruptcy protection in the event that you get sued or suffer losses in one of your Series LLC companies. While this may be true in one state, it might not be the case in another — Series LLC laws can vary greatly state by state.
Is a DBA a separate entity?
A DBA is not a formal business structure or even a separate business entity but rather an extension of your company.
What is a series LLC?
Series limited liability companies organize several businesses under one general business group, with each LLC within the grouping operating as an independent business. Some states, including California, don't allow the organization of series limited liability companies, but the state still recognizes series LLCs organized and registered in other states that approve the type of business corporation. In 2011, the Internal Revenue Service required each LLC in a series holding to file federal taxes as separate companies, and many states, including California, follow the federal tax requirements in collecting state taxes on company profits.
What does it mean to incorporate a company under federal and state limited liability laws?
Incorporating a company under federal and state limited liability laws means potential protection against any lawsuits for damages.
What states have restricted limited liability companies?
Only one state, Nevada, recognized restricted limited liability companies in 2011. The Nevada law allows creation of the restricted LLCs, mandates specific rules for registering corporations under state laws and issues rules for registering the public sale of corporate stock and regulations outlining the voting power of various shareholders of the LLC. The law also outlines evaluation and distribution of the restricted LLC's corporate shares. The most significant section of the law allows the company to re-evaluate the worth of the LLC based on a formula outlined in the law. This formula includes the option to reduce the value of the company based on a new market-value formula that reduces the valuation discount of the firm. The restricted LLC then has less value, with lower tax federal and state tax liabilities.
How to register a limited liability company?
Businesses organized as limited liability companies typically register with the office of the secretary of state. Rules for the application vary with each state but usually include a unique business name and filing articles of organization for your business. Most states also require payment of a filing fee, identification of a registered agent and filing for new business licenses and permits. Some states also require the announcement of the LLC formation by publishing a formal statement in a local newspaper for a set number of days.
What is alternative organization?
Alternative organization also includes partnerships and standard limited liability companies, or LLCs. The type of legal organization impacts the method of filing state and federal business taxes. The structure also determines the methods used in taking company tax deductions and selection of official forms for filing yearly taxes.
What is the Nevada law on LLCs?
The Nevada law allows creation of the restricted LL Cs, mandates specific rules for registering corporations under state laws and issues rules for registering the public sale of corporate stock and regulations outlining the voting power of various shareholders of the LLC. The law also outlines evaluation and distribution ...
Is a series LLC a general business?
Series limited liability companies organize several businesses under one general business group , with each LLC within the grouping operating as an independent business. Some states, including California, don't allow the organization of series limited liability companies, but the state still recognizes series LLCs organized and registered in other states that approve the type of business corporation. In 2011, the Internal Revenue Service required each LLC in a series holding to file federal taxes as separate companies, and many states, including California, follow the federal tax requirements in collecting state taxes on company profits.
What is a series LLC?
A series LLC is a unique form of limited liability company that provides protection from liability across multiple individual “child” series within each main “parent” series LLC protected from liabilities arising from the other individual series. Each individual child series is treated as if it were its own LLC for liability purposes.
What is a traditional LLC?
A traditional LLC is a tried-and-true method for managing a single property. However, the series LLC model allows you to create a “child” company for each individual asset. This structure is limited only by the number of properties you choose to own. Maybe you only have one property right now, and the traditional LLC seems like it would do you just fine. We encourage you to think more long-term about your goals as an investor. Even if you’re 80 percent sure you’re going to be a one-and-done investor, why limit yourself when you can leave your options open at no extra cost? That leads directly into the next great feature of the (S)LLC.
Is an LLC a good entity?
Traditional LLCs are just fine, and they’re useful entities to be sure. However, they do have their limits. That’s why we are such big fans of the series LLC—there’s no denying that its features make it a much wiser choice for the savvy, forward-thinking investor. The series LLC—or (S)LLC—offers anonymity, lawsuit protection, compartmentalized liabilities, and it may reduce operating costs and streamline administration. Here are the details on some of our favorite features of this increasingly popular entity.
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.
How much is the annual tax for a series 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 is given by states that honor the series LLC structure.
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 LLC operating agreement?
An LLC operating agreement is a legal document that outlines the ownership structure and member roles of your new LLC. A series LLC requires a carefully written operating agreement to assure your series is protected.
Can you add an LLC to a series?
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.
What is a Series LLC?
An LLC ( limited liability company) is a form of business ownership recognized by all U.S. states . An LLC is not a corporation, but it does provide the same liability protection as a corporation since it is separate from its owners (called "members" ). An LLC with several members may be taxed as a partnership, with the profits passing through to the partners/members according to their share of the business. LLC's are popular because they are simpler to form than a corporation while providing comparable liability protection. 1
Why do real estate investors use series LLC?
Real estate investors with multiple properties use a series LLC to keep the liability for each one separate from the others. 3
What is SLLC in business?
A few states require a similar form called a Certificate of Organization. The series LLC (SLLC) includes a master or umbrella LLC and other LLCs which are separated from each other for liability purposes (called "cells.". Each cell LLC has assets separate from the others, while the master LLC controls all the LLCs in the series.
How to form a series LLC in Illinois?
To form a series LLC in Illinois, you must use a different form for the Articles of Organization, and the filing fee is more than for a single LLC. After the original Articles of Organization are filed, each individual LLC is formed using a Certificate of Designation for each LLC within the series. 3
How many state registrations are required for an LLC?
Only one state registration. Only the parent LLC must be registered with the state, which means fewer legal costs and registration fees. It also means only one annual or biennial fee is needed for the series. This assumes that all LLCs in the series are registered in the same state.
How to register a series LLC?
To register a series LLC in your state, go to the website of the state business division (usually part of the secretary of state or secretary of commonwealth website) and look for LLC registration. The Series LLC option should be listed if it is allowed in the state.
Which state allowed LLCs?
Delaware was the first state to allow series LLCs, and most of the others have followed its model. Delaware has a registered series LLC entity which can be formed by providing the name of one of the LLCs in the series and the name of the registered series. 4 .
What is series LLC?
The series LLC is essential ly a single umbrella entity that has the ability to partition its assets and liabilities among various sub-LLCs or series . Each sub-LLC may have different assets, economic structures, members, and managers.
Which state was the first to have a series LLC?
Complex business arrangements can sometimes be better managed by the use of a series LLC. As stated above, the first state to enact series LLCs was Delaware. The Delaware statute protects the assets of one series from the liabilities of another series.
Can you form a series LLC in Delaware?
The fact that a state has not adopted a series LLC statute does not prohibit one from forming a Delaware series LLC and having it registered to do business in the state, though there may be complications in doing so from state to state.
Can a series LLC file one tax return?
Some practitioners have expressed concerns that the Internal Revenue Service will not permit the series LLC to file just one tax return for all the series combined. The California Franchise Tax Board’s position is that each series in a Delaware series LLC is considered a separate LLC, must file its own Form 568 Liability Company Return of Income and pay its own separate LLC annual tax and fee if it is registered or doing business in California.
Is Delaware series LLC a risk?
Like LLCs in general, the Delaware series LLCs are not without certain risks. There are numerous unresolved issues regarding the series LLC, including, without limitation, tax issues and creditor/debtor issues (i.e., the interplay between the Federal Bankruptcy Code and state series LLC law.
What is a Series LLC?
The Series LLC was first introduced by Delaware in 1996. The concept was borrowed from Delaware’s statutory trust law, which was particularly popular with mutual funds. Under the statutory trust law, one investment company could be formed as a trust with separate series. Each series could have its own portfolio with different investors, investment strategies, and so on. When the Series LLC became an option it allowed mutual funds to use the LLC—a more flexible vehicle than the statutory trust. Although that’s how it began, a Series LLC can be used for many purposes beyond setting up mutual funds.
What are the main reasons for forming a Series LLC?
There are a few common reasons why organizations choose to form a Series LLC. These include the following:
What are the requirements for a series LLC?
Again, you have to check the specific statute but in general (1) the formation document must provide notice of the limitation of liability of the series the LLC may establish , (2) the operating agreement must state that the assets associated with a series are the assets of that series only, and (3) the books and records of the Series LLC and each series must account for the assets associated with each series separately from the assets associated with the Series LLC itself or any other series.
How to form a series LLC?
No filing is required. In other states a series is formed by filing a document, called, for example, a certificate of designation or a certificate of registration, with the state filing office. Delaware takes a third approach. It has two types of series—“protected series” which are established in the LLC agreement with no filing required, and “registered series” which require the filing of a certificate of registration with the Delaware Secretary of State.
What are the advantages of LLC?
One of the major advantages of an LLC over other entity choices is that it is so flexible—giving the members many options in deciding how to split the management and financial rights, with few statutory mandates. That flexibility exists in the Series LLC and in each series.
What states can you form a series LLC?
Not all states do. The jurisdictions that do authorize Series LLC formation include the following: Alabama. Arkansas.
Can a series LLC be formed in another state?
Additionally, California and some other states do not allow Series LLC formation but do recognize Series LLCs formed in another state. Such foreign LLCs can register and do business within these states. It is also important to be aware of some states, like North Dakota and Wisconsin, that have “false series” laws.
LLC vs PLLC Similarities
As you may have gathered ― based on the fact that both of these business types include the letters “LLC” in their names ― there are quite a few similarities between the LLC and the PLLC.
Conclusion
The professional LLC and the regular LLC may look alike on paper, and there are indeed many areas of overlap. In fact, the PLLC and the LLC are nearly identical in every way, but there are a few key factors which make these business types distinct.
What is a series LLC?
A series limited liability company, known as a series LLC, is a form of a limited liability company that provides protection from liabilities arising from the other series. Each series serves as a separate LLC, with the original LLC often called the base, parent, master, or umbrella LLC.
What is the benefit of a series LLC?
As with a series LLC, the main benefit of a holding company is asset and liability protection. Here are other advantages of this structure.
What is the primary goal of the series?
The primary goal of the series is legal liability protection, meaning if a lawsuit is filed against one business in the series, it will not impact the others.
Why are operating companies considered separate legal entities?
Less risk. Because operating companies are separate legal entities, there can be less risk in investing in new ventures.
How many states have holding companies?
Regulatory complexity. Holding companies are legal in all 50 states, but regulations vary. The rules for operating a holding company can be quite complex.
Is a holding company an LLC?
A holding company may be set up as an LLC.
Does each LLC have its own bank account?
Separate accounting. Each LLC in a series must have its own bank account and accounting structure, which can get complicated.