The Series LLC Guide
Corporate Compliance by Local Corporate Guides®
The Series LLC is a special type of limited liability company available in some US states. Currently, fourteen states and two non-state jurisdictions have laws governing the formation of Series LLCs, but the Series LLC business model continues to grow in popularity and will likely expand to additional states in the years to come.
We recommend working through this starting a Series LLC guide to gain an understanding of the general concept before researching requirements specific to your state.
Starting a Series LLC - Now What?
- Name your Series LLC
- Appoint a registered agent
- Choose your management style
- Submit Articles of Organization
- Obtain EINs from the IRS
- Create an Operating Agreement
- Open Series LLC bank accounts
- Fund your Series LLC
- Get business licenses and permits
- File any required state reports
- Pay your Series LLC's taxes
- Expand your Series LLC to new states
What is a Series LLC?
First established as a business entity in Delaware in 1996, a Series LLC is a limited liability company that consists of a single LLC with one or more divisions, called “series,” that can have their own assets, business objectives, and limited liability separate from the parent organization and each other. If properly formed and maintained, legal actions against individual series usually won’t be enforceable against the Series LLC as a whole or other series within it.
The Series LLC business structure allows an LLC to wall off and protect its business interests and assets in ways that closely resemble forming completely separate LLCs. This is why the Series LLC can be so attractive to real estate companies and mutual funds. It allows entrepreneurs to avoid forming multiple, legally independent LLCs to segregate their assets and business interests—which can be costly and time-consuming—while retaining something close to the asset protection available through forming multiple LLCs.
Which States Allow Series LLCs?
Apart from the Delaware Series LLC, a total of fourteen states and two non-state jurisdictions have statutes governing the formation of domestic Series LLCs, including Alabama, Delaware, the District of Columbia, Illinois, Indiana, Iowa, Kansas, Missouri, Montana, Nevada, Oklahoma, Tennessee, Texas, Utah, and Wyoming. California doesn’t form domestic Series LLCs, but the state recognizes these types of LLCs. This means a Series LLC formed elsewhere can register as a foreign entity in California and do business in the state.
Starting a Series LLC
Series LLC Name
In general, your Series LLC’s name will need to include a corporate designation like “Limited Liability Company,” “LLC,” or “L.L.C.” (though the term “Series” does not need to be appear in the name), but rules for naming each series vary from state to state. One effective strategy is to include the name of your Series LLC at the beginning of each series’ name to help clarify the relationship between each organization.
Check your Series LLC name availability with a Free Business Name Search.
Every state where your Series LLC operates will require it to appoint and maintain a registered agent in that state, and the registered agent for each series will be the same as the registered agent for the parent organization (at least within a single state). A registered agent is an individual or business ized to receive service of process (legal notices) on behalf of a legal business entity, and the agent must be available during ordinary business hours at a publicly-listed street address.
Learn everything you need to know about designating a Registered Agent.
Series LLC Management
One of your company’s first decisions will be whether or not it will be managed by its members or owners (member-managed) or by managers appointed or hired for that purpose (manager-managed). These are basically the same concepts involved when you start an ordinary LLC, but for a Series LLC you’ll also need to decide if each individual series will be member-managed or manager-managed because different series can have different members and managers associated with them.
Learn more about LLC Members and Managers.
Series LLC Articles of Organization
Now that you’ve decided to form a Series LLC, it’s time to make it official. You will need to file a state form—usually called Articles of Organization or a Certificate of Formation—with your state’s secretary of state or equivalent government agency. Forms, fees, and requirements vary from state to state, but at minimum you’ll need to include your Series LLC’s name, information about your registered agent, and a signature. The Articles of Organization must also include a provision specifically izing your Series LLC to establish series.
In most states where you can form a Series LLC, you can establish individual series merely by amending your operating agreement, but some states—Illinois, for example—require each series to register separately with the state. In Delaware, moreover, you can even do both. What Delaware calls a “protected series” get established through the Series LLC operating agreement, as in most states, and the new Delaware “registered series” gets formed by filing a Certificate of Registered Series with the state.
We offer a free traditional LLC Articles of Organization template that you can adapt to the needs of your Series LLC. Or if you’ve decided the Series LLC structure isn’t right for you, check out our comprehensive LLC Guide to learn more about starting and maintaining a traditional LLC.
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.
Everything you need to know about getting an EIN.
Series LLC Operating Agreement
Your Series LLC Operating Agreement is the document that defines your company’s internal rules, and at least in most states you will establish or dissolve series by amending your Operating Agreement. Since the Operating Agreement will define your organization’s management structure, who owns what percentage of the company, and how profits and losses will get distributed, you should likely hire an experienced attorney to guide you. Each series may also have an operating agreement of its own.
Not sure where to get started? We have a free LLC Operating Agreement template for download that you can adapt to the needs of your Series LLC.
Series LLC Bank Accounts
Maintaining a clear separation between your personal assets and your Series LLC’s assets—as well as between the assets held by different series—is key to maintaining limited liability. To this end, you will need to open distinct bank accounts for your Series LLC and each of the individual series within it.
At Northwest, we provide a sample LLC Resolution to Open a Bank Account that you can use as a template for writing your own.
Series LLC Funding & Assets
No Series LLC can get off the ground without funding. You’ll need to determine how much money the parent organization and its individual series need to get started and who will contribute money what (and how much!). Members will receive a proportionate percentage of membership interests based on their contributions.
Business Licenses and Permits
Most states (and many cities and counties) require licenses for certain business activities. Depending on the different functions and activities of your Series LLC and its individual series, you may need to obtain licenses and permits to do business in the state. This will require some research, since few states and municipalities lay out their requirements in a single place.
Series LLC Reporting Requirements
Most states where you form a Series LLC, along with any other states where your company does business, will occasionally want you to update or confirm your information as it appears on the state’s records. These updates are usually called annual, biennial, or periodic reports. Some states only require the Series LLC itself (that is, the parent organization) to file compliance reports of this kind, while some states expect reports from each series.
Learn more about state reporting requirements.
Series LLC Tax Treatment
According to IRS proposed regulations for taxing Series LLCs, each series of a Series LLC should get treated as a separate taxable entity when it comes to paying federal income taxes. This allows a Series LLC and its individual series to take advantage of the various tax elections available to an ordinary LLC. Furthermore, at least in most cases, one series should not be liable for federal income taxes related to any other series or the parent organization. So just as the Series LLC structure allows you to segregate assets and business purposes, it also normally allows you to segregate each series’ tax liability.
Expanding to New States
Though you’ll form your Series LLC in one state, you may want to purchase assets or otherwise expand your business to other states. This typically requires getting a Certificate of Good Standing from your charter state and registering as a foreign entity in other states where you want to do business. You’ll need to pay a filing fee to register as a foreign entity and appoint a registered agent to receive service of process for your Series LLC in each state.
Learn more about Foreign LLC registration.
Will Other States Recognize My Series LLC?
While there are many useful, money-saving features of the Series LLC, it remains a relatively unfamiliar and untested entity in the business world, and the relevant state laws continue to evolve (including recent changes to the Delaware Series LLC). Therefore, it is possible that if you form your Series LLC in a state that allows for it (such as Delaware) and then register as a foreign LLC in a state that doesn’t form Series LLCs (such as New York), courts in states that don’t permit the formation of Series LLCs might ignore a series’ or a series organization’s separate limited liability and treat the company as an ordinary limited liability company instead.
If your organization intends to operate or hold assets in states that don’t permit the formation of Series LLCs, starting an LLC (or multiple, independent LLCs) might be the safer option.