"In overall structure, the series LLC has been described as a master LLC that has separate divisions, which is similar to an S corporation with Q-subs."
This type of LLC allows entrepreneurs to create different subdivisions under one LLC to segregate their assets and liabilities.
LLC Basics: A Limited Liability Company (LLC) is a hybrid business entity that offers the limited liability of a corporation and the flexibility of a partnership. Understanding basics of LLC is essential before understanding Series LLC.
Series LLC Introduction: A Series LLC is a unique type of LLC that allows you to create separate series or units within one LLC, each with its own assets, liabilities, and members.
Advantages of Series LLC: By establishing different series, you can create a wall between the assets of the different series that make up the LLC, which offers unique asset protection benefits. Series LLCs also offer flexible management structures, simpler accounting, and tax benefits.
Disadvantages of Series LLC: While the structure of a Series LLC is unique and offers asset protection benefits, it is not yet recognized in all states. Furthermore, it requires additional paperwork and can be more expensive to set up.
Legal Framework: The structure of a Series LLC is based on state laws. So, understanding the state-level perspective on Series LLC is critical. At present, not all states recognize Series LLC.
Formation: Like standard LLCs, Series LLCs have to file articles of organization with the state. However, in the case of Series LLCs, it requires additional documentation to establish each series. How to form the Series LLC is a critical topic to understand.
Operating Agreements: An operating agreement is a legal document that outlines the rules by which the Series LLC will govern itself. With a Series LLC, the Operating Agreement is particularly critical because it governs not just the LLC but all separate series.
Management Structure: Series LLCs offer flexibility in management structures. Understanding the options available and requirements under statute is essential.
Taxation: Understanding the tax implications of a Series LLC is essential. While a Series LLC is treated as a single entity for federal tax purposes, some states may treat each series as a separate entity.
Liability Protection: Asset protection through liability isolation is the primary benefit of Series LLC. Understanding how each series is protected and how it differs from traditional LLC structure is essential.
Transferring Assets: Transferring assets between series and managing the tax implications of such transfer is an important topic to understand.
Legal Interpretations: Series LLC is a relatively new legal entity, and there is still some grey area on the application of certain legal concepts. It is important to stay updated on new legal interpretations that may have an impact on your Series LLC.
Management Strategy: Management strategy for Series LLC can differ significantly from that of traditional LLC. Understanding how to strategize and manage the Series LLC is crucial.
Series LLC vs Traditional LLC: Lastly, understanding the differences between Series LLC and traditional LLC, their benefits and drawbacks could help decide which one better fits your business need.
Protected Series LLC: This type of series LLC is specifically designed to provide asset protection for different business ventures within the LLC. Each individual series has its own assets and liabilities that are separate from the other series.
Unprotected Series LLC: This is a series LLC where each series is not protected from the liabilities of the other series.
Domestic Series LLC: A series LLC that is formed and operates within the United States is known as a domestic series LLC.
Foreign Series LLC: This type of series LLC is formed in another country but does business within the United States.
Single Series LLC: As the name suggests, this is a series LLC that only has one series within it.
Multi-Series LLC: This kind of series LLC has multiple series under the umbrella of one LLC.
Sub-Series LLC: A sub-series is a smaller entity within a larger series LLC. These may be used for specific projects or investments that need their own liability protection.
"Many form an LLC in order to protect personal assets from a legal claim relating to their real estate investment or business liabilities."
"Additional liability protection may be gained by properly forming and maintaining a separate LLC to hold each property or business entity."
"However, there are costs and administrative burdens associated with properly forming, qualifying, and maintaining each separate LLC."
"Although each cell of a Series LLC can own distinct assets, incur separate liabilities, and have different managers and members, a Series LLC may be able to pay a single set of annual state fees and may be able to file one income tax return each year."
"The key value is that liability incurred by one unit does not cross over and jeopardize assets titled in or allocated to other subsidiary units of the same Series LLC."
"Under Delaware law, any particular series may be dissolved by 2/3 approval of the ownership interests, or a simple majority if provided for in the operating agreement."
"Additional series can be formed or dissolved without any public filing by simply amending the Series' 'limited liability company agreement.'"
"Most states with the series LLC have followed the Delaware model, rather than the model in Illinois which requires each series to be designated with the Secretary of State."
"Under Delaware law, any particular series may be dissolved by 2/3 approval of the ownership interests, or a simple majority if provided for in the operating agreement."
"The series LLC has been described as a master LLC that has separate divisions, which is similar to an S corporation with Q-subs."
"A Series LLC may be able to pay a single set of annual state fees and may be able to file one income tax return each year."
"Additional liability protection may be gained by properly forming and maintaining a separate LLC to hold each property or business entity. However, there are costs and administrative burdens associated with properly forming, qualifying, and maintaining each separate LLC."
"The key value is that liability incurred by one unit does not cross over and jeopardize assets titled in or allocated to other subsidiary units of the same Series LLC."
"Additionally, Illinois states that each series is a separate entity if provided for in the operating agreement. Delaware is silent on whether each series is a separate entity."
"Any particular series may be dissolved by 2/3 approval of the ownership interests, or a simple majority if provided for in the operating agreement."
"Additional liability protection may be gained by properly forming and maintaining a separate LLC to hold each property or business entity."
"A Series LLC may be able to pay a single set of annual state fees and may be able to file one income tax return each year."
"Most states with the series LLC have followed the Delaware model, rather than the model in Illinois which requires each series to be designated with the Secretary of State."
"Theoretically, each series is protected from liabilities arising from the other series."