A Series LLC consists of the “parent” LLC with one or more series under the parent. Each series acts as its own business, with separate assets and liabilities, similar to having separate entities but without the expense and administrative burden of multiple entities.
States Allowing Series LLCs
Only 14 states, the District of Columbia and Puerto Rico recognize series LLCs. Those states are Wyoming, Texas, Nevada, Illinois, Oklahoma, Iowa, Utah, Tennessee, Delaware, Minnesota, Wisconsin, Kansas, Alabama, and Indiana.
States Not Recognizing Series LLCs
Pennsylvania does not allow Series LLC formation.
If you operate businesses throughout several different states, check state laws to make sure each state in which you do business recognizes series LLCs, as the option may not be available in all states.
The utility of a Series LLC may be illustrated by comparing it to the alternative—forming separate LLCs for asset protection. A series LLC offers similar protection with increased flexibility and lower costs.
The series LLC concept is relatively new and, like a regular LLC, provides the ability to isolate assets and liabilities. It can offer distinct advantages such as tax benefits and fewer administrative burdens.
Disadvantages
The main disadvantage is that series LLCs are not universally available. Not all states recognize them, and legal consistency across state lines may be an issue.
You can convert an existing LLC into a series LLC, but each series must maintain separate records, finances, and assets for clear distinction.