What is a Series LLC?
A Series LLC establishes separate individual limited liability companies under one umbrella company. Each series operates like a separate entity with unique assets, members, and business activities. This structure permits it to have multiple "series" or "cells", each functioning as a distinct entity. Forming and managing a series LLC is usually simpler than creating multiple separate LLCs.
Advantages of a Series LLC
- Liability Protection: Each series is protected against the debts and liabilities of other series.
- Tax Efficiency: At a federal level, a Series LLC should file a single federal tax return for a parent company and all cells. However, this IRS guidance is not yet adopted, leading to confusion.
Operating a Series LLC
- Entity Separation: By setting up each company as a separate entity, you are keeping each business venture legally separate from the other companies within the series LLC.
- Management Structure: Different managers or members in every series are possible with distinct obligations and rights.
IRS Treatment and Legal Status
- Proposed Series LLC Regulations: The IRS treats each Series of a Series LLC as a separate entity regardless of its state law status.
- Asset Protection: In case of lawsuits, this structure protects the assets of one series from being used to settle claims against another.
A Series LLC is a specific kind of legal structure that allows businesses to create separate but individual and distinct series within the same legal entity. It offers entrepreneurs the ability to establish multiple limited liabilities without having to start multiple businesses.