The IRS regards the series LLC as one big entity. This means each series within the structure is not considered separate companies and therefore does not require separate returns. You will have to declare any income you’ve gained from your series LLC.
Costs and Benefits of a Series LLC
How much does a series LLC cost? The cost of forming a series LLC can vary between $50-$1,000.
A series LLC provides additional protection for company assets and is more cost-effective and tax-efficient than a traditional LLC. Benefits of a series LLC include:
- Separation and protection of assets for each child series from liabilities of others
- Lower administrative costs compared to forming multiple LLCs
- Less complex to form and maintain than a corporation
- Greater protection to individual assets held by series companies
- Faster business growth achieved by subdividing the company units
- Tax savings in states that don’t charge sales tax for the rent paid by one series to another
Taxation of Series LLCs
At a federal level, a series LLC should file a single federal tax return for a parent company and all cells. Each state might have its own local taxation regulations for series LLCs, so check with your local authorities.
A series LLC has the same taxation options available to it that a regular LLC does.
If you want the IRS to tax your LLC as a C corporation, you have to submit Form 8832. You’ll then file Form 1120 annually for your business tax return.
The IRS treats one-member LLCs as sole proprietorships for tax purposes, meaning the LLC does not pay taxes and does not have to file a return with the IRS.
If your LLC is a single member LLC, you can file your LLC business taxes with your W-2 income on your personal tax return. Your LLC business is self-employment/sole-proprietorship and is reported on Schedule C.
Regardless of your LLC’s tax classification, if you are operating at a loss or have no income, you still need to file a tax return.
Series LLC Formation in Specific States
Also, in Texas, setting up a series LLC typically ranges from $500 to $5,000.
You can set up the Delaware series LLC for less than many LLCs, with one filing fee, low franchise taxes, one tax return, a separated registration agent fee, and legal separation.
Filing Taxes with a Series LLC
Do I file taxes separately from my LLC? The IRS regards the Series LLC as one big entity, which means separate returns are not required. However, specific situations, such as electing C corporation status or wanting to treat a cell as a separate entity for tax purposes, will require distinct tax filings.