Overview of Series LLCs
The Series LLC structure is similar to a corporation with multiple subsidiaries. The difference is that a Series LLC entity can be formed without the cost of creating new entities. With Series LLCs, separate entities are protected from liability if one series has a lawsuit. Series LLCs can be useful for LLCs with multiple businesses wanting to insulate each from risks of others. Examples include real estate investors with rental properties and investment firms with various strategies. Without Series LLCs, separate LLCs would be needed for the same protection.
States Recognizing Series LLCs
The states recognizing Series LLCs currently are:
- Alabama
- Arkansas
- Delaware
- Illinois
- Iowa
- Kansas
- Missouri
- Montana
- Nevada
- Oklahoma
- Tennessee
- Texas
- Utah
Though technically not a state, Puerto Rico residents also have this option. California has strict business regulations with no Series LLCs, but traditional LLCs are common there. Even if your state doesn’t offer Series LLCs, there’s a legal way to get around restrictions of location.
Delaware was the first state to allow Series LLCs. Other states include: Oklahoma, Illinois, District Of Columbia, Indiana, Iowa, Tennessee, Nevada, Utah, Texas. Most states don’t allow Series LLC formation but recognize those formed elsewhere, which can register as foreign LLCs to conduct business. States allowing Series LLC formation have varying rules, so check individual state regulations when establishing a business.
Legal and Tax Considerations
Issues remain on federal taxation of Series LLCs with uncertainty over treatment. Proposed regulations aim to provide clarity, but the status remains uncertain. It is important to consult an attorney to ensure a Series LLC meets both business and personal needs. States recognize foreign Series LLCs, though rules differ.