What is a Series LLC? Since 2009, Texas became the eighth state to allow the formation of a Series Limited Liability Company. A Series LLC is a limited liability company (“LLC”) that is divided into separate units (subsidiary series). Each unit has its own assets, members, managers and debt obligations.
How can a Series LLC benefit your business and investments? The purpose of having a Series LLC is to have the liability protection for each unit. In other words, the assets in one series subsidiary unit are protected from the liabilities of the other units. Each series is responsible only for its own debts and obligations which will not affect the other units if administered properly.
How do you form a Series LLC in Texas? A Series LLC is formed by filing a “Certificate of Formation” with the Texas Secretary of State just like any other LLC, but special provisions need to be included in the Series LLC Certificate of Formation. To create the series subsidiary units, you file an “Assumed Name Certificate” with the Texas Secretary of State and the county where the business will operate.
How is a Series LLC taxed? At the state level for Texas Franchise Tax purposes, the Series LLC and subsidiaries are taxed as one entity. At the federal level with the IRS, you have the option of taxation as one entity, or each subsidiary unit can be taxed individually with its own EIN.
What are some other benefits that a Series LLC can provide? In Texas, a Series LLC will save business owners time and money. Instead of creating an LLC for each individual line of business or asset, you may file one Certificate of Formation and create new series units within that same LLC. This would allow individual subsidiary units to receive the limited liability benefits of multiple LLC’s. The alternative to gain the same liability protection would be to form multiple LLC’s for each business or asset you are trying to protect, which would be expensive and time-consuming.
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