What is a series LLC? For several centuries, corporations were the top choices for a limited liability entity. Over time, appellate case decisions, corporate statutes, and tax regulations have made corporations a predictable, well-established, and easily understood type of entity.

From Wyoming in the 1970s to Delaware in the mid-1990s, new types of limited liability entities were created. Limited liability companies, limited liability partnerships, and limited liability limited partnerships began. In 1996, the Delaware LLC Act enacted an amendment to create a Series LLC.

What is a Series LLC?

The idea of multiple LLCs has been established for a long time. However, a Series LLC is a newer concept in business ownership. A limited liability company (LLC) is a type of business ownership recognized in every U.S. state.

While different than a corporation, an LLC provides the same liability protection because it's separate from its owners, or members. A multiple-member LLC can be taxed as a partnership. This means the profits pass through the partners or members according to their ownership share. LLCs are simpler to form and provide the owner with the same liability protection as a corporation, which makes them a popular entity choice.

Why Makes a Series LLC Unique?

A Series LLC is unique in that it includes a master or umbrella LLC and other LLCs, each of which has its own managers, members, or LLC ownership interests. The series can be unique entities, segregated from the liabilities of the other LLCs. This means the creditor of one series within an LLC won't have access to the assets of a different series in the LLC. 

There are other differences, such as each series:

  • Using a unique name, bank account, and books and records, so it operates as a separate entity. 
  • Having different managers and members for each series, all with different rights and obligations. 
  • Entering into contracts, holding title to real and personal property, and being able to sue or to be sued. 
  • Each LLC having separate assets, all of which the master LLC controls. 

A Series LLC can be compared to a corporation with several subsidiaries. Beginning in Delaware and expanding into Iowa, Texas, Illinois, Oklahoma, Nevada, Tennessee, Wisconsin, Utah, and the Commonwealth of Puerto Rico, some form of the Series LLC is recognized as a business form. California, as well as a few other states, don't allow Series LLCs to be formed under state law. However, Series LLCs can be formed in other states, registered with the state, and operated in the state.

What Businesses Can Benefit From an LLC?

Some businesses that may benefit from an LLC are:

  • A property management company with individual properties that could operate under an umbrella LLC.
  • An arts and crafts business, such as a woodworking business, could have several LLCs in the series, depending on its customer base.
  • A business with separate products or services that can remove the financial responsibilities from each other.

Your state's Secretary of State or Secretary of Commonwealth website can show you if your state allows a Series LLC. You can also find out how to form a Series LLC in your state.

Benefits of a Series LLC

There are many benefits to forming a Series LLC, including:

  • A reduced startup cost: There's only one filing fee, and a lawyer can set up the parent and cell entities at a lower cost than forming multiple LLCs.
  • Protection of assets: The individual assets are removed from the liabilities of the other cells.
  • Less administration: There are no limits to the number of LLCs you form. However, each of them is separate and administered separately, which means you have lower administrative expenses and time constraints 
  • One tax return: The parent LLC is required to file a tax return, though it includes all the cell LLCs. This can be complicated, so it's best to hire an experienced tax preparer.
  • Simpler than corporation/subsidiary structure: This structure doesn't have the complex taxes, structure, or formal records as a corporation with subsidiaries.
  • Less sales tax: This varies by state, but the rent paid between the series' cells may not owe sales tax. You need to verify specifics with your state. 
  • One state registration: The parent LLC is registered with the state, which means one set of associated legal costs and registration fees, as well as only one annual or biennial fee.
  • One tax return: The parent LLC is required to file a tax return, though it includes all the cell LLCs. This can be complicated, so it's best to hire an experienced tax preparer.

If you need help with a Series LLC, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top five percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.