What is a Series LLC
A Series LLC is a unique form of a limited liability company (“LLC”) in which the articles of organization specifically allow for segregation of membership interests, assets, and operations into independent series. Each series operates like a separate entity with a unique name, bank account, and separate books and records. A series LLC may have different members and managers in each series. The rights and obligations of these members and managers differ from series to series. Each series may enter into contracts, sue or be sued, and hold title to real and personal property. Each series might have to file its own tax return based on the membership structure.
Not All States Permit Series LLC
The Series LLC is a creation of the state. Only in certain states are Series LLCs allowed to be formed. Delaware was the first state to enact legislation authorizing the creation of series LLCs. Several states have followed suit including Illinois, Iowa, Nevada, Oklahoma, Tennessee, Texas, Utah and Puerto Rico. Some states, like California, do not allow for Series LLCs to be formed under state law but Series LLCs formed in other states can register with the state and do business in the state (as most other non-Series LLC states require some form of registration before doing business there).
One or Multiple Bank Accounts Required?
We have been getting requests to provide accounting services for Series LLCs that are only using one bank account for the entire Series. We don’t advise using only one bank account for a Series LLC. We advise each cell within a Series LLC to have its own bank account until there is a precedent set in case law that says one bank account can be used. Please contact us if you have any questions.
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