While not available in every state, Series LLCs have been around for nearly 30 years.
For entrepreneurs managing separate businesses or assets, maintaining these entities can be highly complex. The Series Limited Liability Company (or Series LLC) can offer a structural solution for organizing your various business ventures under a single legal entity, typically called a "Parent LLC." This month in Spearhead, we discuss the concept of Series LLCs.
What is a Series LLC?
A Series LLC is a form of limited liability company that allows for the creation of separate entities called series (or Child LLCs), each with its own assets, liabilities, and management structure. This type of structure generally offers protection against various risks across your ventures. Additionally, Series LLCs can provide a cost-effective and flexible approach to managing diverse endeavors.
The key advantages of a Series LLC are its flexibility and liability protection. Each series operates as an individual entity, under the Parent LLC, enabling business owners to manage multiple entities or assets efficiently. Additionally, the structure ensures that the liabilities of one series does not affect the others, mitigating risks associated with different ventures.
However, certain risks associated with Series LLCs range from increased costs in maintaining the separate entities to combating recognition in foreign jurisdictions. Always ensure to properly register in the state you wish to conduct business in and set aside reasonable funds to form the series.
Creating a Series LLC
Establishing a Series LLC typically involves filing articles of organization and drafting operating agreements for each series, however it is advised to confirm with the intended state on special requirements. For example, in Texas, certain language is required in the certificate of formation and you must maintain separate records for the assets in each Series LLC.
We note, not all states currently recognize the concept of a Series LLC. Entrepreneurs contemplating a Series LLC should carefully assess the availability and requirements of a Series LLC in their targeted state of operation.
Summary
In conclusion, Series LLCs present an attractive option for entrepreneurs seeking flexibility and liability protection across multiple ventures. Their unique structure streamlines management while offering distinct asset protection. Considering the variations in state laws, seeking professional legal guidance becomes imperative when exploring the viability of a Series LLC for your business portfolio.
Our Advisors specialize in guiding businesses through complex structures like Series LLCs. Contact us today to explore the benefits of a Series LLC.
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