A series LLC is a form of limited liability company ("LLC") that allows for segregation of membership interests, assets, and operations into independent series. Each sub-LLC is insulated from others for liability purposes, making it useful for companies with several businesses or investments.
Benefits and Protection
A series LLC goes further in limiting partner liability by forming separate series of companies and allocating assets to them. This prevents partners from becoming liable and distributes assets among companies. The most significant benefit of a series LLC is the liability protection for each series without the cost and paperwork involved in establishing multiple LLCs. Assets owned by one series are generally shielded from liability of other series within the same LLC.
The Series LLC operating agreement is an innovative concept that unites a series, aka cells, within one LLC. The concept was originally introduced by the State of Delaware.
States that currently allow the formation of series LLCs include Alabama, Delaware, and Tennessee. Each state has specific rules and regulations regarding the formation and operation of series LLCs.
Forming a Series LLC in Tennessee
To form a series LLC in Tennessee:
- Choose a Name
- Use the Tennessee Secretary of State business name database
- File Articles of Organization
- Create an Operating Agreement
Tennessee requires Series LLCs to file a Tennessee Annual Report each year with the Secretary of State, Business Services. The minimum filing fee for LLCs is $300.
In November, the Tennessee Department of Revenue (Department) issued two notices to help clarify Franchise and Excise Tax classification of single member LLCs (SMLLCs) and series LLCs.
Naming a Series LLC in Tennessee
When naming a series LLC, ensure that you:
- Choose a name
- Use the Tennessee Secretary of State business name database
- File articles of organization
- Create an operating agreement
Remember that each series is insulated from others, which is particularly beneficial for companies with multiple businesses or investments.
Tennessee requires filing an annual report for series LLCs with the Secretary of State, and the minimum filing fee for LLCs is $300.
In clarifying tax rules, the Tennessee Department of Revenue issued notices in November regarding single member and series LLCs.
The series LLC structures introduced by Delaware are now permissible in several states, including Alabama, Delaware, and Tennessee, each with their own formation rules.
The primary advantage of a series LLC is the liability protection it offers for each series without incurring the costs associated with forming multiple individual LLCs. Assets within one series are typically protected from the liabilities of other series.