Series LLCs allow for the creation of separate entities within one overarching entity, each with its own assets and liabilities. This section of the text explains the basic structure of a Series LLC and highlights the importance of obtaining a separate Employer Identification Number (EIN) for each series to avoid confusion and maintain clear records.
Some clients seek legal assistance to ensure assets remain separate between each series. The parent LLC typically acquires one main EIN. For guidance on whether each series requires its own EIN, it is advisable to consult an attorney or accountant.
Delaware, among other states, does not mandate a separate franchise tax report for each series within a Series LLC. To maintain financial clarity, each series should have its own bank account and EIN. It’s possible to apply for an EIN online with ease.
The legislation for Series LLCs differentiates between registered and protected series, with the former requiring formal approval and official documentation to be recognized under the state’s law.
States Allowing Series LLC Formation
A Series LLC has the capability to split its assets and operations into independent segments, each with distinct members and management. The following states permit the formation of LLCs with the option to create series:
- Alabama
- Arkansas
- Delaware
- District of Columbia
- Illinois
- Indiana
- Iowa
- Kansas
- Missouri
- Montana
- Nevada
- North Dakota
- Oklahoma
- Puerto Rico
- Tennessee
- Texas
- Utah
- Virginia
- Wyoming
Real estate investors often choose Series LLCs to segregate and safeguard properties from the liabilities associated with other series within the same LLC. Similarly, companies with multiple business centers utilize Series LLCs to protect each profit center.
It is imperative to verify with local licensing boards and legal advisors whether a Professional LLC (PLLC) is necessary in your state. Certain states compel licensed professionals to establish a PLLC; others provide the option between a PLLC and an LLC.
Each series within a Delaware Series LLC is obligated to apply for its EIN since they are recognized as distinct entities for tax matters. Banks typically necessitate an individual EIN for each series to facilitate their own banking transactions.