A Series LLC is a limited liability company with separate membership series. You can place different assets in each series. The intent is for companies with multiple lines of business or distinct assets to be able to separate those assets while avoiding the administrative costs and time associated with organizing a separate LLC for each asset.
First introduced by Delaware in 2002, series LLCs are available in only a handful of other states including Illinois, Iowa, Nevada, Tennessee, Oklahoma, and Utah. A company doing business anywhere in the United Statescould organize as a Series LLC in Delaware (or one of the other states with a Series LLC provision). However, the advantages to organization as a Series LLC for a company outside of (and to a certain extent) inside one of these states is uncertain for the following reasons:
- You would still need to register as a foreign business in the state in which the company was located or transacted its business. This is a requirement for any company that organizes in a state other than its home state.
- It’s uncertain if the Series LLC format would provide the insulation it is meant to provide. That insulation has not yet been tested in court by a creditor trying to gain access via a court challenge. If the case were brought outside the state of organization in a state that didn’t offer the Series LLC form, it’s quite possible that a court would allow a creditor of one series to access the assets of a separate series.
- It’s uncertain whether the Series LLC will be taxed as one entity or if each series would be required to file a separate return. For example, California, which does not offer the Series LLC, has taken the position that with respect to Series LLC organized in other states and doing business in California, each series within the Series LLC is a separate business entity and each has a filing requirement.
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