A series llc, formed under texas law, is an llc that provides in its governing documents for the establishment of a series of members, managers, membership interests, or assets that have. A series llc, formed under texas law, is an llc that provides in its governing documents for the establishment of a series of members, managers, membership interests, or assets that have separate rights, obligations and liabilities and business purposes from the general llc. No matter where you live, you always have the option to form a series llc elsewhere. The difference between a standard llc and series llc is that the language used in the company agreement and certificate of formation for series llc allows for the creations of sub llcs, also called series, within the main company. Pros and cons of forming a series llc for real estate investments.
Theres a lot of talk about series llcs and people are wondering if theyre a smart idea. A texas series llc is a type of limited liability company where investors can own multiple properties and businesses under a single entity. The texas series llc a great tool for investors dallas. A series llc is the latest and by far most sophisticated form of business entity created. A texas series llc is a limited liability company that has the ability to create one or more sub series within a single llc structure. A texas series llc is a limited liability company llc that has the ability to create one or more sub series within a single llc structure. A series llc consists of a master llc with one or more series. Look into all the entities to choose from llc, series llc, limited partnership, family limited partnership, scorp, ccorp. Texas series llc explained series llc benefits cost of. A texas series llc is a limited liability company that has the ability to create one or more subseries within a single llc structure. The series llc is a type of llc that has been around since 1996, originally starting in delaware. A suggested best practice for naming your series llc in. Series llc in texas pros and cons of a texas series llc. Protected series of a series llc have been used in states other than delaware, including states which do not have a series llc law of their own.
Disadvantages of a delaware llc if your llc has its primary place of business in a state other. If operated properly, the debts, liabilities, obligations, and expenses incurred with respect to a particular sub series are enforceable only against the assets owned by that particular sub series and are not. State statutes governing series llcs also remain in flux. Pros and cons of the series llc carrington coleman. Series llc benefits and drawbacks for your business. Texas series limited liability companies generally. A series limited liability company, commonly known as a series llc and sometimes abbreviated as sllc, is a form of a limited liability company that provides liability protection across. What is a series llc in texas and why might you need one. If operated properly the debts, liabilities, obligations, and expenses incurred with respect to a particular sub series are enforceable only against the assets owned by that particular sub series, and are not enforceable against the assets of the llc or. Seventeen different states have legislation regarding series llc, with delaware being the first state to offer such. The pros and cons of series llcs november 16, 2015, 3. Eight states allow the formation of series llcs delaware, illinois, iowa, nevada, oklahoma, tennessee, texas and utah. A delaware series llc in other states can be accomplished. The series llc has become popular because more and more states are allowing these.
A limited liability company, or llc, is a hybrid business structure that combines the simplicity, flexibility and tax advantages of a partnership with the liability protection of a. Under delaware law, a limited liability company llc may be composed of an individual series of membership interests. Many of our clients, especially real estate investors, have heard of the series llc. A series llc is subject to all of the provisions of the llc law as a traditional llc except for those that specifically apply to series llcssuch as the recordkeeping and liability limitation. Series llcs somewhat demystified statebystate kkos. As far as llc laws, which vary from statetostate, texas is very handsoff. Series llc laws essentially removed requirements that each company had to be listed and filed separately. Why and how to do a texas series llc dodge legal group. Under texas law, a series llc is defined as an llc that provides in its governing documents for the establishment of a series of members, managers, membership interests, or assets that have separate rights, obligations and liabilities and business purposes from the general llc. As a result, one protected series within the series llc may be insulated from the debts and liabilities of all other protected series of the llc. Watch out for this trap when drafting texas series llc. The texas series llc provisions were added to the texas business organizations code tboc in 2009 as subchapter m sections 101. An llp, or a limited liability partnership, and a pllc, a professional limited liability company, are both business entities. Under a series limited liability company llc, a main llc can create separate llcs to hold different assets that may or may not be under common ownership andor management with the master llc or any other series.
Formation of texas entities faqs texas secretary of state. The concept is that a single entity may be formed in a state, but separate series. The different entities within the company are all housed under a master llc, which serves as an umbrella entity. A series llc texas is a variant of a traditional limited liability company llc that has. Nevada, illinois, iowa, oklahoma, tennessee, texas and utah. Each has different fees and rules and pros and cons. The 81 st legislature codified series llcs in 2009 by adding subchapter m, sections 101. An sllc is not actually a distinct form business entity, but rather is an ordinary limited liability company.
In essence, a texas series llc is a type of limited liability company. A texas series llc is a limited liability company llc that has the ability to create one or more subseries within a single llc structure. As a startup business, you have the option of setting up a texas series llc while. A company agreement may establish or provide for the. Apart from new states adding series llc statutes every few years, and apart from inconsistencies between states. In texas, a series llc is formed in the same way as any other llc, i.
The texas series llc can allow flexibility to growing entrepreneurs with different facets to their business. A series llc, with various degrees of limitation, is currently available in just over a dozen states. Like the traditional texas llc, limited partnerships, and corporations, the series llc is governed by chapter 101 of the tboc. The low level of regulations can make the texas llc a very attractive option for real estate investors. The series llc sllc includes a master or umbrella llc and other llcs which are separated from each other for liability purposes called cells. Texas is one of about 16 states that permit the use of series limited liability companies llc. Delaware first to allow series llcs, alabama, texas, tennessee, utah, nevada, illinois, oklahoma, iowa, indiana, kansas, missouri, montana, the district of.
Texas adopted legislation in 2009 allowing for series limited liability companies sllcs. The biggest problem with series llcs is that many states including california dont have series legislation and may choose to ignore the laws of the state where the series was created. A series llc texas is a variant of a traditional limited liability company llc that has been authorized for use in this state. If a series llc is formed in delaware but has property in ohio, a nonseriesllc state, it is unclear whether ohio will recognize the series structure for purposes of asset.
Since the texas series llc was authorized by the 81st texas legislature in 2009, subsequent amendments were made to further enhance texas s reputation as a state that is amenable to business and recognizes the importance of asset protection. Pros and cons of a limited liability company nerdwallet. A wy series llc must only file one articles of organization with the secretary. The texas series llc enjoys all of the same benefits listed above. Under a series limited liability company llc, a main llc can create separate llcs to hold different assets that may or may not be under common ownership andor. Pros and cons of forming a series llc for real estate. Attorney william bronchick discusses the pros and cons of the series llc for real estate investors. Pros and cons of forming a series llc for real estate investments nellie akalp september 25, 2019 select rating give it 0. In july 2009 i wrote this post about texas adoption of the series limited liability company. Series llc for real estate investors in massachusetts. However, the series llc seems to have a bit of a mysterious aura that keeps it from being understood. The feasibility of using a delaware series llc in other. Although california doesnt form domestic series llcs, the state does allow series llcs created in other. Learn the top 12 advantages and disadvantages of an llc.