What States Recognize Series LLCs?

The formation of distinct “series” inside a limited liability corporation is possible with a series LLC. Each series may have its own members, business goals, liabilities, and assets. Businesses that desire to divide their assets and liabilities and reduce their exposure to liability should use this structure. Series LLCs are not recognized by all jurisdictions, and different states have different legislation controlling them.

Only 18 states—Delaware, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, Nevada, North Dakota, Oklahoma, Texas, Utah, Wisconsin, Puerto Rico, the Virgin Islands, and Washington, D.C.—recognize series LLCs as of 2021. Businesses in these states can create a series LLC by submitting the relevant documents to the state and paying the associated costs.

Therefore, is a series LLC worthwhile? Your company’s needs will determine the solution. A series LLC can be a useful instrument if you wish to segregate and protect various business lines or assets. In comparison to creating many LLCs, it might also save you money on formation and maintenance charges. It’s crucial to remember that series LLCs are not recognized in all states, and their legal framework might be complicated. Before considering whether a series LLC is the best option for your company, it’s crucial to speak with an experienced attorney or accountant.

The distinction between a series LLC and a restricted LLC is another frequent query. A standard LLC with restrictions on membership interest transferability is known as a restricted LLC. Members are thus prohibited from selling or otherwise transferring their ownership stake without the consent of other members. The development of distinct series within an LLC, each with its own assets, liabilities, and members, is possible with a series LLC, on the other hand. Both arrangements provide some liability protection, but a series LLC offers more management and asset separation options.

Lastly, does each series LLC require a separate EIN? Yes, it is the answer. For taxation purposes, each series inside an LLC is recognized as a separate entity and is required to have its own EIN. This indicates that if your series LLC contains multiple series, you will need to apply for multiple EINs.

In conclusion, if you’re thinking about creating a series LLC, it’s crucial to speak with an experienced lawyer or accountant to be sure it’s the best structure for your company. Series LLCs have a number of advantages, but not all states recognize them, and their legal framework can be complicated. A series LLC, however, might be a useful instrument if you have many company lines or assets that you want to segregate and protect.