A series LLC is a special type of corporate entity that enables the development of many “series” within of a single LLC. Each series may have its own resources, obligations, and participants while still being covered by the parent LLC’s protections. Businesses that seek to divide their assets and liabilities and maybe save money on formation and maintenance are drawn to this structure. Series LLCs are not accepted everywhere, though, including Pennsylvania.
13 states, including Pennsylvania, do not officially recognize series LLCs. This means that companies cannot register an out-of-state series LLC to conduct business in Pennsylvania or construct a series LLC there. Businesses must instead opt for an other form of organization, such a conventional LLC or corporation, in order to operate in Pennsylvania.
It’s crucial to remember that while Pennsylvania does not recognize series LLCs, ordinary LLCs and corporations may still be formed there. Businesses can also choose to be taxed as S corporations, which are a tax designation rather than a type of organizational structure. Similar to an LLC, a S corporation is a pass-through entity, which means that the company’s income and losses are transferred to the owners’ individual tax returns.
A series LLC and a S company are not the same, but they do have several things in common. Both arrangements allow owners to choose pass-through taxation and provide liability protection. While a series LLC is a single legal company with numerous “series” within it, a S corporation is a separate legal entity from its owners.
A series LLC is a single legal company that may have many “series” in Illinois, where series LLCs are recognized. Each series may operate separately from the other series within the LLC and may have its own assets, liabilities, and members. Businesses that seek to divide their assets and liabilities and maybe save money on formation and maintenance are drawn to this structure.
Finally, as series LLCs are not now recognized in Pennsylvania, companies operating there must select a different legal form. Although there are some parallels between a S corporation and a series LLC, they are not the same. Before deciding on a business structure, it’s crucial for companies to carefully weigh their options and speak with a certified expert.