Does Texas Allow a Series LLC?

A series LLC is a special kind of limited liability corporation that offers business owners a flexible approach to organize their activities. It permits several “series” or subsidiary businesses to run under a single parent LLC. One of the few states that permits the creation of a series LLC is Texas. What Tax Treatment Does a Series LLC Receive in Texas? A series LLC is regarded as a single entity by the IRS, but for the purposes of state taxes, each series may be recognized as a separate entity. Each series LLC in Texas is required to submit a unique franchise tax report and pay a unique franchise tax. The franchise tax is based on the company’s taxable margin, which is determined by deducting specific expenses from the business’s gross receipts.

How Can a Series LLC Be Created in Texas? A Certificate of Formation must be submitted to the Secretary of State in Texas in order to create a series LLC. A clause noting that the LLC will have one or more series must be included in the certificate. The name of the series, its business purpose, and the name and address of the series’ organizer must all be included in the Certificate of Formation. Additionally, you need to create an operational agreement that spells out the guidelines for both the main firm and each series.

Do You Need a Series LLC to Have a Separate EIN? There is no need for an individual Employer Identification Number (EIN) from the IRS for each series inside a series LLC. All series inside the LLC should use the same EIN, which the parent LLC should file for. However, each series should keep its own books and records, and other series or the parent LLC should not be held liable.

What Separates a Series LLC from a Restricted LLC? A restricted LLC restricts the use of the LLC to a certain purpose, but a series LLC gives business owners the ability to construct many series within one parent LLC. For firms that desire to restrict the use of their LLC to a certain purpose, such as holding real estate, a restricted LLC is a great choice. A series LLC, on the other hand, is a great choice for companies that want to manage numerous business lines under a single parent LLC.

In conclusion, Texas permits the creation of a series LLC, giving business owners the flexibility to operate various business lines under a single parent company. A separate franchise tax report and separate franchise tax are required from each series under an LLC. For each series inside a series LLC, business owners do not need to obtain a separate EIN. Last but not least, a series LLC and a restricted LLC differ in that a series LLC offers more flexibility to operate numerous company lines, whereas a restricted LLC restricts the usage of an LLC to a single purpose.