Creating distinct “series” or compartments within the corporation is possible with a series LLC, a sort of limited liability company. These series may have independent resources, obligations, and participants. The question of whether a series LLC is a disregarded entity arises, and the solution is not simple.
Each series of an Obligated Member Entity (OME) LLC has an obligated member who is accountable for the debts and liabilities of that series. Since each series has a member who is accountable for its liabilities, the series in this instance is not a disregarded entity. Each series does not, however, have its own member in a Non-Obligated Member Entity (NOME) LLC; instead, the LLC functions as a whole. The series could be considered a disregarded entity in this situation for tax purposes.
The distinction between manager-managed and member-managed LLCs is another topic for discussion. In an LLC that is member-managed, the members are in charge of the day-to-day management and operations of the business. A management or managers are chosen by the members of an LLC that is overseen by a manager. The manager might or might not be an LLC member. The operating agreement for the LLC specifies this choice.
The method of filing, the complexity of the LLC, and the workload of the Secretary of State’s office are some of the variables that affect how long it takes to establish an LLC in Tennessee. The processing time for an online Tennessee LLC registration is typically 5-7 business days. If the application is delivered in person or by mail, the processing time might change. An LLC’s drawback is that it might not be the ideal choice for companies seeking to generate funds through equity financing. LLCs are unable to issue stock and can have trouble luring investors. A downside for small enterprises with limited resources is that LLCs require more paperwork and upkeep than sole proprietorships or partnerships.
In conclusion, if a series LLC is a Non-Obligated Member Entity LLC, it may be classified as a disregarded entity for tax reasons. The series is not a disregarded entity if it is an Obligated Member Entity LLC because each series has its own member. The operating agreement for the LLC specifies whether it will be administered by its members or by its managers. An LLC’s drawback is that it might not be the ideal choice for firms wanting to obtain funds through equity financing. The time it takes to establish one in Tennessee varies.