Due to their flexibility, simplicity, and tax advantages, limited liability corporations (LLCs) are among the most widely used business structures in the United States. But other jurisdictions have gone a step farther by creating a brand-new sort of LLC called a series LLC. A series LLC is a distinctive legal structure that provides business owners with a number of advantages, and Illinois is one of the states that permits companies to create one. In this post, we’ll look at what a series LLC is, how to create one in Illinois, whether each series LLC need a separate EIN, what a series LLC is used for, and how it differs from a restricted LLC.
With a series LLC, business owners can establish many series or subsidiaries under a single parent company. As a result, each series is handled as a distinct organization with its own assets, liabilities, members, and operating agreement. But unlike conventional LLCs, each series doesn’t need its own legal company or state filing. As a series LLC, the parent business declares in its articles of organization filed with the Illinois Secretary of State that it is. Once a series is established, the parent firm is free to produce as many of them as it likes, each with a unique goal, organizational structure, and ownership.
In Illinois, you must complete the same steps as a standard LLC to establish a series LLC. A filing fee of $750 must be paid to the Illinois Secretary of State along with the Articles of Organization. Additionally, a series LLC provision that specifies that the LLC is a series LLC and that it has the authority to create distinct series must be included in the articles of incorporation. By submitting a certificate of designations with the Secretary of State once the Secretary of State has approved your articles of organization, you can then establish one or more series under the parent company.
No, each series LLC in Illinois does not require a separate Employer Identification Number (EIN). For tax purposes, the parent company should request a single EIN for the entire series LLC. To guarantee that the assets and liabilities of each series are appropriately tracked, each series should have its own unique accounting records and financial statements.
A series LLC is designed to give business owners a flexible and affordable option to handle several companies under one legal structure. Business owners can reduce their liability and shield the assets of each series from the liabilities of other series by dividing their operations into several series. Additionally, each series can have its own ownership and administration structure, allowing for more personalization and control. Real estate investors, private equity firms, and asset management organizations that manage numerous properties or investments can benefit significantly from series LLCs.
A limited LLC is a type of LLC that limits the transferability of ownership interests, whereas a series LLC does not. Members of a restricted LLC cannot sell, transfer, or assign their ownership interest without the approval of the other members. This indicates that ownership of the LLC is tightly regulated and difficult to transfer. A series LLC, on the other hand, enables the formation of distinct entities under a single parent company, each with a unique ownership structure and administration. A restricted LLC gives more control and protection against unauthorized ownership transfers, while a series LLC provides more freedom and customizability. Final Thoughts:
A series LLC is a special type of legal structure that enables business owners to oversee several entities at once. A series LLC offers more flexibility, customization, and protection for business owners while having a similar creation process to a standard LLC. Business owners can reduce their liability and shield the assets of each series from the liabilities of other series by dividing their operations into several series. For real estate investors, private equity firms, and asset management organizations that oversee numerous properties or investments, a series LLC is very advantageous. Each series LLC in Illinois does not require a separate EIN, and it differs from a restricted LLC in that it permits the formation of distinct legal entities under a single parent business.
By submitting Articles of Amendment to the Illinois Secretary of State, you can change an existing Illinois LLC into a Series LLC. The Series LLC designation and the series of members, managers, or interests that the LLC will hold must both be stated in the Articles of Amendment. The operating agreement for the LLC must also be changed to reflect the switch to a Series LLC form. To make sure the conversion is done appropriately and conforms with all legal and regulatory standards, it’s vital to contact with a lawyer and a tax expert.
Yes, each series LLC is required to have its own operating agreement that describes the specific rights, liabilities, and responsibilities of the members and managers of that series. Although the operating agreement of the main LLC will serve as a foundation for the creation and administration of each series, separate agreements for each series are required to ensure adequate asset organization and protection.