By Jennifer Reuting, author of Limited Liability Companies for Dummies™
After reading Limited Liability Companies for Dummies, I decided a series LLC is the way to go. Do you have, or can you point me to, the series Operating Agreement, Separate Series Agreement, and addendum to the Operating Agreement used to form a new series? I did not find templates of these forms on the CD. Thanks.
Series LLCs and Series Agreements are basically a group of LLCs that keep your business entities, mostly real estate rental properties, separate and are easier to form than corporations. You get practically the same liability protection as you would if your formed a corporation, but depending on the state, the fees to file are typically lower. The tax structure also allows for more write offs which can be a tremendous benefit. But perhaps the greatest reason cited by business owners for forming Series LLCs is the liability when renting homes keeps each home protected from litigation. Should one home become involved in a lawsuit, the others cannot be attached. So, think of Series LLCs as a big LLC umbrella that protects all the other LLCs under it safe should the litigation floods begin as is often the case when you own multiple rental homes. Because each LLC is only liable for its own obligations, taxes, profits and assets, the others are fully protected.
The biggest issue with Series LLCs is the limited number of states that recognize them. Delaware is the leading state with the most Series LLCs filed, and only 11 others have followed suit including Illinois, Tennessee, Oklahoma, Utah, Wisconsin, Iowa, Nevada and Puerto Rico. However, due to recent tax changes in Nevada, MyLLC.com no longer recommends filing for any type of business entity in that state; the costs are simply too high.
You will most likely need a separate Registered Agent for each LLC in a Series LLC as well as separate bank accounts, payroll accounts, credit cards, and financial statements. Remember, the idea is to keep everything separate for the protection of all of your assets. So while the initial set-up is slightly tedious it is well worth it should legal issues arise. And, MyLLC.com is here to assist you with filing your Series LLCs as well as securing separate Registered Agents.
Be sure to talk to your tax professional before making any decisions regarding the structure of your business. And then contact MyLLC.com ! One of our highly trained professionals is standing by to assist you!
