When structuring your businesses, making sound, tax-efficient decisions about where and how you structure entities is critical. Choosing the right entity type and forming it in the appropriate state allows California business owners and entrepreneurs to maximize the benefits from their hard-earned money and legacy.
A Series LLC is one of many business structures that offers certain unique advantages for asset protection and tax savings. These entities are recognized as one entity for tax purposes but operate legally as multiple separate entities, providing a beneficial framework for safeguarding individual assets.
What Is a Series LLC?
A Series LLC is a form of Limited Liability Company (LLC) where the Articles of Organization explicitly permit the unlimited separation of membership interests, assets, and operations into independent series. Each “series” functions as if it were its own entity, complete with its own name, bank account, and individual accounting records. This structure allows for different managers across the series, operating with varying rights and responsibilities.
This is similar to a corporation with multiple subsidiaries. A Series LLC is able to enter into contracts, initiate or defend against lawsuits, and own real and personal property independently in each series.
The hallmark of a Series LLC is the liability protection afforded to assets in the separate series. Assets in one series are isolated from liabilities in another, offering a protective shield against the piercing of the corporate veil (or reverse piercing) should an entity’s assets or owners be exposed to liability.
Where Can I Form a Series LLC?
The answer to the question in our title is no, California does not allow the formation of a Series LLC in our state. However, there are numerous other states (and Washington D.C.) that allow the formation of one, including Alabama, Delaware, Illinois, Indiana, Iowa, Kansas, Missouri, Montana, Nevada, North Dakota, Oklahoma, Tennessee, Texas, Utah, Wisconsin, and Wyoming. These states all allow the formation of Series LLCs, but Delaware is often preferred for its extensive piercing and reverse piercing laws.
Although California does not currently recognize Series LLCs formed elsewhere for intrastate business as distinct series, it generally permits these LLCs to register as foreign entities to conduct business within the state.
A Strategic Approach to Your California Business
At Dahl Law Group, we are committed to ensuring that California businesses are properly structured and operated effectively. The Series LLC is just one of many options available to entrepreneurs in California. Our team is dedicated to helping you make informed decisions that align with your business and financial goals while adhering to the necessary legal requirements. If you are considering the many benefits of a Series LLC or other business structures, contact Dahl Law Group for guidance tailored to your specific needs.
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