Series LLCs: A Smart Option for Multiple Businesses

If you juggle more than one business or plan to start multiple ventures, managing the legal aspects can get complicated and costly. This is where a Series LLC can be a smart option. Simply put, a Series LLC is like a parent with many children. The parent is the main LLC, and each child is a separate “series” with its assets and operations, but all under the umbrella of the parent LLC. This setup can save you time and money, especially when each business venture differs. Let’s explore what makes Series LLCs a clever choice for entrepreneurs managing multiple businesses.

What is a Series LLC?

A Series LLC allows you to operate multiple separate units, each with its assets and liabilities, under one overarching LLC. Think of it as one big family where each member has their room and belongings but lives under the same roof. Each series acts like a mini-LLC, protecting its assets from the liabilities of the other series within the same parent LLC.

Benefits of a Series LLC

• Cost Efficiency

Setting up a Series LLC is generally more cost-effective than forming multiple separate LLCs. You file one set of organization articles and pay one filing fee. This can lead to significant savings in initial setup and ongoing administrative costs.

• Simplified Management

With a Series LLC, you have less paperwork and fewer administrative duties compared to managing multiple separate LLCs. Since it’s all under one umbrella, you can consolidate tasks like banking and accounting and streamline operations.

• Asset Protection

One of the most significant advantages of a Series LLC is the legal separation between each series. If one series is sued, the assets in the other series are generally protected. This is crucial if you’re running multiple businesses with varying levels of risk.

• Flexibility

A Series LLC offers the flexibility to add or remove series as your business evolves. This is ideal for entrepreneurs who experiment with different business ideas or expand into new areas without wanting to set up a new LLC each time.

Online LLC services can be a great investment if you’re considering starting an LLC. These services can guide you through the setup process, ensuring all legal documents are filed correctly and on time. Before deciding which service to use, it’s essential to compare the offerings and costs of different providers. Here are a few options:

Each of these services has its strengths, so consider what features are most important for your business needs, such as the ease of use, the quality of customer support, and the inclusivity of essential services.

 

How to Set Up a Series LLC

Setting up an LLC involves several key steps. Here’s how you can start:

Step 1: Choose a Business Name

The first step in creating your LLC is picking a unique name. Each state has specific guidelines for naming your LLC, including the need for the name to differ from other businesses registered in the state.

Here are the common guidelines you must follow: 

• It must be different from other business names already registered in the state.
• It can’t include restricted words or phrases (like implying it’s a bank unless it is one).
• It must end with “Limited Liability Company” or one of its abbreviations (LLC or LLC).

You can do a quick, free name check to see if your chosen name is available. If you are considering getting a website name that matches your business name, You can find good deals for your domain names on Namecheap.

Step 2: Hire a Registered Agent

Like in other states, your LLC must have a registered agent. A registered agent is a person or company that agrees to receive legal papers on behalf of your LLC, ensuring you get all important legal notices. The agent must have a physical address and be available during business hours. You can act as your registered agent, choose someone you trust, or hire a professional service like Northwest Registered Agent, Swiftfilings, or Bizee.

Check out our blog: ‘Is a Registered Agent Necessary> Your Guide to Finding an Affordable Option.’

Step 3: File the Articles of Organization

The Articles of Organization is a simple document that officially forms your LLC. You must file this document with the state where you established your LLC. This document includes basic information such as your LLC’s name, address, and the names of its members.

Step 4: Making an Operating Agreement for Your Business

Let’s discuss setting up some ground rules for your business. This is where an Operating Agreement comes in. Think of it as a handbook that explains how your business runs. It’s important because it helps everyone understand their role and what’s expected in your LLC.

Here’s what an Operating Agreement usually includes:

• Ownership: This part talks about who owns what percentage of the business. 
• Member’s Rights and Responsibilities: Here, you’ll write down what each person in the LLC can and cannot do and what they’re responsible for. It’s like a job description for each member.
• Joining & Leaving: This section covers how new people can enter your business and what happens if someone decides to leave. It’s good to have this figured out so there are no surprises later.
• Dissolution: This might sound a bit gloomy, but it’s practical. It’s about how to close down the LLC if you ever need to. It includes the steps to take and how to handle everything when wrapping up the business.

Creating an Operating Agreement is a smart move. It keeps things clear and organized so everyone knows what to expect, and it can save you a lot of time. 

Step 5: Getting Your EIN from the IRS

Your business needs a number called an EIN from the IRS. It’s like an ID number for your business. This number will help you as an identification number when getting bank accounts and credit accounts, filing taxes, and hiring employees.

It’s free, and you can get it from the IRS website at https://www.irs.gov/businesses/small. 

 

Best Practices for Managing a Series LLC

• Keep Financials Separate

Each series should have its bank accounts and keep its financial records separate. This helps maintain the legal protection between series.

• Maintain Clear Records

Good record-keeping is essential. Document the assets, liabilities, and transactions of each series to support the legal independence of each one.

• Understand the Tax Implications

Consult with a tax professional to understand how to file taxes for a Series LLC. Depending on state laws, you may need to file separate tax returns for each series or a consolidated return for the entire LLC.

• Regularly Review Your Structure

As your business grows and changes, regularly review and update the structure of your Series LLC and its series to ensure it still meets your needs.

 

Conclusion

A Series LLC offers flexibility, cost efficiency, and asset protection for entrepreneurs running multiple business ventures. By correctly setting up and managing a Series LLC, you can take full advantage of its benefits while minimizing the administrative burden often associated with running multiple businesses. Whether you’re expanding into new markets or want to keep different business activities legally separate, a Series Facebook LLC could be the smart choice that helps you grow and protect your business interests.