Series Limited Liability Company (Series LLC)
A Series LLC is a new form of LLC that may be formed under the laws of some states. A series LLC is a master LLC whose organizing document provides for separate sub-units (series), which operate as independent LLCs. California law does not allow for a Series LLC to be formed in California. However, a Series LLC that is formed under the laws of another state may register with the California Secretary of State and transact business in California.
Key Features
- Each unit has its own owners (members) and may be managed separately from the master LLC and other units.
- Each unit must maintain separate books and records.
- As with a regularly formed LLC, the owners (members) of each unit are not financially responsible for the unit's debts and obligations.
- A unit may conduct part of the business of the master LLC, or may conduct a wholly different business.
- Each unit has its own assets and liabilities. The members of each unit are treated under the laws of the state where the master LLC is formed as owning an interest in only that unit, and have no rights as members of one unit in the assets or income of any other unit.
- Each unit is liable only for its own debts and obligations. In general, creditors of one unit may only make claims against the assets of that unit.
Filing Guidelines
Currently, the Internal Revenue Service has not stated whether a unit within a master LLC is generally a separate entity from the master LLC and other units for tax purposes. However, it has treated units of a master (Series) LLC as separate tax entities in one private letter ruling. The Franchise Tax Board has taken the position that if each unit has the features listed above under the laws of the state where the Series LLC was formed, then each unit will be treated as a separate entity for filing and tax purposes. In that case, the same filing guidelines and estimated taxes that apply to a regular LLC will apply to each unit of a Series LLC.
