A Series LLC is a limited liability company that functions as an executive LLC in charge of a group of sub-companies, which each act as independent LLCs. In fact, there are several instances in which adopting Series LLC status is preferable to the more traditional LLC status. There are, however, supplementary requirements that can make Series LLCs inappropriate for smaller businesses.
What’s It All About?
Status as a series LLC allows companies – much like holding companies – to separate assets between their multiple business-units. Each of these units can go out and conduct a segment of the master LLC’s business or can engage in an utterly separate function that is in no way related to the master business. Ultimately, each business unit of the master LLC must maintain its own unique books and executive members, and each business unit must maintain its own financial debts and responsibilities.
Each of the Series LLC units might also be obliged to maintain separate filing and maintenance requirements, which can make them more expensive to operate – depending on the host state’s requirements regarding corporate filings.
The Legal Upshot
Questions remain about the future of Series LLCs. In fact, the Internal Revenue Service has not yet weighed in on whether a separate business unit operating under a master company in a Series LLC will be treated as a separate entity for tax purposes, but so far, they seem to be treating these separate units as such. After an early review, the American Bar Association does not currently endorse Series LLCs; the Bar Association finds that there are too many unresolved issues surrounding the business organization concept. Additionally, specific state laws can be complicated regarding formation and recognition of Series LLCs formed in other states.
If You Have Questions about Structuring Your Business, Call 732 238-8686 for More Information Today
Indeed, Series LLCs are trending, but they aren’t right for every business. If you’re ready to structure or restructure your business empire – no matter how large or small – Bowne Barry & Barry Attorneys at Law is here to help. Our business law attorneys have the experience and skill to help you grow your New Jersey business. For business-law guidance, please contact or call the law office of Bowne Barry & Barry at 732 238-8686 today.
