Series LLC

What a series LLC actually is

A series LLC (sometimes called a "cell" LLC) is a single parent LLC that can create an unlimited number of internal series under one filing. Delaware codified the structure in 1996; about 17 other US jurisdictions have since adopted some form of the statute. Each series can hold its own property, sign its own contracts, sue and be sued in its own name, and — critically — its assets are legally walled off from the debts and liabilities of every other series and of the parent itself.

Mechanically the parent files standard Articles of Organization, then adopts an operating agreement that authorizes series and lays out how new series are created, named, capitalized, and dissolved. Some states (Illinois, Texas) require a separate "Certificate of Designation" for each series; Delaware does not.

How the series structure works

Think of the parent LLC as a holding company and each series as a wholly-owned subsidiary — except there is only one state filing and one annual fee. The liability shield runs in two directions:

• Inter-series: a lawsuit against Series A cannot reach the assets of Series B or the parent.
• Parent → series: creditors of the parent cannot reach assets of a properly capitalized and recorded series.

That shield only holds if you respect the formalities. Each series needs its own bank account, its own books, its own contracts in the series' name, and clean records that show no asset commingling. Lose those formalities and a plaintiff's lawyer will argue that all the series should be treated as one pot — exactly what the structure is supposed to prevent.

States that allow a series LLC

The following jurisdictions have a series LLC statute on the books:

• Delaware
• Illinois
• Nevada
• Texas
• Tennessee
• Iowa
• Oklahoma
• Utah
• Wyoming (Series under specific statute)
• Indiana
• Kansas
• Missouri
• Montana
• Alabama
• Arkansas
• North Dakota
• Virginia
• District of Columbia
• Puerto Rico

Outside these states the parent LLC is still valid, but a court in a non-series state may not respect the inter-series liability shield.

Why real estate investors use it

Series LLCs were essentially built for landlords. Each rental property goes into its own series; a tenant slip-and-fall at one rental cannot reach the equity in any other. Compared to forming five or ten separate LLCs, you pay one state filing fee, one annual report, and one registered agent — a difference of several thousand dollars a year once you cross five properties.

Typical real estate structure

• Parent: Acme Holdings LLC (Delaware or Texas)
• Series A: 123 Main St (rental)
• Series B: 456 Oak Ave (rental)
• Series C: Property management operations

Each series has its own EIN, its own bank account, its own lease paper, and its own income/expense ledger. Insurance is also written per series — never one umbrella policy covering all assets in the parent's name.

Series LLC vs multiple separate LLCs

Series LLC vs traditional LLC

A traditional LLC is one legal entity with one liability shield protecting one pool of assets. A series LLC is one legal entity with multiple compartments, each with its own shield. If you have a single business or a single rental, a traditional LLC is simpler and you should not pay a lawyer to draft series language you will never use. The series structure earns its keep once you have multiple distinct income-producing assets you want walled off from each other.

Tax treatment & EINs

The IRS' Proposed Regulation 301.7701-1(a)(5) (still proposed but treated as best practice by most tax advisors) treats each series as a separate entity for federal tax purposes. In practice that means each series picks its own classification (disregarded, partnership, or corporation), files accordingly, and most CPAs recommend a separate EIN per series so payments, 1099s, and bank records line up cleanly.

How to form a series LLC

1. Pick a series state — Delaware and Texas are the two most common; Wyoming and Nevada are also popular.
2. File Articles of Organization for the parent LLC, electing the series option where required.
3. Adopt an operating agreement with full series provisions (formation, naming, capitalization, dissolution, distributions).
4. Create each series with its own resolution / certificate of designation.
5. Get a separate EIN per series, open a separate bank account, and keep separate books.
6. Insure each series independently — never under the parent name only.

Common mistakes

• One bank account for all series

  Commingling funds is the fastest way to collapse the inter-series shield in court.

• No certificate of designation

  States like Illinois and Texas require one per series; skipping it can invalidate the series.

• Using a series in a non-series state

  Holding property directly in a non-series state may expose all series to that state's law — use a child LLC instead.

• Generic operating agreement

  An off-the-shelf LLC agreement without explicit series language defeats the structure entirely.