The problem with the delaware series llc and virtually all of the other 7 states to date that have adopted series llc statutes illinois being one exception, is that a series is not defined as a separate legal entity. Series llcs are formed similarly to a corporation with subsidiaries. Illinois is one of more than a dozen states that allow for the formation of a series llc. This unique business structure combines the personal liability protection of an llc with the versatility of a partnership. In illinois, you must follow traditional llc naming laws and you must include the full name of the parent llc in the name of each child series. Converting your llc to series llc did you know homes. How the series llc works what are the benefits of a series llc protection. There are only a handful of states that recognize the series llc and careful attention should be given to.
A series llc illinois is an option for new business entities in the state as of 2005, creating a limited liability company that serves as an umbrella for separate companies formed within the series llc. A series llc is a limited liability company that has one or more series. This site is maintained for the illinois general assembly by the legislative information system, 705 stratton building, springfield, illinois 62706. The individual series are protected from liabilities and losses suffered by the other individual series and the master llc. A series llc is a limited liability company with a unique structure. The illinois limited liability company act provides that you. The debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular series shall be enforceable against the assets of such series only, and not against the assets of the limited liability company generally or any other series thereof, and, unless otherwise provided in the limited. Some depends upon the state treatment of the llc and under what jurisdiction it is formed. Rather, it simply is invested with all the legal advantages of being treated as if it were a separate legal entity. These guidelines should not serve as a substitute for statutory analysis or. Series llc understanding the series llc and its advantages. I think this comes from the fact that the series llc is relatively new delaware was the first state to adopt the series llc in 1996, and many states have adopted it within the last 510 years, as well as the fact that only about of the states have a series llc statutes and those statutes are not in any way uniform. In this video, i discuss what is a series llc and how it is set up. A series limited liability company, commonly known as a series llc and sometimes abbreviated as sllc, is a form of a limited liability company that provides liability protection across multiple series each of which is theoretically protected from liabilities arising from the other series.
As of january 2011, only eight states allow the formation of a series llc. Proposed regulations under section 7701 of the code provide whether or not a series of a domestic series llc, a cell of a domestic cell company, or a foreign series or cell that conducts an insurance business is a juridical person for local law purposes, for federal tax purposes it is treated as an entity formed under local law. My office provides this booklet to assist you in the. Jun 10, 2010 how to set up an illinois series llc 1. Delaware, illinois, iowa, nevada, oklahoma, tennessee, texas and utah. Because the series llc concept is so new, there are many legal questions still to be answered. File an series llc articles of organization and notice of the limitation on liabilities of a series.
To create a series llc in illinois, the parent llcs operating agreement must allow for series, and notice must be given of the limitation of liability of. However, if you own multiple real estate properties in states where series llcs are allowed, then setting up a series llc might be a good option to reduce your risk and improve the efficiency of your business. The series llc sllc includes a master or umbrella llc and other llcs which are separated from each other for liability purposes called cells. Llc articles of organization illinois secretary of state. When forming a company, business formers have a choice of jurisdiction. Illinois series llc how to start and maintain a series llc.
Series llc illinois how to start a series llc in illinois. Parent llc name must be included in series name other states require the name of each individual series to state the name of the parent llc. This is called a series llc, and its often used as an asset protection device that, in some states, saves the formation fees and the hassle of creating multiple llcs for. In some ways a series is like a subsidiary of its series llc. An illinois series llc can be a good alternative to the regular llc legal structure for entrepreneurs who own more than one company. I believe you can convert an illinois llc to an illinois series llc by filing articles of amendment with the secretary of state. Illinois series llc how to start and maintain a series llc in illinois. Illinois is one of only eight states to offer the series llc, along with delaware, iowa, nevada, oklahoma, tennessee, texas and utah. You must know, however, that not all states recognize the series llc.
Series llcs are often used by real estate companies, both management and investment, that own multiple properties throughout illinois. We have created a step by step guide to help business owners with the formation of their illinois series llc. How to set up an illinois series llc law office of tom sammons 502 n. Mar 20, 2014 illinois is one of only eight states where businesses can establish series under limited liability companies llcs. The service provides for routine filing typically a 10 day turnaround or expedited filing 24 48 hour turnaround. A series llc is a unique structure that combines the flexibility of a. The organization of series limited liability company in illinois is authorized under the limited liability company act 805 ilcs 1803740. The state of illinois has reduced many of the limited liability company llc. In illinois, you are required to use the full name of the series llc and then the name of the cell, e. Illinois recently enhanced their online filing portal to include the illinois llc 5. Mar 17, 2020 to create a series llc in illinois, the parent llc s operating agreement must allow for series, and notice must be given of the limitation of liability of the new series. Cost effective means to limit liability approximately two years ago, the illinois limited liability company act was amended to allow for the creation of series limited liability companies series llcs. But as we all know, real estate investing always requires an analysis of risk, and i like to discuss the uncertainties surrounding this form of entity before we file with the sos. The llc cells have their respective assets that are still linked to the master llc.
The series llc is a product of the delaware legislature, the most highly regarded body for drafting corporate laws. Proposed irs reg11992109 gives some insight as proposed irs regulations. Jan 12, 2018 from an administrative perspective, forming a series llc can make a lot of sense. Does lower llc fees in illinois mean the end for series llcs. An llc, which is recognized as a business entity in every state, provides its owners personal liability protection from business debts and judgments. The series llc can help organizations protect their assets from liability, and in many cases can do so with less expense and more flexibility than other structures that mitigate liability risk like the holding company or parentsubsidiary structures. A guide for organizing domestic limited liability companies in illinois. Dec 04, 20 the series llc is a tough one to give definitive answers about.
Each cell llc has assets separate from the others, while the master llc controls all the llcs in the series. Each series in a series llc can operate a separate business and have separate assets. But when it comes to naming the cells, though, state laws differ. The delaware series llc is the most cuttingedge entity on the market.
Llc articles of organization indicate whether you wish to establish a standard limited liability company or a limited liability company that has the ability to establish series. If you have multiple businesses that you would like to keep separate for the purposes of liability, you have two options. A limited liability company with the ability to establish series, commonly referred to as a series llc, has the ability to create within itself separate series or. There is a master umbrella with series entities under it. Series llc benefits and drawbacks for your business.
Your name must include the phrase limited liability company, or one of its abbreviations llc or l. How to form an llc in illinois with pictures wikihow. Converting your existing llc to a series llc primarily depends on whether your states llc laws allow a series llc. A series llc is a costeffective alternative for business owners and entrepreneurs with multiple enterprises. Like a traditional limited liability company llc, the series llc can provide its owners members with protection from personal liability for the. This gives illinois businesses an interesting option. The illinois secretary of state regards a series llc as one entity filing a single annual report and paying a single fee. Series llcs somewhat demystified statebystate kkos. So if an illinois series is sued by a person in a state that does not recognize series llcs, will the courts respect the separateness of the structure. Think of each cell as a subsidiary of a corporation, which, in this case, is the umbrella llc.
Mar 29, 2018 the series llc is still not available in most u. Naming your series llc smart business incorporation. But remember that the filing fees and availability of a series llc option will vary from state to state. Illinois law specifically states that a series of an llc shall be treated as a separate entity to the extent set forth in the articles of organization, and then also. When all requirements are met, or unless otherwise provided for by. Illinois is one of only eight states where businesses can establish series under limited liability companies llcs. The series llc is a complex entity that can be hard to understand. Illinois has restricted the rights given to the members of a series llc to create new series because illinois requires public filing. The series limited liability company llc takes its name from the fact that it can have multiple a series of members, managers, or business lines within it. Certain states allow companies to form a distinctive business structure called a series limited liability company llc. How will other states treat the illinois series llc. If a cell llc incurs liability, the other cells are not affected. You cannot form a series llc in california, but if youve done so in another state that does permit it, you can register your series llc to do business in california. A series llc is a unique structure that combines the flexibility of a partnership with the liability limitation of an llc.
Real estate investors often use them so that each series owns a separate property. A lawsuit against one series does not affect the others. Illinois compiled statutes illinois general assembly. Series llcs somewhat demystified statebystate kkos lawyers. From an administrative perspective, forming a series llc can make a lot of sense. Series llcs are currently permitted in delaware, illinois, iowa, nevada, oklahoma, puerto rico, tennessee, texas, and utah. This limited liability company agreement is made and entered into, and is effective as of this 1st day of november, 2015, by and between member one, as a member of the company as defined below, and member two, as a member of the company, and each other person as defined. A series llc is a limited liability company where each series acts as a separate llc for liability protection purposes.
Illinois followed delaware, which introduced the series llc in 1996 in an effort to allow business owners to. Once the company is formed with the state, a series llc will require some extra documentation compared to an llc. A series llc is a special type of limited liability company consisting of a parent llc and one or more divisions within itself, called series, that can have separate assets, finances, business purposes, and limited liability. The most important benefit of a series llc is the ability to protect each child series and its assets from the liabilities of the other child series and the master llc investors can manage wealth by dividing investments between the child series based on potential return and risk. Today, only illinois requires a different application and charges higher registration fees for forming a series llc rather than a simple llc. Presently, only illinois makes separate entity status available for each series of an llc. What is a series llc a series llc is a unique form of limited liability company llc in which the articles of formation specifically allow for unlimited segregation of membership interests, assets, and operations into independent series. A 50 or more page operating agreement must be prepared to establish a series llc. Thereafter all series are created in the operating agreement and then. Each real estate property is held in a different series in order to segregate the liabilities and insulate each series from the. The booklet provides detailed guidelines for filing the articles of organization, as well as information on filing fees, other government agencies you must contact, and legal obligations you will assume after organization. Illinois series llc how to start and maintain a series.
Series limited liability company illinois llc attorney. If you previously formed your company as a traditional llc, it is possible to legally convert your llc to a series llc. This practical requirement ensures that anyone who deals with the llc can trace the series back to the parent llc in the public records. The concept is that a single entity may be formed in a state, but separate series or cells may be internally created within the llc.
First of all, the cost and paperwork involved with forming several separate llcs versus starting one series llc can be significant. It is similar to one cabinet that has multiple cubby holes. My office provides this booklet to assist you in the process of forming your own limited liability company. On august 16, 2005, the series llc statute 805 ilcs 1803740 was added to illinois limited liability company act, making the state the fifth in the country to allow the formation of series. Nov 01, 2019 a series llc is a costeffective alternative for business owners and entrepreneurs with multiple enterprises. An illinois series llc is a single legal business entity that permits the partitioning of assets and liabilities among the various series.
No state requires you to use the wordseries in the name of your series llc. The series llc is a tough one to give definitive answers about. While it offers a more costeffective solution, it also retains the benefits and flexibility of an llc. Each cell llc has its own owners members and is liable only for its own debts and obligations. How a series llc pays federal income tax is complicated. This has removed some of the cost savings of a series llc. However, it is not common and i have never done it. A series llc is the latest and by far most sophisticated form of business entity created. If you previously formed your company as a traditional llc, it.
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