Texas series limited liability companies generally. Because the series llc concept is so new, there are many legal questions still to be answered. Who would you recommend as a real estate attorney to form a series llc in texas. If operated properly the debts, liabilities, obligations, and expenses incurred with respect to a particular subseries are enforceable only against the assets owned by that particular subseries, and are not enforceable against the assets of the llc or any other subseries. Although many states allow for the formation of series llc, few still do not. Series llc formation and conversion of traditional llcs. Learn about the texas series llc and how the series llc could benefit your business. Does each series in a series llc have limited liability. Free texas llc operating company agreement templates pdf. To form a texas series llc, you must complete and file the certificate of formation with the texas secretary of state. Watch out for this trap when drafting texas series llc. This is the same form submitted by an ordinary texas limited liability company, but a texas series llcs certificate of formation must include an additional provision called the notice of limitation on liabilities of series.
In general, a series llc is formed in the same manner as a traditional llc. A series llc is essentially a slight variation of the traditional llc. Owners who are planning to form new business entities in the future may want to consider a texas series llc. Series llcs were pioneered in delaware in the 1990s and were recognized by the state of texas in 2009. Delaware, illinois, iowa, nevada, oklahoma, tennessee, texas and utah. As of january 2011, only eight states allow the formation of a series llc. This article focuses solely upon forming a series llc in texas, which happens to be one of the states that has passed laws authorizing the formation of series llcs. If you formed your llc as a traditional llc but now want to take advantage of the more flexible and costefficient texas series llc structure, your certificate of formation and operating company agreement must be revised to convert the llc to a series llc. An llc is governed by title 3, chapter 101 of the texas business organizations code boc.
If asset protection is even a partial motive in setting up your company, its best to work with an expert. Most texas llc attorneys will add the required information using. The series llc is a special type of limited liability company available in some us states. How a series llc pays federal income tax is complicated. If you want to use our general certificate of formation for a limited liability company form 205 word, pdf, you may do so and add the additional required information in the supplemental text area of the form. A texas series llc is a type of limited liability company where investors can own multiple properties and businesses under a single entity. If you previously formed your company as a traditional llc, it is possible to legally convert your llc to a series llc. A texas series llc is a traditional llc that has adopted special language within the governing documents to authorize the use of series or cells.
The primary difference between the two is that the series llc incorporates special language into the certificate of formation and the company agreement that unlocks the ability to create an unlimited number of series or cells within the framework of a single llc. To register your series llc, you will need to file the certificate of formation with the secretary of state. Title 1, chapter 3, subchapter a of the boc governs the formation of an llc and sets. What is a series llc in texas and why might you need one.
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 special form of a limited liability company. The secretary of state does not have a specific form to be used to form a series llc. What is the texas series llc and what protections does it provide. Though delaware was the first to form the series llc, other states are also adopting the practice. While the formation of a series llc may not be for every company, it. At janik vinnakota llp, we help businesses and entrepreneurs evaluate whether a series llc is a structure that might benefit their business.
Nov 05, 2018 under texas law, a series llc is defined as an llc that provides in its governing documents for the establishment of a series of members, managers, membership interests, or assets that have separate rights, obligations and liabilities and business purposes from the general llc. Jul 27, 20 at the june 20 university of texas continuing legal education conference on llcs, lps, and partnerships we discussed series llcs in texas. If you previously formed your company as a traditional llc, it is possible to legally convert your llc to a. Texas series llc explained series llc benefits cost of series llc. During one of the sessions the speaker asked how many attorneys in the audience had formed a texas series llc. The difference between a standard llc and series llc is that the language used in the company agreement and certificate of formation for series llc allows for the creations of sub llcs, also called series, within the main company. Texas llc approval time is 23 business days if you file online. A texas llc company agreement is a legal document to be used by entities of any size that would like to establish the companys procedures and policies, among other basic and detailed aspects of the company. Series llc how to start a series llc northwest registered.
Currently, district of columbia, illinois, iowa, kansas, minnesota, montana, nevada, north dakota, oklahoma, tennessee, texas, utah, wisconsin and puerto rico also allow the formation of series llc. Llcs have long been a popular business structure in texas, especially since partnerships are now subject to texas franchise tax. The certificate of formation is the document, that once approved by the secretary of states office, creates your texas llc. For real estate investing holding purposes, a texas series llc is a means to own multiple real estate assets under one entity. A series llc, formed under texas law, is an llc that provides in its governing documents for the establishment of a series of members, managers, membership interests, or assets that have separate rights, obligations and liabilities and business purposes from the general llc. In order to establish a series llc, boc section 101. The filing of the cof is an excellent opportunity to put the public on notice that the company has a serious asset protection firewall in place. Texas series llc explained series llc benefits cost of.
Your series llc should above all be tailored to you and formed with the assistance of a qualified real estate asset protection attorney. In theory, each series within a delaware series llc should have its own limited liability in the case of lawsuits. In texas, a series llc is a variation of the traditional texas llc business formations model. Real estate law 101 series, by the houston real estate attorneys 832. A series llc, formed under texas law, is an llc that provides in its governing documents for the establishment of a series of. Series llc texas how to start a series llc in texas. Finally, a great benefit to forming an llc as a series llc is. Since were focusing our example on texas, well talk about the creation process of a series llc in that state. Flat fee series llc formations by a texas business formation attorney.
A series llc texas is a variant of a traditional limited liability company llc. Although the document is not a requirement of the state to conduct business within the state of texas, all membersowners establishing. Formation of texas entities faqs texas secretary of state. Form 205general information certificate of formation. In texas, the texas business organization code boc controls and regulates the formation and maintenance of a texas series llc under tex. As such, it is often used as an alternative to a multiple llc structure. That means it files a document generally called either articles of organization or a certificate of formation with the states business entity filing office, such as the secretary of state. Also, all attorneys would say i muswho would you recommend as a real estate attorney to form a series llc in texas.
Watch out for this trap when drafting texas series llc docs. Series llc for real estate investors in virginia asset. Series llc benefits and drawbacks for your business. Texas series llc guide how to start a series llc in texas. 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. The series has been valid in the lone star state for the past ten years since 2009. In certain states, a limited liability company can be comprised of numerous series or cells, each with its own separate veil of liability protection. Currently, fourteen states and two nonstate jurisdictions have laws governing the formation of series llcs, but the series llc business model continues to grow in popularity and will likely expand to additional states in the years to come. The series limited liability company series llc farah. Texas llc approval time is 710 business days if you file by mail. It allows the investor to separate each property into groups that are distinct and insulated from each other from liability. The limited liability company llc is a popular way to structure a new business venture in texas. The series limited liability company the series limited liability company series llc was first introduced in delaware in 1996.
New filings at the secretary of state reflect that formation of other types of entities is down significantly, while llcs compose the majority of new filings. Texas adopted legislation in 2009 allowing for series limited liability companies sllcs. A texas series llc is a limited liability company llc that has the ability to create one or more sub series within a single llc structure. A series llc texas is a variant of a traditional limited liability company llc that has been authorized for use in this state. An sllc is not actually a distinct form business entity, but rather is an ordinary limited liability company that has been authorized to hold its assets in separate cells or series. A texas series llc is a limited liability company llc that has the ability to create one or more subseries within a single llc structure. In july 2009 i wrote this post about texas adoption of the series limited liability company.
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. The limited liability company hereinafter llc is neither a corporation nor a partnership. Each series operates like a separate entity with a unique name, bank account, and separate books and. The texas certificate of formation form form 205 does not provide this notice required by law. A texas series llc is a limited liability company that has the ability to. If operated properly the debts, liabilities, obligations, and expenses incurred with respect to a particular sub series are enforceable only against the assets owned by that particular sub series, and are not enforceable against the assets of the llc or. The state laws governing the formation and operation of a series llc vary greatly.
Fortunately, texas provides protection for these investors with a business formation called the texas series llc. Online llc services formation modification series llc. Series llc a sample transaction chapter 4 2014 texas land title institute series llc a sample transaction 2 initial certificate of formation serves to enable the series llc to. Nov 10, 2017 instead, these investors will take on the purchase of multiple properties.
The key to creating a protected series llc in texas is drafting a legally correct certificate of formation and operating agreement. How to convert a texas llc to a series llc bradley b. How to start a series llc in texas how to start an llc. The series limited liability company series llc was first introduced in delaware in 1996. Series llcs chapter 15 2 texas was the fourth state to enact an llc statute in 1991, and by 1996 20all 50 states had llc statutes. Series llc in texas pros and cons of a texas series llc. The copp law firm offers online llc services to clients across the state of texas. The delaware series llc is a business structure that draws attention and curiosity from many business owners. A series llc can have multiple series within a one llc framework. 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. Forming a series llc is almost exactly the same as forming a standard llc except fo r the inclusion of the following language, from the texas business. Formation of texas entities faqs secretary of state. While the formation of a series llc may not be for every company, it can be very beneficial for others.
981 1353 748 492 1173 1237 93 547 1375 1375 1480 774 516 668 851 1004 402 318 536 617 1130 1238 875 840 129 668 1583 413 283 775 1296 296 1346 563 1477