Series LLC

The core feature is the creation of independent series under a single master LLC. Each series can have its own:

• Assets and Liabilities: Debts and obligations are enforceable only against that specific series.
• Members and Managers: Ownership and control can be unique to each series.
• Business Purpose: Each series can operate a distinct business or hold different assets, like individual real estate properties or investment portfolios.

Provides strong liability shields between series. Creditors of one series generally cannot pursue the assets of another series or the master LLC. This is established through:

• Operating Agreement: The foundational document that outlines the series structure and protections.
• Separate Records: Maintaining distinct accounting and record-keeping for each series is critical to uphold the liability shield.
• State Statute Compliance: The protection is only as strong as the specific Series LLC statute of the state of formation (e.g., Delaware, Illinois).

Reduces administrative and cost burdens compared to forming multiple standalone LLCs.

• Single Filing: Only the master LLC is formed with the state, avoiding separate formation fees and annual reports for each series.
• Unified Management: A single management structure (like the same manager for all series) can oversee operations.
• Centralized Governance: The master LLC's operating agreement provides the overarching framework, though each series can have its own supplemental agreement.

Enables clean legal and financial separation of different asset pools or business ventures. This is valuable for:

• Real Estate Investors: Holding each property in a separate series to isolate risk.
• Investment Funds: Creating distinct series for different strategies or investor groups.
• Holding Companies: Segregating ownership of various operating businesses or intellectual property. The separation must be clearly documented and maintained to be legally effective.

Series LLCs are creatures of state law, not federal law. Their features and legal recognition vary significantly.

• Pioneer Jurisdiction: Delaware's statute (1996) is the most established and widely used.
• Recognition Issues: Not all states have Series LLC statutes. The treatment of a Delaware Series LLC by a non-series state (like California) in litigation or for taxation can be uncertain.
• Key States: Other states with statutes include Illinois, Nevada, Oklahoma, Texas, and Utah.

Typically treated as a pass-through entity for tax purposes, but with series-specific considerations.

• Default (Check-the-Box): The IRS generally treats each series as a separate entity for federal tax purposes, allowing each to elect its own classification (e.g., partnership or corporation).
• Single EIN Option: A series may use the master LLC's Employer Identification Number (EIN) or obtain its own.
• State Tax Variability: State-level tax treatment (franchise tax, income tax) can differ and requires careful review.

A Series LLC is a master limited liability company that can establish separate, protected series or cells within it. Each series operates as a distinct entity for liability and asset purposes, governed by a single operating agreement. This structure is codified in state statutes, most notably in Delaware (the Delaware Series LLC).

• Master LLC: The overarching entity that files formation documents.
• Series: Internal divisions with segregated assets and liabilities.
• Operating Agreement: The single document that outlines the rights and rules for all series.

The primary legal feature is the ring-fencing of assets and liabilities between series. Debts and obligations of one series are enforceable only against the assets of that specific series, not against the assets of the master LLC or other series.

• Key Protection: Creditors of a failed series can only claim assets within that series.
• Requirement: Clear accounting and record-keeping are legally required to maintain the separateness and avoid piercing the veil.
• Example: A real estate Series LLC might have Series A for an apartment building and Series B for a commercial property, with mortgages and tenants isolated to each.

Series LLC statutes are not uniform or universally recognized across the United States. Formation is typically done in a Series LLC-friendly state like Delaware, but its treatment in other states (foreign qualification) is complex.

• Formation States: DE, TX, IL, NV, and others have enabling statutes.
• Recognition Risk: Courts in states without Series LLC laws may not honor the internal liability shields, potentially exposing all series to cross-liability.
• Foreign Qualification: Operating a DE Series LLC in another state may require registering each individual series, negating administrative efficiency.

For federal tax purposes, the IRS treats each series of a Series LLC as a separate entity eligible for its own check-the-box election. This provides significant flexibility.

• Default: Each series is typically treated as a disregarded entity if it has a single member, or a partnership if it has multiple members.
• Election: Any series can elect to be taxed as a C corporation or S corporation independently.
• State Taxes: State-level tax treatment varies and may not align with the federal model, requiring careful planning.

The structure is ideal for businesses managing multiple, distinct asset pools or investment lines while seeking administrative simplicity.

• Asset Management: Holding multiple real estate properties, investment funds, or intellectual property portfolios.
• Venture Capital & Funds: Creating separate series for different investment strategies or founder equity pools.
• Product Lines: Isolating liability for different business ventures or product families under one corporate umbrella.

Series LLCs are increasingly explored as a potential legal wrapper for Decentralized Autonomous Organizations (DAOs) and blockchain projects seeking U.S. legal recognition.

• DAO Series: A master LLC could house separate series for a governance token, a treasury, and a specific protocol or product, isolating legal risk.
• Regulatory Clarity: Provides a formal structure for interacting with traditional finance and legal systems.
• Limitation: The need for a centralized filing agent and manager may conflict with the decentralized ethos of some projects.

The core feature of a Series LLC is liability segregation. Each series can have its own assets, members, and business purpose, with debts and liabilities enforceable only against that specific series. This creates a firewall between series, protecting assets in one series from the liabilities of another. This is analogous to creating separate corporate subsidiaries but within a single legal filing.

Series LLCs are not recognized in all jurisdictions. They exist where specific state statutes authorize them, most notably in Delaware (the Delaware Limited Liability Company Act, Title 6, Chapter 18). Other states, like Illinois and Nevada, have adopted similar statutes. The legal enforceability of the liability firewall across state lines, especially in non-series states, remains a complex area of law.

Series LLCs are a leading legal wrapper for Decentralized Autonomous Organizations (DAOs). A single Series LLC can house multiple DAOs or protocol sub-communities as separate series.

• Example: A DAO's treasury and governance token could be held in the master entity, while a specific grant program or investment fund operates as a segregated series.
• This provides a legal identity for on-chain activity while managing risk exposure for different initiatives.

The structure consists of two primary components:

• Master LLC: The overarching entity that files the certificate of formation and maintains overall governance. It may hold common assets or intellectual property.
• Individual Series: Created by an internal series designation in the LLC's operating agreement. Each series operates with a high degree of autonomy but is not a separate legal entity for filing purposes (e.g., it does not get its own EIN from the IRS by default).

For U.S. federal tax purposes, a Series LLC and its individual series are generally treated under the IRS "check-the-box" regulations. The master entity and each series can elect to be taxed as a disregarded entity, a partnership, or a corporation. A common structure is for the master to be a disregarded entity and for active series to be taxed as partnerships, passing through income to members.

A Series LLC differs fundamentally from a parent company with traditional subsidiaries.

• Formation: Creating a new series requires an amendment to the operating agreement, not the formation of a new legal entity with separate state filings.
• Cost & Administration: Lower formation and maintenance costs, as there is only one state filing fee and annual report. However, separate accounting and record-keeping for each series is legally required to maintain the liability firewall.