Posted by: Apr 21, 2020

Texas Series LLC

Choosing a business structure that will adequately protect your specific business and provide the benefits it needs is critical. 

By forming a Limited Liability Company (LLC), you can protect your personal assets.

With a traditional LLC, the LLC holds all business assets. In the event of a lawsuit, the plaintiff would sue the LLC, and all of your business assets would be at risk.

A newer and special type of LLC, known as the Texas Series LLC, is a variant of the traditional LLC. A Texas Series LLC can provide further protection for your business’s assets.

What Is a Texas Series LLC?

The Texas Series LLC sets up different “sub-companies,” also referred to as series, under the parent LCC.

The Texas Series LLC’s operating agreement and the certificate of formation will have language that forms each sub-company, or series, allowing assets to be held separately.

Each series is connected to the parent LLC and the other series LLCs by contracts, but each operates individually.

Each series can have different owners, interests, assets, distribution of profits and losses, and tax treatment. In the event of a lawsuit, only the series that does business with customers and vendors is at risk.

What Does My Texas Series LLC Operating Agreement Need to Include?

In order to receive the benefits and asset protections of a series LLC, it must be formed using proper language. You should always consult your business law attorney or tax team for individualized guidance.

The Texas Business Organization Code governs the requirements for series LLCs. The Texas Business Organization Code specifically sets out language that must be included in the certificate of formation and operating agreement.

Also, a series LLC must maintain separate records for the assets of each series. It is permissible for any of the series of the LLC to conduct business in another name of the LLC, but the LLC must file an assumed name certificate for the name series.

If your Texas-based business operates in states outside of Texas, it is important to be mindful of issues that may arise. Only some states recognize a series LLC as a legitimate business organization.

If you are considering doing business in another state, you should contact the filing official to determine whether they recognize series LLCs. That way, you will know how best to protect your series LLC.

Filing a Texas Series LLC

The Texas Comptroller treats a series LLC as a single entity. That means when you form a series LLC, you will register with the Secretary of State one time and pay only one fee. 

You need to pay only one annual fee to a registered agent for your series LLC in Texas. Also, you need to file only one tax return.

However, if you decide to do so, each series can apply for its own federal tax identification number to be treated individually for federal tax purposes.

Considering a Texas Series LLC?

If you are considering forming a series LLC and want to explore the pros and cons, contact Adam Curley at The Curley Law Firm today. Adam’s practice focuses on business law, and he can guide you in making the right decisions for you and your business.