Entering the business world through the establishing your own company can be a scary, but exciting time. There are papers to file, fees to pay, and regulations to abide by. For small business owners, a limited liability company (LLC) is often an ideal option. A Series LLC can be even more appealing. These LLCs allow owners to file separate assets under different business entities, protecting each from any debts or lawsuits that may be brought against the others. In other words, assets assigned to each sub-LLC are shielded from each other’s liabilities. Nevertheless, what are the legal requirements of an LLC? Keep reading to find out.
State laws permit, limit, or restrict the formation of series LLCs. Some states, including Delaware, Illinois, Nevada, Texas, and Utah, allow owners to establish series LLCs. Other states, such as California, to not allow series LLCs to be formed within their borders but do permit those formed legally in other states to register and conduct business. Still, a few do not recognize series LLCs at all.
Legal and Professional Help
If permitted by the laws of their state, anyone can establish an LLC. A lawyer is not needed to do this. However, it is highly advisable that anyone considering establishing a business consult with a lawyer and a tax professional. A series LLC comes with a lot of freedoms other business models do not. However, as with most things in life, laws and regulations still apply.
- Articles of Formation. For example, filing a series LLC is quite similar to filing a more traditional LLC. Both require owner(s) to file articles of formation with specific government entities.
- Operating Agreement. With these articles of formation, an operating agreement is either required or highly recommended. (Check your state laws or consult with a lawyer to find out what your state explicitly requires!) For a series LLC, your operating agreement most likely will need to expressly authorize the primary LLC to form subsidiary-like LLCs.
- Fees. Fees to set up your LLC or series LLC will vary by state. Some may require a fee for each series, some may not. Your local laws dictate the requirements for the state, or even county, you file your series LLC in.
With all the paperwork, fees and state requirements – it is likely in your best interest to consult with a lawyer in the very least.
Royal Legal Solutions
While a lawyer is not a requirement when forming a series LLC, it is highly advisable. A consultation can help ensure you start your business on the right foot. Maintaining a working relationship with a lawyer can help ensure you remain in compliance with all laws that may affect your business. Even if you have a series LLC and have owned it for some time, talking with a professional can keep you up to date on any state law changes that may have occurred since forming your company.