A limited liability company (LLC) is a great way to protect personal property while simultaneously saving on taxes. A series LLC is a multi-tier business structure, which creates a parent-child hierarchy. Typically, the parent series LLC is filed with the state. Once that has been done and the Internal Revenue Service (IRS) has provided a tax-identification number, individual “child” series LLC companies can created without additional filings or startup fees.
A series LLC allows a business owner to protect their assets and investments separately. What does this mean? Each LLC’s assets are protected from lawsuits that may be brought against the others. Imagine you invest in four separate rental properties, each under a distinct series LLC. If a personal injury occurs on Property A and a lawsuit if unfortunately brought against you, the other three properties and any earnings and returns that correspond to them in your other series LLCs cannot be subjected to losses you may suffer. Only the series LLC attached to Property A can be subjected to the punitive damages you may be liable for.
There are two ways to structure the management of your series LLC. For a member-managed series LLC, the owner(s) run the business. For a manager-managed LLC, a designated member or non-member is responsible for the running of the business. Let us take a closer look at the differences below.
At Royal Legal Solutions, we do our best to ensure you have the greatest possibility for success. We understand how important it is to protect your investments and limit your liabilities. If you have questions about how a series LLCs works and if they are right for you, the experts at Royal Legal Solutions can help.
Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.
Ready to know more than your attorney? Join our community platform where you'll get immediate FREE access to all our best educational resources for real estate investors. Including 8 Masterclasses, group mentoring replays, and much, much more.
Join thousands of real estate investors in all 50 states as they enjoy exclusive content, special promotions, and behind-the-scenes access to me and my guests. No spam, ever. Just great stuff!