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What Is a Series LLC in Texas: A to Z (2024)

Max Smith

Reading Time: 5 minutes

Having various assets and ventures can sometimes create hassles in management, taxation, liability protection, and more. That’s why you should create a series LLC to protect your assets and ventures from liability risks and enjoy benefits. But what is a series LLC in Texas?

To create a series of LLCs in Texas, you must follow formal steps and maintain rules and regulations. Of course, the cost of forming a series of LLCs must be estimated. You also need to consider how it works. 

So, let’s find out the ins and outs of a series LLC in Texas.

A ‘Series LLC’ is a particular type of limited liability company in Texas. It is an umbrella LLC with separate ‘series’ or cells. Here, the term ‘series’ means several internal divisions.

Each of the series can have its own:

  • Assets.
  • Liabilities.
  • Members (ownership).
  • Membership interests.
  • Management structure.
  • Business purpose.
  • Rights and obligations.

Picture the LLC as one big house with multiple compartments, or in this case,’ series.’ It is taxed as a single entity paying a filing fee. However, it enjoys significant advantages like flexibility and asset protection. 

Does a Series LLC sound interesting enough to make you want to create one? If so, let’s find out how to do so.

How to Create a Series LLC in Texas?

Do you know how to get an LLC in Texas? The mandatory steps for creating a series LLC in Texas are the same as those for making a typical LLC. Here are the necessary steps on how to form a series LLC in Texas:

  • Choosing a Name

Choose a name that is unique and complies with Texas state regulations. The Texas Secretary of State’s website can help you check the name’s availability.

  • Filing Formation Documents

Do you know how to file a series LLC in Texas? File the formation documents, the Certificate of Formation (Form 205), with the Texas Secretary of State. Expressly state that your LLC will be a series LLC.

  • Paying the Filing Fee

When you file the Certificate of Formation with the state, pay the filing fee too. Always check the state’s website to learn the current fee amount.

  • Drafting an Operating Agreement

An operating agreement must be in an LLC for smooth operation and proficient management. It is more crucial to create one if it is a Series LLC. It will help in laying regulations for things like:

  • The creation of a series.
  • The allocation of assets.
  • Liabilities among series.
  • Getting Licenses and Permits

Get the licenses and permits to operate legally at the state or local level. The ones you need depend on the nature of your LLC business.

  • Maintaining Compliance

Forming your series LLC does not mean your obligations are complete. You must maintain compliance by filing annual reports and paying taxes regularly. 

After you ensure all the steps are followed diligently, some are optional but highly recommended:

  • Establishing a parent LLC first
  • Setting an individual series
  • Obtaining EINs for each series
  • Publishing a notice in a local newspaper

But what about the costs? You need to know about those, too. Let’s look that up in the following.

Cost of Series LLC in Texas

Here is the breakdown of the potential costs of Series LLC in Texas:

  • Filing Fee: The Certificate of Formation (Form 205) for a Texas LLC, including a Series LLC, is currently $300. Paying by credit card has a 2.7% convenience fee.
  • Designation of Series (per series): The fee is not specific but minimal.
  • Assumed Name Certificate (if wanted, per series): This fee is also not specific but minimal.
  • Publication Costs (if required): Depends on the publication and the county.
  • Professional Service Fee (if chosen): Depends on your Series LLC formation and the service provider’s rate.
  • Annual Reporting Fees: Currently, it is $0.
  • Additional Costs: There will be associated costs for obtaining business licenses, permits, or professional memberships.

As we have covered the main points of the Series LLC formation, let’s now understand how it works. 

How Does a Series LLC Work in Texas?

Here is a complete explanation of how a Series LLC works in Texas:

1. Structure

Here is the structure of a series llc in Texas.

  • Umbrella LLC

The main LLC acts as the parent entity. Although forming it before Series LLC is optional, entrepreneurs prefer it first. This order is better for the organization.

Forming an umbrella LLC is the same as creating a traditional LLC. While forming an LLC, you must abide by Texas state laws.

  • Series

You will have individual series or cells within the Series LLC. As mentioned, each series will have separate assets, members, liabilities, and business purposes.

2. Major Advantages

2 major advantages are shown below. 

  • Asset Protection

Every series’ liabilities are isolated from each other. If one series has debts or gets sued, the assets of the different series or the parent LLC are protected.

  • Flexibility

You can start a new venture under a separate series. You will not have to go through the hassle of forming an entirely new LLC with all the formation costs. Also, you can operate your business on your terms because each series has a separate management structure.

3. Important Considerations

Some of the essential things to watch out.

  • Operating Agreement

This document is crucial for a Texas Series LLC. It outlines how the LLC operates and documents the separate features of each series’ operations.

  • Annual Reporting

The Texas Secretary of State requires series LLCs to file annual reports. These reports contain information about the series and their respective activities.

  • Costs and Taxation

Although multiple operating series exist, a Texas Series LLC is legally considered a single entity. So, it pays only one single filing fee.

Like a regular LLC, it also doesn’t pay income tax itself. The members do, according to the profits and losses passed to them.

Also, getting a separate EIN (Employer Identification Number) for each series is beneficial for tax purposes.

Conclusion

So in  summary, what is a Series LLC in Texas? You can have multiple LLCs under one parent LLC, so you will get a series LLC. It’s beneficial for you to enjoy various benefits and protect your assets. You just need to maintain formalities to create and operate a one series LLC in Texas.

Then, it will work great for your business and lead your company to success. However, you can get help from an expert online service provider. 

Key Points

Here are the critical points on Series LLC in Texas:

  • A ‘Series LLC’ is a unique limited liability company where an umbrella LLC has separate series or cells of different kinds of LLCs.
  • Steps for Creating a Series LLC in Texas:
    • Choosing a Name
    • Filing Formation Documents
    • Paying the filing fee
    • Drafting an Operating Agreement
    • Getting Licenses and Permits
    • Maintaining Compliance
  • Optional Steps:
    • Establishing a parent LLC
    • Setting an individual series
    • Obtaining EINs
    • Publishing a notice
  • Cost of Series LLC in Texas:
    • Filing Fee: Currently $300; 2.7% convenience fee for a credit card.
    • Designation of Series: Not specific, but minimal.
    • Assumed Name Certificate: Not specific, but minimal.
    • Publication costs depend.
    • Professional Service Fee: Depends.
    • Annual Reporting Fees: $0.
    • Additional Costs: Depends.
  • Process of a Series LLC in Texas:
    • Structure:
      • Umbrella LLC
      • Series
    • Major Advantages:
      • Asset Protection
      • Flexibility
    • Important Considerations:
      • Operating Agreement
      • Annual Reporting
      • Costs and taxation

Frequently Asked Questions

Does Texas allow series LLC?

Of course! Since 2009, forming and running a series of LLCs in Texas has been legal. It’s a unique type of LLC that has multiple LLCs under it. The parent LLC treats divisions, which are called series. It has separate rights, purposes, and obligations.

What is a protected series LLC in Texas?

A different type of LLC is a series LLC. In a series LLC, the parent LLC protects all the  businesses’ assets from liabilities. Moreover, the protected series may also be called cells, child LLCs, sub-series, or just series. 

Do I need to pay a series LLC Texas franchise tax?

Yes! You may need a Texas taxpayer identification number and must pay one franchise tax report. Moreover, you may also submit a public information report. But it will be as a single entity, not a combined group.

Max Smith - LLC Formation

He is a seasoned entrepreneur and legal expert at LLC Formation Hub. With a stellar track record in both business and law, Max simplifies the complexities of LLCs. His practical insights, featured on LLC Formation Hub, empower entrepreneurs across the USA. Max merges business finesse with legal acuity to guide businesses toward success.


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