Using your Series LLC

Since each LLC in a series needs separation from any other LLC, that means treating it like a completely independent company. New EIN, new bank account, new annual meeting, new members and managers, new certificates, new…

As you can guess, this means more than a little additional paperwork and administrative work.

For this reason, we counsel people to minimize the number of companies that they set up. Don’t set up a new LLC just because you can. You do not normally need to set up a new series unless the type of income will be taxed differently than the original series or if you feel that the risk of a law suit against the LLC is high enough that you want to isolate the “risky” business from your other LLC.

Then watch this short video for a summary of the key steps to keep your company in compliance.

If your business activity requires a local business license then you will also need to complete a foreign registration process to register your out-of-state LLC in your home state. You would want to talk to an knowledgeable accountant and other people in your area involved in the same fields of business to get more information about licensing.

If your home state does not have Series legislation in effect, then all series would be treated as a single standard LLC. This is also known as “collapsing your Series LLC”.

When you add the next Series to your LLC, you may need to apply for a Federal EIN to be able to separate the new series from your other companies. If you want to learn about the online application, Click Here. The IRS does not require a new EIN if the type of revenue is “the same” between cells. If you wish to keep cells separate for liability protection purposes, you should also keep them financially separate with their own EIN and bank accounts.

The concept of Series LLCs is relatively new, and at the time of writing (October 2012) only 10 states in the US have passed laws to accept this type of entity. Some other states will allow an out-of-state series to be registered as a separate legal entity and others will only allow the master LLC and all of the associated series to be registered as a combined group.

Completing the formation of the Master LLC requires that the Founding Members complete the paperwork surrounding the Initial meeting for the LLC and then completing the paperwork for the First Series.  The process of creating the First Series under the master and creating additional series are identical.

As an example, say that I’ve formed an master LLC named EB-LM LLC.

The State has registered EB-LM LLC. And the State has granted the Continuation of the Articles of Organization to allow the creation of independent Series. To create a series, the members of EB-LM LLC pass a resolution to create a series and complete Exhibit B. __ to identify the Members and Managers of the new series and Exhibit A- __ to identify the Capital Contribution and units of ownership of the new series Members.

Each Series needs to have an Exhibit B. __ and an Exhibit A- __ as well as a different EIN, bank account, minutes and resolutions and annual meetings.

No paperwork is required for most Series States, however Illinois requires a fee and paperwork for every series that is established.

Foreign Registration and Certificate of Good Standing

If a company is established in one state and needs to also be registered in another state, this process is called Foreign Registration. For example, if your LLC is set up in Nevada or Delaware and you live in another state, you may find that opening a bank account in your state requires you to register the NV / DE LLC in your home state, or if your web site sales product supplier requires you to obtain a sales permit in your home state, you will have to register the NV / DE LLC there too.

You start by obtaining a short form Certificate of Good Standing in the state where your LLC is established. The form for Nevada is https://nvsos.gov/index.aspx?page=4 in the Business Center and the form for Delaware is http://www.corp.delaware.gov/certmemo.pdf.

The next step is to complete the application for foreign registration from your State’s department responsible for entity formation. This is typically the Secretary of State or Department of Business Services. This form will need to be printed out and sent to the address on the form along with the Delaware / Nevada Certificate of Good Standing.

Please notice that your state may allow you to change the name of your LLC as you register it in it your state. In the field for the proposed LLC name you could enter BLUE SKY LLC and place the current LLC name (EB-LM LLC) taken from the Delaware / Nevada Certificate of Good Standing you obtained from the web site mentioned above.

25 thoughts on “Using your Series LLC”

  1. OK…I am really confused! Exhibit B1..What goes in the first black space under Recitals and also what goes in #1 New Series blank?# Number 9 I assume is my signature? Then sign and date.

    Exhibit A1 I assume I sign once? and what goes in Note 1?
    Sorry this is all new to me and I have watched videos several times (I think I have confused myself)
    Any help is appreciated..

  2. My LLC is from Nevada. I believe the bulk of my business will be in my home state of Colorado. Do you know if Co requires foreign registration?
    Thanks

  3. This information is great, but a little overwhelming for a first time applicant. However I am looking forward to learning the necessary information . I am happy to have these training modules to refer to.

  4. “Each Series needs to have an Exhibit B. __ and an Exhibit A- __ as well as a different EIN, bank account, minutes and resolutions and annual meetings.”

    In my case, LLC Series 1 = Ecommerce has its own EIN…
    If I want to form LLC Series 2 = Intellectual Property, I need a new EIN number?
    LLC Series 3 = Prototype build, New EIN?
    LLC Series 4 = Sales / Marketing. New EIN?

    Max Katko

  5. How do we discover whether it is necessary in New Mexico to register our series as a foreign LLC?

    In the 8th paragraph on the “adding another series” page, I see the words “If you need to register a series as an out-of-state (that is “foreign”) LLC…”, which seems to indicate that it might not be necessary, but cannot find information about what would require this action. The series in question is a house that is being rented to a family. At least 2 other series that we wish to set up are also rental properties in New Mexico. There are other series with other business activities also being considered. Where can I locate the criteria for businesses that New Mexico needs us to register as a foreign LLC?

    Since the person writing this message does not have access to Mr. Chavez’ email account, it would be helpful if you would email your response to rather than the email address you have on file. If you prefer to respond by phone, 505-205-1563 is the appropriate contact number.
    Sincerely,
    Wendy A. Chavez
    for Randolph Chavez of Raccoon Holdings, LLC

  6. Still trying to figure out the next step (after doing the foreign registration in New Mexico) in setting up the serials for Raccoon Holdings, LLC. The annual meeting has been held, and resolutions passed authorizing the formation of the various series. I know we need to get a unique EIN per series, and set up a bank account for each series as well as a foreign registration in New Mexico. Each series will effectively be its own LLC and the process is similar to that of setting up the umbrella (Raccoon Holdings, LLC), but nearly a year has passed since the umbrella was formed so I have mislaid some of the instructions. Which module will best tell me what to do next? Best to email Wendy in Bookkeeping at , though a phone call to 505-205-1563 will allow Mr. Chavez to also hear the information being requested. Thank you for your patience.
    Sincerely,
    Wendy A. Chavez, Bookkeeper
    Raccoon Holdings, LLC

  7. Hey folks;

    I have listened to the two webinars about LLC’s and Series LLC’s. My LLC is called All 4 Sports And Recreation. I have the impression now that this is my “master” LLC, correct ? I am planning to open a webstore using a dropshipper soon. The domain name is qualitycedarpatioandgarden.com and it can be visited online; however, the website is still under construction and the store itself is not open yet. As this will be my first series or “cell” am I to assume it will simply be LLC Series-1 ? Do I need to go through the paperwork and application process discussed in the Series LLC Overview webinar for this first cell? Does this cell need its own EIN number ? Do I need to apply for Foreign Registration and if so how do I do that here in Ontario ? (your webinar only makes reference to “states”) I probably have many more questions but my head is spinning a bit. I will try to make the Monday evening phone session but that time frame is a bit problematic for me.

    Respectfully,
    Ken Watson

  8. Hello Ken,

    Yes, you need to go through the initial meeting of the master LLC and setup for Series 1. Last night I recorded a conversation from our Monday night call that walked through the minute book. That recording is now on the Series Minute Book page of the web site. It should help with some of the spinning >grin<

    You would place something like the following in the footer of your web site – (c) 2011 QualityCedarPatioandGarden.com is owned and operated by All 4 Sports and Recreation LLC Series 1.

    This advises visitors that they are dealing with a company and not an individual. Series 1 already has the EIN assigned (refer to the EIN documents we sent you). Foreign registration is a uniquely American concept and does not apply to Canadians. You might want to contact the Accountant we show on the web page for information regarding taxable income generated by the US LLC.

    Best Regards,

    Gary Bauer
    Your Entity Solution, LLC

  9. Hello,
    I have already received my minute book and although you told me not to panic im panicking I am not sure which form needs to be sent back to the IRS and i cant see the video to well on my pc I need Help…
    Thank You

  10. Once the paper work in the minute book is complete and I filled out papers for series 1, do I need to send paperwork to someone?

  11. with my work and all .i have little time to spend understanding how too’s of filling out this minutes book! my main concern in the beginning[and question to you guys] was that i be able to keep my home and personal property seperate from this llc setup ! will be trying to join in monday nite if i can get a good signal on pc broadband ! thanks for your help guys and all i can get [confused]!!!

  12. Hello Jesse,

    The two companies work as partners to give you maximum tax deductions. Keep track of your expenses and talk to your accountant about deductions. Your Nevada company will one the stock market trading account and the Louisiana company will claim the business expenses. Here is a link that should explain it more clearly. http://ebiz-learning.com/trading.html

    Best Regards,
    Gary

  13. Question:
    Y.E.S, LLC set up an EIN for a Oklahoma series LLC for me. which is a master LLC, (correct?) and cannot do business, hold assets, or need a bank account, etc. (correct?) So does that mean that I have to get a new EIN for ‘Series 1’ of the LLC along with another bank account, since the info was sent to me for the original master LLC and I got a bank account for that LLC not the ‘Series 1’ cell of the LLC, before I can do business?

  14. Hello Bette,

    We shipped your binder and seal via FedEx (tracking number 066534560612817) on March 13 and will be sending the operating agreement, certificates, etc. early this week.

    Best Regards,
    Gary Bauer
    Your Entity Solution, LLC

  15. I still have not received my minute book so it does not do me any good to watch the video. I watched all the way until it gets to the minute book. Can you tell me when I might receive it?

    Thank you,

    Elizabeth Morgan

  16. If I understood correctly, I filled out an LLC-37.40 requesting to set up a Series 1 under by LLC in Illinois. I completed the
    Name of Series space SKS Merchandising, LLC, Series 1. Is this correct? Also, when I register the Business for a Tax ID do I have to register both the LLC and the Series 1 or just the Series 1 since the sales will come through the Series 1? I had already set up a
    bank account in the name of SKS Merchandising, LLC. Can I assign this bank account to the Series 1 by resolution by having a meeting?

  17. Hello Sandra,

    In principle, you would get a Tax ID only for series 1. If Illinois does not offer that choice, you would treat it as you are doing for the bank account. Assign it through a meeting to Series 1.

    Best Regards,
    Gary

  18. The name of my master LLC is Social Phoenix. I want my second seriesLLC to have the name Rising Phoenix. Will that be allowed? If so, do I still need to put series 2 after the name? Does the name Social Phoenix have to appear anywhere in my second companies name?

  19. If you live in a state with Series legislation, then you should be able to get more insights with a local accountant. You can always call us or review the recorded Monday night calls that mention Series LLCs.

    Regards,
    Gary Bauer

  20. DO I NEED A SHORT FORM CERTIFICATE IN THE STATE OF OKLAHOMA?
    OR IS THIS SOMETHING YOU HAVE ALREADY DONE FOR ME?

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