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.