Under Delaware law, a limited liability company (LLC) may be composed of an individual series of membership interests. This type of entity is referred to as the Delaware series LLC. Each series is effectively treated as a separate entity, meaning the debts, liabilities, obligations and expenses of one series cannot be enforced against another series of the LLC or against the LLC as a whole.
Few types of business entities have attracted as much interest from people as the Delaware series LLC.Today, less than half of the U.S. states allow you to form a Series LLC, with Delaware being the first to popularize the entity.What Is a Series LLC?
The first series LLC was devised by some of Delaware's top lawyers and was formally introduced in the state of Delaware in 1996. The purpose of the Delaware series LLC is to form a unique entity that consists of separate, individual interests. Under Delaware law, each series can hold its own assets, have its own members, conduct its own operations and pursue different business objectives, yet remain insulated from claims of members, creditors or litigants pursuing the assets of, or asserting claims against, another series.
When it comes to this type of business entity, it's not a matter of series LLC vs LLC, but rather a question of whether or not your LLC would benefit from siloed units within the business. The Delaware series LLC is a collection of individual series—this notion has been likened to a honeycomb. It can be illustrated as follows:
Since a Delaware series LLC is treated as a single entity, it only has to pay one annual Franchise Tax of $300 to the state of Delaware, instead of paying $300 for each individual Delaware LLC.What Is a Delaware Series LLC Used For?
It serves many purposes, but it is typically utilized by real estate investors who own several properties and companies that own multiple brands.
Do Series LLCs Need a Registered Agent?
Yes. Just like any other LLC, your Delware Series Limited Liability Company will also need a Registered Agent. However, a common misconception is that each series will need to have its own Registered Agent. A single Registered Agent can represent the entire company. Harvard Business Services, Inc. can act as the Delaware Registered Agent for your series LLC.
How to Form a Series LLC in Delaware?
The process of forming a series LLC is quite similar to forming a regular LLC. You just need to provide the name of the company, basic contact information and we will prepare and file the Certificate of Formation with the State of Delaware.
Once the initial steps are complete, your series LLC will need to draft an LLC Operating Agreement and obtain an EIN.What Are the Pros and Cons of Forming a Delaware Series LLC?
While a Series LLC is a flexible entity that offers several benefits, there are some drawbacks associated with it.
[Please note: As of August 2019, Delaware has amended its Series LLC law. All information in this article pertains to what is now known as a Protected Series LLC, as opposed to the newly introduced Registered Series LLC.]
We are a document filing specialist and business formation company. We are neither attorneys nor accountants, and this information should not be considered legal or accounting advice.
If you have more questions about the Delaware series LLC, please contact us via live chat, Skype (DelawareInc), telephone (800-345-7400) or email.Form a Delaware Series LLC Now
Recorded in December, 2020
Since 1981, Harvard Business Services, Inc. has helped form 362,825 Delaware corporations and LLCs for people all over the world.
Harvard Business Services, Inc. guarantees your annual Delaware Registered Agent Fee will remain fixed at $50 per company, per year, for the life of your company.
Harvard can provide assistance throughout the life of your company. These custom services are the most popular with our clients: