If you want to operate multiple businesses under the umbrella of a single legal entity, a Series LLC can be an ideal option to manage your risks and protect yourself from liabilities. There are several reasons why a Series LLC can be a good fit for your business needs, and they’re especially popular with real estate investors who want to own multiple properties under separate business entities.
The idea of a Series LLC is that it allows you to “segregate” your risks. In addition to the personal liability protection that is part the benefits of forming an LLC, a Series LLC gives business owners the flexibility to separate different parts of their businesses into multiple segregated entities within the overall Series LLC. Think of a Series LLC as a kind of “umbrella” organization that contains your various business interests.
Another use of a Series LLC is if your business has multiple separate units that serve different markets or industries. If you’re doing business as a few separate and unrelated divisions or business lines, it might make sense for you to formally separate and segregate the administration, bank accounts, and legal risks of each of these lines of business as well.
Does Your Series LLC Need Separate Registered Agents?
The answer is: maybe.
One advantage of the Series LLC is that it can help you reduce the administrative costs of starting a business. Depending on the state where you form your Series LLC, you might be able to set up multiple businesses “for the price of one” — in other words, you might only owe one filing fee for the Articles of Incorporation (or other incorporation documents), and you can then set up multiple LLCs within that overarching Series LLC.
This cost savings sometimes applies to your company’s Registered Agent as well. Depending on the state rules where you set up your Series LLC, you might only have to set up one Registered Agent for the entire Series LLC, even if you have multiple companies, lines of business or properties contained within the larger Series LLC.
What If You Do Business in Multiple States?
Depending on which states you operate your business in, don’t assume that you only need one Registered Agent for your Series LLC. If you are doing business in multiple states, you might need to set up a separate Registered Agent for any companies that are located in other states. Rules vary by state — and many states do not recognize the Series LLC.
The series LLC is currently only available and fully recognized in 8 states:
Other states have some limited recognition of Series LLCs and their treatment of Series LLCs varies, but it’s complicated — refer to this legal blog for examples.
So even if you have a Series LLC set up in a state that recognizes it as a legal entity, you still might have to register as a foreign entity or pay extra taxes or fees in other states where you do business (that do not recognize Series LLCs). This might not require getting a Registered Agent in those other states, but it still creates additional complexity.
If you have a Series LLC set up in one state and then decide to do business in a separate state that does not recognize the Series LLC, it might be easier and safer to set up a new LLC in that other state. This would include the costs of setting up a new Registered Agent, just to avoid any possible confusion or risks that come with doing business in a state that doesn’t recognize the Series LLC.
Series LLC Registered Agents: An Example
To make this a little more concrete, let’s say Bob has a real estate investing business that owns properties in Texas. He has a Series LLC incorporated in Texas and a Registered Agent in Texas, because that is where he lives and where his properties are located.
But Bob decides to invest in some new real estate opportunities in Oklahoma. Since Oklahoma and Texas both recognize Series LLCs, Bob should be able to do business in Oklahoma by registering his Texas-based Series LLC in Oklahoma as a foreign entity. This would not require Bob’s company to get a new Registered Agent in Oklahoma, because his business is already registered in Texas.
However, if Bob wanted to expand his real estate business to California, he might be better off setting up a new LLC in California and getting a separate Registered Agent in California for that company — because California does not recognize the Series LLC.
There is still a lot of uncertainty in the legal system as to how Series LLCs are treated from one state to another. Don’t assume that you can effortlessly expand or do business across state lines just because your state accepts Series LLCs — you might need to adapt your business structure to comply with multiple states’ conflicting requirements and demands.
Bottom line: if you plan on doing business within just one state, and your state accepts the Series LLC, you generally will not need more than one Registered Agent for your entire company. The “baby LLCs” or “subsidiaries” of your Series LLC umbrella are all covered by the same Registered Agent for the overall series LLC. As long as your state accepts and recognizes the Series LLC as a single legal entity, one Registered Agent should suffice.
NOTE: This article does not constitute legal advice. If you have specific questions or concerns about state-specific requirements and other compliance issues, talk with an expert at Incfile and/or consult with an attorney about the best way to set up and structure your Series LLC.
Are you ready to start a business, form an LLC, or reorganize your business structure with a Series LLC to meet the changing needs of your company? Talk to Incfile today! Our incorporation experts can help you evaluate your options with state-specific advice.
For a small annual fee, Incfile offers a Registered Agent service that helps LLC owners get peace of mind while helping to preserve their privacy. If you’re starting a business with Incfile, your first year of Registered Agent service is included at no cost.