🇺🇸 What is a "Series LLC"?
Think of a honeycomb. A Series LLC consists of a "Master" LLC (the hive) and unlimited "Series" or "Cells" (the individual holes).
Legally, each Series acts like a completely separate company. If a tenant sues Property A (Series A), they cannot touch the assets in Property B (Series B) or the Master LLC.
The Killer Feature: In friendly states like Texas or Delaware, you typically pay the state filing fee (and Annual Franchise Tax) ONCE for the Master LLC. The Series cells are created internally, saving thousands of dollars annually in maintenance fees.
Saving $25,000 in 10 Years
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| Buying Multiple Rentals? |
Let's compare the cost of protecting 5 rental properties. Note: This math applies to "Series-Friendly" states (TX, WY, NV, DE). If you are in California, see the warning below.
*Note: Tax filing complexity depends on your election (Disregarded Entity vs. Partnership). However, administrative overhead is significantly lower.
The "Internal Shield" Mechanism
How does it actually work? You generally don't file paperwork with the state every time you buy a new house. You do it internally via your Operating Agreement.
- 📝 Step 1: Form the Master LLC in a Series-friendly state (Delaware, Texas, Wyoming, Nevada, Tennessee, etc.).
- 📝 Step 2: Create an "Operating Agreement" that specifically authorizes the creation of Series.
- 📝 Step 3 (Critical): Draft a "Series Designation" document for each asset. Example: "Series A holds 123 Main St."
- 🔒 The Result: Series A has its own bank account, its own EIN, and its own liability shield. If Series A goes bankrupt, Series B is untouched.
(Crucial Warning) The "Corporate Veil" Trap
A Series LLC is powerful, but fragile. If you don't treat each Series as a separate business, a judge will "pierce the corporate veil" and combine all your assets.
🚫 How to Destroy Your Protection
- ❌ Commingling Funds: Using rent from Property A to pay for Property B's roof. NEVER do this. Each Series must have its own bank account.
- ❌ Ignoring the CTA (New for 2026): The Corporate Transparency Act requires most entities to file a BOI Report with FinCEN. Many legal experts believe each Series must file separately. Failure to file carries fines of $591/day.
- ❌ Signing Incorrectly: When signing a lease, sign as "Manager of Master LLC, on behalf of Series A." Never just as "Owner."
The Banking Headache (And How to Fix It)
The biggest practical friction point is Banking. Legacy bank tellers often struggle with Series LLC structures because they don't see separate Articles of Organization for each cell.
The Fix:
1. Use tech-forward business banks (like Mercury, Relay, or specialized credit unions).
2. Bring your Master LLC Articles + The Operating Agreement (which allows Series) + The Series Designation document.
3. Get a Separate EIN: Obtain a free EIN from the IRS for each Series. This is critical for tax clarity and banking compliance.
Chief Editor’s Verdict (Scale with Safety)
If you have 1 property, a regular LLC is sufficient. If you plan to scale to 3 or more, the Series LLC is the sophisticated standard. It shields your assets without draining your wallet.
Action Plan
1. Don't DIY: Use a specialized service or attorney. A generic template will likely fail in court.
2. California Warning: If you are in CA, the Franchise Tax Board charges $800 per Series if they do business in the state. This structure does NOT save money for CA properties; it only works for CA investors buying out of state (e.g., in TX).
3. File Your BOI: Don't forget the FinCEN reporting for every new Series you create.
This article provides general information about business structures as of January 2026. Laws vary significantly by state (e.g., California's aggressive taxation of Series LLCs). The Corporate Transparency Act (CTA) imposes strict reporting requirements. The author is not an attorney or CPA. Forming an LLC does not guarantee asset protection if formalities are not followed. Always consult with a qualified business attorney before forming a Series LLC.
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