The 15 Most Frequently Asked Questions About Forming A Series LLC in Texas
The following is a quick and concise answer to the most frequently asked questions that I get as an attorney from people that are looking to form a Series LLC in Texas. There are additional considerations and, of course, exceptions to each answer, but generally, this should give you a good starting point for your Series LLC questions.
What is a Texas Series LLC?
A Texas Series LLC is a special type of limited liability company that allows for the creation of multiple series within one entity, each with its own assets, liabilities, and members.
How do I form a Texas Series LLC?
To form a Texas Series LLC, you must file a Certificate of Formation with the Texas Secretary of State and pay a filing fee. You must also draft an Operating Agreement that outlines the structure of the Series LLC and the terms governing the relationship between the different series.
What are the advantages of a Texas Series LLC?
The main advantage of a Texas Series LLC is that it allows for the creation of multiple series within one entity, each with its own assets, liabilities, and members. This can be beneficial for businesses that want to segregate assets or operate multiple businesses under one umbrella.
What are the disadvantages of a Texas Series LLC?
The main disadvantage of a Texas Series LLC is that it is a relatively new entity structure and there is not a lot of legal precedent or guidance on how it will be treated by the courts in certain situations.
Can I convert an existing LLC to a Texas Series LLC?
Yes, you can convert an existing LLC to a Texas Series LLC by amending the LLC’s Certificate of Formation and drafting a new Operating Agreement.
Can I use the same name for each series within my Texas Series LLC?
Yes, you can use the same name for each series within your Texas Series LLC, but you must include the name of the series in any legal documents or filings.
How do I set up a separate bank account for each series within my Texas Series LLC?
You can set up a separate bank account for each series within your Texas Series LLC by opening a new account for each series and ensuring that each account is titled with the name of the series, and that expenses, liabilities, and income is adequately separated.
Are the assets of each series within my Texas Series LLC protected from the liabilities of other series within the same entity?
Yes, the assets of each series within your Texas Series LLC are generally protected from the liabilities of other series within the same entity.
Can I have different members for each series within my Texas Series LLC?
Yes, you can have different members for each series within your Texas Series LLC.
Can each series within my Texas Series LLC have its own tax identification number?
Yes, each series within your Texas Series LLC can have its own tax identification number.
Can I sell or transfer a series within my Texas Series LLC?
Yes, you can sell or transfer a series within your Texas Series LLC, but you must ensure that the transfer complies with the terms of the Operating Agreement and any other legal requirements.
Can a creditor of one series within my Texas Series LLC go after the assets of another series within the same entity?
No, generally a creditor of one series within your Texas Series LLC cannot go after the assets of another series within the same entity.
Can I dissolve one series within my Texas Series LLC without dissolving the entire entity?
Yes, you can dissolve one series within your Texas Series LLC without dissolving the entire entity, as long as the terms of the Operating Agreement allow for such a dissolution.
Can I convert a Texas Series LLC to another entity type?
Yes, you can convert a Texas Series LLC to another entity type, but you must comply with the legal requirements for the new entity type and ensure that the conversion is authorized by the Operating Agreement.
How do I add a new series to my Texas Series LLC?
To add a new series to your Texas Series LLC, you must amend the LLC’s Operating Agreement with a new Designation of Series, as well as file your Assumed Name Certificate with the Secretary of State.
