What is a Series LLC?

• Pick A Name for Your Series LLC: Obviously, the very first step is to shortlist a name for your company. Similar to a traditional LLC, you need to follow certain guidelines and rules when naming your SLLC. They are:

1. Avoid using a name that’s too similar to or the same as other registered business names.
2. Also, don’t forget to include “LLC” or “Limited Liability Company” in your chosen name to indicate its business structure.
3. Use the term “protected series” within the name of each LLC.
4. Make sure that the name of the master(parent) LLC is different from its sub-LLCs.
5. Include the full name of the primary parent LLC in each child SLLC’s name.
6. Add the name of the assets held by each sub-LLC needs in their names, helping everyone understand the assets owned by the child series, including the public and creditors.

Here’s an example of how you can name your SLLC,

If your Master LLC Name is Joanne Enterprises, LLC

Your child SLLC name should be something like,

1. Joanne Enterprises Protected Series – Real Estate Assets
2. Joanne Enterprises Protected Series – Technology Division
3. Joanne Enterprises Protected Series – Investment Portfolio
4. Joanne Enterprises Protected Series – Hospitality Ventures

In the above example, the parent LLC is “Smith Enterprises, LLC,” and each child series within it uses the term “Smith Enterprises Protected Series” followed by a specific identifier for the type of assets it holds (e.g., Real Estate Assets, Technology Division, Investment Portfolio, and Hospitality Ventures). This naming approach distinguishes the master LLC from its child series while providing a clearer picture of the assets owned by each series.

• Assign a Registered Agent: 

A registered agent is an individual or entity authorized to receive legal, official, and financial documents on behalf of your LLC. They accept them and then forward them to you. 

Similarly, every state where your SLLC operates will require it to appoint a registered agent in that state, and the agent for each sub-LLC will be the same as the Parent LLC(at least in the same state). 

• Decide on the Management Structure: You usually have two management options,

1. Member-Managed: The owners/members of the company will manage it themselves.

    

2. Manager-Managed: The company will be managed by managers who are appointed or hired specifically for that role.

In this specific situation of an SLLC, you need to make this decision for the overall company and each individual sub-LLC within the company. Different series can have different owners/members and managers, so you must choose if each series will be managed by its members or appointed managers. It gives you more flexibility for each part of your SLLC to have its own management setup.

• Complete The Required Paperwork: To officially form your SLLC, you need to file your Articles of Organization(known as “Certificate of Formation” in some states) document with the Secretary of State or equivalent state business registration agency. You must specifically mention/include a clause that your LLC can set up sub-LLCs in your Articles of Incorporation form and other formal documentation. You’ll also have to provide the name of your Series LLC, details about your registered agent, and your signature.

Some states may require filing a different form for SLLCs, and the specific forms, fees, and requirements will also vary depending on the state. 

In states with an allowance for an SLLC, you can create individual series by simply updating your Operating Agreement. Let’s discuss a little more on that!

• Draft An Operating Agreement for Your LLC: An Operating Agreement for your SLLC Operating Agreement is like a set of rules for your company. In most states, you can use this document to create or close a series within your LLC. 

It also decides how your company will be managed, who owns what part, and how money is shared. Because it’s crucial, getting help from a knowledgeable lawyer is a good idea. Each series within the LLC may also have its own operating agreement.

Here’s what you can include in your LLC Operating Agreement: 

1. Formation and the main purpose of your LLC
2. Series Structure
3. Members and Managers
4. Capital Contributions
5. Profit and Loss Allocation
6. Voting rights and responsibilities
7. Management Authority
8. Meetings and Voting Procedures
9. Transfer of Interests
10. Amendments to the Operating Agreement