Back to Blog
Why a Series LLC?
You have probably heard the adage, "don't put all your eggs into one basket." To limit your personal liability from owning a business or holding real estate assets, you should use a legal entity, such as a limited liability company, the most common choice of entity today.
Now assume you use an LLC to own rental properties; you have a dozen of them. Before the series LLC, you could place all 12 in one LLC, or any number in one, and create additional LLC. Putting all your rental properties in one LLC is "putting all your eggs into one basket." Creating a new LLC for each property is having separate baskets.
Creating a series LLC allows holding assets in divisions, or series, in an LLC. The series LLC is like an egg carton, with each egg having its own slot. With a series LLC, each rental property can have its own series. Instead of filing a formation document with the Secretary of State each time to create a new entity, you can have a series LLC and create a new series with internal documents.
The Texas Business Organizations Code provides that if you have some sort of demonstrable method of maintaining records of each series separate from another and from the LLC as a whole, then the liabilities that arise from a series will not affect the assets of the other series or the LLC itself. Adequate records to show the activities and assets of a series leads to having a protected series.