Like pretty much any tax planning question, the answer is “It depends.” By no means should this article substitute for good advice by someone who knows your particular circumstances.
But if you’ve never explored the idea of a Series LLC with your tax pro, maybe now is the time to do so.
As recent as just 2-3 years ago, some lawyers were still advising against the Series LLC because they had been unproven in some jurisdictions. Boy, have times changed!
here are now 8 states and Puerto Rico with Series LLC law. In some cases, you can use that law to form a Series even if you, your business and/or your investments are in another state. By all means, though, check that out with your legal and tax advisor first.
The unique advantages of speed, flexibility, privacy and low cost create some distinct opportunities.
You may want to consider a Series LLC if:
- You are a serial entrepreneur.
If you set up numerous businesses, trying ideas out before you fully commit, the Series may work well for you. You can set up the individual cells (IRS now refers to these as series, further complicating the vocabulary) under the main Series LLC to create fast and easy subsidiaries. Normally I don’t like to recommend do-it-yourself on any entity formation, but as long as you have a pro set up the initial main Series LLC, the individual cells are quick and easy to form. Basically, you fill out the paperwork that’s included when you have Megan do the initial formation. Then get your EIN from the IRS, set up your bank account and you’re good to go!
HINT: The current Series LLC information pack for just $97 includes a $100 coupon off of Megan’s formation of your Series LLC. This includes consultation with Megan, so it’s a killer deal. Series LLC
- You have multiple real estate properties.
The Series LLC is made for multiple properties. The challenge with normally formed LLCs is that you can rack up a lot of formation and annual state fees by having the individual LLCs for each property. On the other hand, if you have one big LLC with all of your properties, you put everything at risk if something goes wrong with one of the properties. The Series with the individual series could be a perfect solution. There are no (or very little in the case of an IL Series LLC) formation costs for each individual series and you can combine them into one return.
NOTE: The new Proposed Regs (which we cover tomorrow) may require a couple more steps to get to the point of rolling the individual series together. The regulations haven’t been finalized by the IRS, but it’s something to watch.
- You want a low cost solution to a lot of entities.
Since you don’t have to form each series separately and pay a formation fee and annual fees to your state, the Series LLC is a significantly lower cost solution.
We have a lot more ideas and specific advanced strategies for working with the Series LLC here