What is Different Between a Series LLC and a Regular LLC?

What is Different Between a Series LLC and a Regular LLC?

A series LLC is a limited liability company (LLC) that allows the creation of separate series or cells within the main LLC. Each series or cell is treated as a separate entity for liability and asset protection purposes, but all of them are under the umbrella of the primary LLC.

A regular LLC, also known as a single-member LLC or a traditional LLC, is a business structure that provides personal asset protection and tax benefits for the owners, also known as members.

Here are some key differences between a series LLC and a regular LLC:

• Asset Protection: Each series or cell is treated as a separate entity for liability and asset protection purposes in a series LLC. This allows different assets and liabilities to be separated among the different series, providing an additional layer of protection. A regular LLC provides asset protection for the LLC’s and member’s personal assets but not for the different assets of the LLC individually.
• Formations and Maintenance: Setting up a series LLC may require additional steps and paperwork compared to a regular LLC. In some states, a series LLC is not an option; in others, it may be more complex and expensive to set up and maintain.
• Taxation: A series LLC is taxed as a single entity, with each series or cell being considered a separate “division” for tax purposes. In contrast, a regular LLC may be taxed as a pass-through entity or as a C-corporation or S-corporation.
• Flexibility: A series LLC provides more flexibility to separate and isolate assets and liabilities among different series or cells. This can be useful for real estate investors looking to hold multiple properties in a single LLC or for business owners looking to separate different lines of business within a single LLC.

It’s important to note that not all states recognize or allow series LLCs, and the laws and regulations surrounding them can vary from state to state. It’s recommended to consult with a lawyer or accountant to determine the best type of LLC for your specific situation and to ensure compliance with all laws and regulations.

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