For tax purposes, the Internal Revenue Service treats the series LLC very similarly to a traditional LLC. For now, the IRS regards the series LLC as one big entity. This means, each series within the structure is not considered separate companies and therefore does not require separate returns.
How are Series LLC taxed?
The IRS issued Proposed Series LLC Regulations in September 2010 (Reg-119921-09) to settle treatment of Series LLCs and their series for income tax purposes and concluded that each series of a Series LLC is to be treated as a separate entity for federal income tax purposes regardless of its state law status.
What is the benefit of a Series LLC?
The Series LLC can help organizations protect their assets from liability, and in many cases can do so with less expense and more flexibility than other structures that mitigate liability risk like the holding company or parent-subsidiary structures.
Can a series LLC be taxed as an S Corp?
For your active business operations, like the sale of services or products, your Series LLC could choose to be taxed as either a C Corporation or an S Corporation.
Can you change an LLC to a series LLC?
Yes, an existing LLC can be converted to a series LLC. The process varies by state, depending on whether the jurisdiction recognizes series LLCs.
Is a series LLC worth it?
A Series LLC can be a great way to separate your business assets and divide the responsibilities for investment and debt in different areas or divisions of your company. A Series LLC allows you to form multiple “mini-LLCs,” so to speak, and operate them all under a single umbrella company.
What states are series LLC allowed?
The series LLC is a creation of the state. Only in certain states are series LLCs allowed to be formed. Delaware was the first state to enact legislation authorizing the creation of series LLCs. Several states have followed suit including Illinois, Iowa, Nevada, Oklahoma, Tennessee, Texas, Utah and Puerto Rico.
Does each series LLC need its own EIN?
When applying for an employer identification number (“EIN“) on IRS.gov you must provide the legal name of the LLC that is applying for the EIN. After all, banks require a separate EIN for each series and each series is a separate entity for all purposes.
Can a series LLC file a separate tax return?
There are ways you could file separate returns for each cell, but this is typically not recommended for series LLC owners whose income is mostly coming from passive investments like real estate.
What are the tax advantages of a series LLC?
It’s important to note that the series LLC isn’t without its tax advantages. Its status as a pass-through entity will save you money and spare you from excessive corporate taxes that you would pay for other types of companies. Your operating company (also called the “shell” or “master” company) is what will appear on your tax return.
Do you have to keep series LLC records?
We do, however, recommend that series LLC owners keep thorough, separate records for their series to ensure liability protection and simplify the tax process. This applies regardless of how you choose to file. Please keep in mind that this information about series LLC tax treatment relates only to taxation at the federal level.
Do you have to file a tax return for a Cell LLC?
Only one tax return. Only the parent LLC is required to file a tax return, which includes all the cell LLCs. Of course, this is going to be a complicated tax return, so you will need a tax preparer who is experienced with this type of return. Must have separate registered agents.