Banking Issues for Series LLCs

Series LLCs are fantastic entities. They’re less expensive to operate than dozens of individual entities and give you great privacy and flexibility. But because they’re relatively new on the legal structure front, there are still plenty of practicalities to work through.

One of the biggest that we deal with is banking. The problem is simple: banks work within very strict guidelines. The Patriot Act has complicated things further, and individual branches don’t have the same autonomy as before. Your great relationship with your local manager won’t necessarily help you, if you can’t provide sufficient paperwork to meet the Compliance Department guidelines.

With Series LLCs, the biggest issue is a lack of filed Articles for the individual Cells. This is proof bankers look at to see that a company exists and is in good standing. Yet Cells don’t file separate Articles (except in Illinois, where there is a Certificate of Designation on record). Without having the separate Articles, banks often refuse to open accounts for Cells, or to assign separate EINs to each Cell.

But that doesn’t mean you can’t make it work for you. It’s just a matter of find a way to work through their system. For example, open up your accounts in the name of the Parent LLC. A company can have multiple bank accounts. File DBAs, or fictitious business names as required, so you can assign those DBAs to the different accounts. If you can’t have different EINs assigned, don’t worry. It’s not the end of the world. The goal here is to move forward, not fight the system to a standstill.

There are many variables when you’re structuring a business. That’s why it’s hard to go through a quick-service website. Unless you talk to someone who’s got some knowledge and experience on both the tax and the legal side, it’s hard to know what you don’t know. And that can leave you vulnerable.

Got questions? Contact us! We’re here for you.

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