Series LLC Questions & Answers


Diane Kennedy and I did a webinar recently on Series LLCs. You can see the replay for a short time over at www.ustaxaid.com/series. And check out our limited-time offer that incudes having a Series LLC formed for you, here: http://www.ustaxaid.com/shop/Series-LLC-Year-End-Special.html

We had a bag full of questions and ran out of time. So, I’m answering all of your questions in my blog. And, of course, if anything you read this week brings on another question, ask away!

Converting Regular LLCs to Series LLCs

Question:         If I have an existing LLC, can I turn it into a Series LLC? How do I do that?

Answer:           As long as your LLC was formed in a state that has Series LLC law (Delaware, Iowa, Illinois, Kansas Tennessee, Texas, Nevada, Oklahoma and Utah) it’s a simple process. Sort of. You will need to file an Amendment to your Articles of Organization, advising the Secretary of State that the LLC should now be considered a Series LLC, with all of the rights and restrictions that apply. You may need to change a few other things, too. For example, Series LLCs are intended to be Manager-Managed structures. If you set up your LLC as a Member-Managed structure, that will also need to change.

The exact language you use will vary from state to state. I’d suggest getting some help with this, to make sure it’s done properly.

Also, once the change is made with the Secretary of State, you’ll need to prepare a new Series LLC Operating Agreement. This is a VERY different document to a regular LLC agreement. Again, get someone to help with this. (Like us!)

Converting LLCs in Non-Series States

Question:         My LLC was formed in Georgia – a non-Series state. How do I turn it into a Series LLC? Can I?

Answer:           Yes, but it will be a little more complicated. You will need to first domesticate your Georgia LLC into a Series state – so turn it from a Georgia LLC into an Oklahoma Series LLC, for example. That will involve a jurisdictional move and then a conversion. Most states let you do this simultaneously. We’ve done several for our clients.

If you still need to operate in Georgia, though, you will need to cross-register your new, Oklahoma Series LLC into Georgia, this time as a foreign LLC.

Series LLC Filing Fees vs. Regular LLC Filing Fees

Question:         Are the fees to establish and maintain a Series LLC higher than those of a regular LLC?

Answer:           That depends on the state. Most states have no difference, but a couple of states (Illinois and Kansas) do adjust both the filing fee and their annual report fee for Series LLCs. The initial filing is higher and the Annual Report fee is based on the number of Cells. That makes sense. These are the only two states where you are also required to register the Cells separately with the Secretary of State.

At Smart Business Incorporation, we specialize in helping investors and business owners develop structures to run their businesses, protect their assets and keep as much of their earnings as possible. If you want to know how to best structure your next business, visit our website or drop us an email at info@smartbusinessincorporation.com. We’ll be glad to help.

Related posts:

Leave a Reply