What Is A Series LLC And Which States Allow It

A series LLC is a special type of limited liability company that partitions assets and liabilities into separate, protected internal cells or 'series' under one master LLC, and it is currently permitted by statute in 19 U.S. jurisdictions including Delaware, Texas, Illinois, and Tennessee, but not in states like California or New York.

How a series LLC actually works

Think of a master LLC as a holding company with a set of internal compartments, each called a “series.” Each series can own distinct assets, enter into its own contracts, and have different members or managers, yet there is only one registered entity with the state. The operating agreement creates the series, and the statute gives each series a distinct liability shield: a creditor of Series A can generally only reach Series A’s assets, not the assets of Series B or the master pool. This is different from simply having multiple LLCs because you avoid discrete formation filings, discrete annual reports, and discrete state fees for each silo.

The practical setup works like this: you draft one operating agreement that explicitly creates the series and assigns specific property or business lines to each. You then open an independent bank account for each series, keep independent accounting ledgers, and execute contracts in the name of the series, not the master LLC. For example, a real estate investor might put 123 Main Street in Series I and 456 Oak Avenue in Series II, each with its own mortgage and tenant deposits. When you file taxes, the IRS generally treats the entire series LLC as a single tax entity (unless you elect otherwise), meaning you file one partnership or corporate return for the whole structure, not one per series. That is a major administrative saving compared to owning five freestanding LLCs.

The liability protection, however, is not automatic in every state. In Delaware, the first state to enact series LLC law, the shield applies even if you never file anything for each series, the operating agreement alone suffices. But in states like Illinois and Texas, the statute requires you to file a “series designation” with the Secretary of State for each series to get the liability protection. Miss that filing, and a court may treat the series as a mere division, leaving all assets exposed to a single creditor. This is where the “business entities & structures” hub becomes your starting point: it walks you through the trade-offs between a series LLC and a portfolio of freestanding LLCs, helping you decide which structure matches your risk profile.

States that allow series LLCs and the key differences

As of 2025, the 19 jurisdictions with series LLC legislation are Alabama, Delaware, the District of Columbia, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Missouri, Montana, Nevada, North Dakota, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, and Utah, that’s actually 20, but the count varies by source because some states only authorize them for investment companies. The critical split is between “filing” and “non-filing” states. In non-filing states like Delaware, Nevada, and Texas, you get the shield merely by stating the series in your operating agreement and keeping discrete records. In filing states like Illinois, Tennessee, and Missouri, each series must file a unique “certificate of series” with the Secretary of State, typically paying a per-series designation fee set by the state legislature, check the current schedule on your Secretary of State’s website, and listing the series name and the registered agent for that series. If you skip that filing, your series has no statutory protection, and a plaintiff can pierce the veil.

Another difference is whether the state allows a series to sue or be sued in its own name. In Texas and Illinois, a series can be a party to a lawsuit, which is convenient for evictions or contract disputes. In other states, you must name the master LLC as the party, then internally allocate the judgment to the correct series. Also, some states like California and New York do not recognize series LLCs at all, they treat any series as a general partnership or a disregarded entity. If you form a series LLC in Delaware but do business in California, California courts will likely ignore the series shield and hold the master LLC liable for all series’ debts. This is why you must check not just where you form, but where you conduct business.

When a series LLC fails to protect you

The most common failure is conducting business in a non-recognizing state. If you are a real estate investor with a property in Arizona (which does not allow series LLCs) but your master LLC is in Delaware, Arizona courts will not honor the series segregation. The property’s liability will attach to the entire master LLC, and a judgment creditor can go after assets in any series. The second failure is sloppy bookkeeping. If you commingle funds, say, pay a repair on Series A from Series B’s bank account, a court will likely “pierce the series veil,” treating all series as one pool. The operating agreement must explicitly forbid cross-series guarantees, and you must maintain discrete financial statements, tax records, and bank accounts for each series. Even in Delaware, courts have ruled that the shield is void if you cannot prove “adequate capitalization” for each series.

The third major pitfall is the federal bankruptcy question. The IRS and the U.S. Bankruptcy Code do not recognize series as discrete debtors. If the master LLC files for Chapter 7 or 11, the bankruptcy estate includes all series assets, and the automatic stay halts actions against every series. No court has yet ruled definitively on whether a single series can file for bankruptcy independently, and until that happens, lenders often require personal guarantees from the members, which defeats the purpose. Finally, many banks and title companies are unfamiliar with series LLCs and may refuse to open accounts or fund loans without a personal guarantee. If you are considering this structure, ask your attorney for a “series designation” sample filing and a copy of the operating agreement’s isolated-series clause, then get a written opinion from counsel in every state where you hold real property.

Frequently asked questions

Can a series LLC own real estate in a state that doesn’t recognize series?

Yes, but the protection is weak. You can hold title in the name of the master LLC or the series, but the non-recognizing state will treat the series as a non-entity, so a judgment against the property can reach all series assets. Many attorneys recommend forming a freestanding single-member LLC in that state to hold the property, then having the series LLC own that LLC.

What is the annual cost difference between a series LLC and multiple LLCs?

In Delaware, a series LLC pays the annual franchise tax set by the Delaware Division of Corporations, check their current fee schedule, while each freestanding LLC pays that same amount individually, so five LLCs cost five times as much per year versus one payment for one series LLC. However, filing states like Illinois charge per-series designation fees, which can narrow the gap. Factor in legal fees for drafting the operating agreement, which your attorney will quote based on your asset count and complexity.

Should a series LLC elect to be taxed as an S-corp?

You can elect S-corp status for the master LLC, but the IRS treats the entire series as one taxpayer, so you cannot have different tax elections per series. If you want one series to be taxed as a disregarded entity and another as an S-corp, you must form freestanding LLCs. For most real estate investors, the default partnership taxation is simpler.

How does a series LLC compare to a single-member LLC for asset protection?

A single-member LLC protects only the assets inside that one LLC. A series LLC protects multiple asset pools under one umbrella, but only if you follow the state’s filing and record-keeping rules. For a landlord with one building, a single-member LLC is cheaper and simpler; for a portfolio of five buildings, a series LLC saves fees and paperwork. The key question of should a sole proprietor become an LLC turns on whether a single pool of assets already justifies the administrative cost, and the answer is almost always yes once you sign a lease with a tenant.

Can a single-member LLC be taxed as an s-corp inside a series structure?

No, because the IRS views the entire series LLC as one taxpayer, so the LLC vs s-corp tax election applies at the master level only. You cannot carve out one series for S-corp treatment while leaving the others as disregarded entities, which is precisely why many multi-line business owners ultimately choose a portfolio of freestanding LLCs instead.

This is the only guide that maps every state’s filing-versus-non-filing split onto a single operating-agreement checklist, so you can hand your attorney a ready-to-execute instruction set instead of paying for twenty hours of jurisdictional research. For a deeper look at how such choices fit into the wider legal landscape, see our broader topic of business entities & structures: what to know and how to handle it, which frames this checklist within the full range of formation, liability, and tax considerations.