How are Series LLC taxed?


To understand what a Series LLC is and how it is taxed, we will need to first understand how a Limited liability Company (LLC) works in real life.

We have heard about LLCs and that they can have one or more members, but we don’t know why they exist. The reason is some: To secure the owner’s personal assets.

Here is a story to clear the concept further.

Consider this: You go to a restaurant. At the gate of the restaurant, the car parking valet takes your car.

The valet is new to the job and doesn’t know how to drive. Instead of pressing the brakes, he accidentally pressed the accelerator and struck another car, the parking garage.

The owner of the other car files a lawsuit against the valet, the restaurant, and you.

Since it was your car, you are being held responsible. The restaurant makes a settlement because it has insurance. Valet goes to jail. But the car owner demands to repair fees of his car – which was a Class D category car and cost around $80,000.

This is where an LLC comes in. Without an LLC, the court will decide to take your property, i.e. a car or a real estate, dilute it, and then sell it to pay off the debt that you incurred because of the damage cost to the other car. However, with an LLC, your assets are covered.

The court will not be able to take your assets because they are now not on your name. Instead, they are safe in the name of the LLC – an entity that belongs to you, technically, as you are the sole member.

This is how LLCs work.

You can use an LLC to create a business or to own property. LLCs limit liabilities that creditors demand.

How Series LLCs Work?

Now that you understand the concept of an LLC let us discuss how Series LLCs work. Similar to an LLC, a Series LLC will keep your property and real estate investments safe.

But how?

Let’s say; you have to pay some debt to your creditors. Now, these creditors file a lawsuit against your LLC. This LLC owns all your assets. The court will ask the LLC to pay the debt by liquidating the assets. This will mean all your assets will be liquidated. Instead, to save you from such an issue, most states in the US have allowed Series LLC.

In a series LLC, you create properties, products, and businesses in different LLCs. However, all these LLCs are connected under a single LLC called the mommy LLC.

This is the general structure of the series LLC.

Mommy LLC > Baby LLC 1, Baby LLC 2, Baby LLC 3.

There are many benefits of having Series LLCs; these include:

  • Selling LLCs is easy. Instead of selling a product, or a real estate property, you will be selling the whole LLC.
  • Series LLCs also save you a lot in taxes in some states
  • Series LLCs are a lot easier to manage
  • Series LLCs keep your assets safe and secure.

How are Series LLCs taxed?
Every state has set its own rules for taxing Series LLC companies.

In most states such as Nevada, Illinois, and Iowa, LLCs only have to pay one-time annual fees. This means all LLC companies under a single Series LLC company will be considered a single entity.

Let’s say, the yearly license renewal fees for an LLC company is $50 per year. You own four LLCs under a single Series LLC company. So, instead of paying $200 for four LLCs, you will only pay $50 as an annual fee of the Series LLC for real estate. This will help you steer clear from excessive taxation.

Do note that each LLC will need to have its bank account, accounting, debt calculation, and unique selling point (USP) that makes every LLC a separate entity.

List of Series LLC Taxes by States

Most states in the US consider a Series LLC as the only entity no matter how much profit that LLC is generating each year. Here is a list of LLC taxes imposed by most states in the US.

State Tax
Alabama LLC $183
Alaska LLC $250
Arizona LLC $50
Arkansas LLC $50
California LLC $70
Colorado LLC $50
Connecticut LLC $160
Delaware LLC $90
Florida LLC $125
Georgia LLC $100
Hawaii LLC $50
Idaho LLC $100
Illinois LLC $150 (used to be $500)
Indiana LLC $90
Iowa LLC $50
Kansas LLC $165
Kentucky LLC $40
Louisiana LLC $100
Maine LLC $175
Maryland LLC $100
Massachusetts LLC $500
Michigan LLC $50
Minnesota LLC $160
Mississippi LLC $50
Missouri LLC $105
Montana LLC $70
Nebraska LLC $105
Nevada LLC $425
New Hampshire LLC $100
New Jersey LLC $125
New Mexico LLC $50
New York LLC $200
North Carolina LLC $125
North Dakota LLC $135
Ohio LLC $99
Oklahoma LLC $100
Oregon LLC $100
Pennsylvania LLC $125
Rhode Island LLC $150
South Carolina LLC $110
South Dakota LLC $150
Tennessee LLC $300
Texas LLC $300
Utah LLC $70
Vermont LLC $125
Virginia LLC $100
Washington LLC $200
Washington DC LLC $220
West Virginia LLC $100
Wisconsin LLC $130
Wyoming LLC $100

Can you benefit from a Series LLC?

Depending on the laws in your state, you can create as many Series LLCs as you want. Some states don’t allow forming LLCs. Or, even if you register your Series LLC in California State, you won’t be able to keep it as a single entity.

In California, you will have to pay $850 as annual fees for registering your LLC. If you have four LLCs available, this cost will increase to $2,500 annually. However, there are many states where laws against LLCs are relaxed. You can form entities in those states to steer clear of excessive state taxes legally.

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