Texas Series LLC Attorneys
Owning several properties or businesses can raise a structural problem: You may want the risks tied to one asset or operation separated from the others. A series LLC in Texas, set up and maintained correctly, can provide that framework and liability protection.
Texas law allows the formation documents and company agreement of a limited liability company (LLC) to establish designated series with separate rights, obligations, or business purposes. Barnett & Leuty, PC, can help you decide whether this structure fits the way your business operates.
What Is a Series LLC in Texas?
The defining element of a series LLC vs. an LLC in Texas is internal separation. An LLC is a common business structure that protects the business owner from liability. Under the Texas Business Organizations Code, an LLC may establish multiple series, and a protected or registered series may contract, hold title to assets, and sue or be sued in its own name. However, neither is a separate domestic entity for purposes of Title 1 and Chapter 101 of that code.
That matters when comparing a series LLC vs. a standard LLC. A Texas series LLC can associate specified assets, obligations, or business purposes with different series, while those series remain part of the same LLC. Texas law recognizes protected series and registered series, which follow different filing rules.
Series LLC Real Estate for Multiple Rental Properties
A series LLC real estate structure may be useful if you want different rental properties associated with different series. Texas law allows a protected or registered series to hold title to real property in its own name. Subject to statutory conditions and permitted exceptions, obligations tied to one series are enforceable against that series’ assets, rather than the LLC generally or another series.
Suppose one owner holds a duplex and a four-unit rental building. Each of the properties can be associated with its own series, but the liability limitation requires more than a label. It calls for records that separately account for each series’ assets, a company agreement containing the liability statement, and a certificate of formation containing notice of the limitation. Separate financial bookkeeping for each series is also required. For a rental portfolio, those details decide whether the statutory liability limitation applies.
Series LLCs for Businesses With Multiple Locations
The structure is not limited to real estate. Texas law allows a series to have a separate business purpose, and protected and registered series may contract and hold assets in their own names. That can make the structure worth considering for distinct locations or operating units.
Before asking how to create a series LLC in Texas, look at the business itself. Are the locations or operating units distinct enough to be reflected in the company’s documents and records? Plan your Texas series LLC formation around the actual operations before drawing divisions on paper.
What It Takes to Keep Each Series Protected
Texas does not provide the statutory liability limitation simply because part of a company is called a “series.” Section 101.602 requires records that separately account for a series’ assets, a company agreement containing a statement to the effect of the liability limitation, and a certificate of formation containing notice of that limitation. You must review written agreements, too, as the statute permits certain agreements to change which assets answer for an obligation.
Texas does not require a single record format. Under Section 101.603, records qualify if each series’ assets can be identified by specific listing, category, type, quantity, or formula, or by any other method that objectively determines them. Your lawyer can help you choose a method you can maintain as assets change.
How you file a series LLC in Texas depends on the type of series. A registered series requires a certificate of registered series with the Secretary of State. A protected series does not use that separate filing.
If you’re researching how to convert an LLC to a series LLC in Texas, start with the existing documents. Texas permits an existing filing entity to amend its certificate of formation, but the company agreement and asset records must also support the intended structure. State filing fees are set by statute: $300 for a new certificate of formation, $150 for a certificate of amendment, and $300 for each certificate of registered series. Legal fees depend on how much drafting your structure requires.
Barnett & Leuty, PC: Your Texas Series LLC Law Firm
A series LLC depends on its documents and records. A Texas series LLC lawyer can review how property is held, how contracts are signed, and how operations are divided before recommending an approach.
Barnett & Leuty’s business law practice includes series LLC formation and other entity formation and transactional work. Bring your current documents and a description of the assets or operations you want separated. Discuss the choice between protected and registered series, then work through the agreement, certificate language, and records before putting the structure into use.
To explore your options for a new company or an existing business, contact us today.
Frequently Asked Questions About Texas Series LLCs
Are series LLCs allowed in Texas?
Yes. Texas has allowed series LLCs since 2009 under Subchapter M of Chapter 101 of the Texas Business Organizations Code. In 2022, the Legislature added the registered series as an option alongside the original type, which is now called a protected series. Both types can separate assets and obligations within a single LLC, provided the company meets the statute’s recordkeeping and document requirements.
How much does it cost to form a series LLC in Texas?
The Texas Secretary of State charges $300 to file a certificate of formation for a new LLC, or $150 to file a certificate of amendment if you are adding series language to an existing LLC. A protected series requires no additional state filing fee. Each registered series requires its own certificate of registered series, which costs $300 to file. Attorney fees depend on how many series you plan to create and how much drafting your company agreement and records require.
Do I need a company agreement for a Texas series LLC?
For practical purposes, yes. In Texas, the document most people call an operating agreement is called a company agreement. The liability limitation between series applies only if the company agreement contains a statement to that effect and the certificate of formation contains notice of the limitation. The company agreement is also where each series is established and where its members, managers, and assets are defined.
Does each series file its own Texas franchise tax report?
No. The Texas Comptroller treats a series LLC as a single legal entity for franchise tax purposes. The LLC files one franchise tax report and one Public Information Report under its taxpayer identification number, rather than a separate report for each series. Federal tax treatment can differ, so it is worth reviewing your structure with your accountant.
Can each series have its own bank account, EIN, or assumed name?
Yes. Each series of a Texas series LLC may have its own bank account, employer identification number (EIN), and assumed name, though none of these is required. Separate bank accounts is “best practice” because it can make it easier to show that each series’ assets are accounted for separately, which the liability limitation depends on. A protected or registered series that operates under a different name can file an assumed name certificate.
Is a series LLC better than a standard LLC?
It depends on how many assets or operations you need to separate and how consistently you can maintain the records. A series LLC can hold multiple properties or business lines under one certificate of formation and one franchise tax report, and a protected series adds no state filing fee. In exchange, each series’ protection depends on separate records and the right language in the company agreement and certificate of formation. A registered series costs the same $300 to file as a new standalone traditional LLC, and some lenders, title companies, and other third parties are more accustomed to working with separate LLCs. Barnett & Leuty, PC, can compare both approaches against your actual holdings before you commit to either.
Contact Barnett & Leuty, PC, to speak with one of our attorneys
Barnett & Leuty, PC
(512) 336-1529
info@civil-law.com
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