Series LLC in Missouri
In 2013, the State of Missouri enacted legislation permitting the formation of a new type of entity called a Series LLC in Missouri.
The series LLC is a group of smaller LLCs nestled under one master LLC umbrella. Similar to a parent corporation with many subsidiaries, each smaller LLC is independent from one another. This is because each smaller LLC will have its own members, is only liable for its own debts and obligations, and can hold its own assets.
A traditional LLC is currently one of the most popular structures for personal asset protection. Unfortunately, when you own multiple assets under one LLC all assets covered are exposed to the same liabilities. If your business encompasses multiple operations, divisions or product lines then you should consider forming multiple legal entities in order to separate or limit the liability to each division. While setting up multiple LLCs does further reduce your exposure to liability, it can add up.
This is where the Series LLC comes in. The Series LLC in Missouri has all of the benefits of a traditional LLC, such as flexibility and limited liability, with the additional benefits of reducing in administrative costs and increasing isolation of liabilities on multiple assets.
- Plus State Fees
When you form a Missouri series LLC, you can form as many series within the Missouri series LLC as you want, all for the same filing fee. This is a great structure to accommodate a growing business. If you run out of series down the road, you just simply amend the articles of organization of the Missouri series LLC and the operating agreement of the Missouri series LLC to add more series.
Currently, each individual series within the LLC does not have to file taxes. The master LLC files on behalf of all the series that fall underneath its umbrella. Another benefit of creating a Series LLC is that you can create separate members and managers within each series and assign them different duties, powers, rights and percentages of ownership.
However, a Series LLC in Missouri isn’t a one-size-fits-all structure for all businesses. There are some risks associated with forming a Series LLC. For instance if you operate in a state that does not allow Series LLC there’s a chance your assets within them might not be protected. Regulations for the Series LLC vary from state to state and currently only 14 states allow them. Also, you must closely follow regulations with starting and operating a Series LLC in Missouri. If you’re not careful the Series won’t offer the protection you’re expecting.
Another aspect to be aware of is that each individual Series within your Series LLC must have its own bank account, since each is producing separate financial statements. This can be a complicated administrative issue depending on how many Series are within the Series LLC.
Lastly, since the Series LLC concept is rather new, there are some legal questions yet to be answered. For instance, how each individual Series would be handled in a bankruptcy or if a bankruptcy court will recognize the individuality of each different Series within the LLC.
Forming a Series LLC is worth careful consideration. If you’re contemplating forming a Series LLC in Missouri contact LexLaunch to talk through your options and get started protecting your assets today!