Delaware corporate law allows a really interesting business type: Series LLC. Each LLC within a Series LLC in Delaware is regarded as a legally independent and separate entity, which means each entity is responsible for its own debts, expenses, financial responsibilities and legal obligations. Each LLC may have its own assets, members, activities and purpose of business. However, it is protected against the claims of members, creditors and complainants that claim right on another LLC.
A Series LLC is regarded as a single entity. Therefore, it is taxed accordingly. That means it is a good idea to start a Series LLC and pay only $300 franchise tax which is paid by every Delaware company and accounting fees, instead of starting different businesses and pay different taxes for each of them.
Even though it seems perfect, this business type may sometimes bring about potential problems.
Some Disadvantages for Series LLCs
- The fact that each LLC under a single Series LLC is regarded as a separate entity has not been tested in a legal case yet. Theoretically, each LLC is regarded as a separate entity, but if a judge adjudicates otherwise this would disprove the theory.
- Federal tax policy for Series LLCs is still not certain. Though they are all regarded as a single company together, officials suggested that they should be taxed separately. However, the absolute decision has not been made yet.
- It is still not certain how a Series LLC or its sub-entities will be taxed if they operate in other states.
- We cannot say banks have been successful for opening separate bank accounts for each LLC under a Series LLC. So, they are still having problems about how to handle Series LLCs financially.
- There are not many legal consultants that are expert on Series LLCs since it is a new business type.
So, we recommend you to wait until these problems are cleared up. If you still want to start a Series LLC or if you have other questions please contact us.
TR Phone: +90 850 304 7002
US Phone: +1 302 526 4800
Address: Newark, Delaware.