Serial entrepreneurs should consider a Delaware Series LLC, the most cutting-edge type of business on the market.
It is advisable to set up a new LLC for each different business interest, but if the cost of managing a dozen or more companies is overwhelming, consider another alternative: the Series LLC.
Are you someone who is regularly thinking of and exploring business ideas to determine the viability of a product or a service in the market? Or perhaps you own multiple real estate investment properties, and you’ve been meaning to separate them out, without the need to establish and maintain individual companies. The Series LLC may be the business incubator you need to provide some shelter and separation between each business idea.
Introduced in 1996 in Delaware, the Series LLC offers the same benefits as a traditional LLC, with one significant difference: The Series LLC can establish under that umbrella an unlimited number of self-contained protected cells. Under Delaware law, each cell is given protections almost like separately incorporated subsidiaries.
Why a Series LLC?
For an entrepreneur who has multiple business pursuits or who owns multiple real estate investment properties, each product, service or property can be segregated into its own protected cell. A claim arising out of any one product, service or property should not allow that creditor or claimant to reach the assets of any other protected cell. If all products, services and properties were in a single traditional LLC, all would be at risk for a claim arising out of any one product, service or property. With a Series LLC, all of your eggs are still in one basket, but there is some separation between them, like in an egg carton, to keep the eggs from breaking at once.
What are the other advantages?
When compared to the cost of establishing separate, multiple traditional LLCs for each property or business, there are clear cost and administrative efficiencies by establishing a Series LLC to segregate real property and businesses into their own protected cells for asset-protection purposes. A Series LLC only pays one franchise-tax fee and one registered-agent fee, no matter how many protected cells it creates. There is also no cost to add protected cells and no limit on the number of protected cells. Because the LLC operating agreement is allowed maximum freedom of contract when drafting, the limit is your imagination.
How do I get started?
IncNow has set up more than 1,000 Series LLCs over the past 12 years. An attorney-managed business in Wilmington, IncNow has been helping entrepreneurs, start-ups, law firms, incubators, accountants and businesses launch Delaware LLCs and corporations since 1974.
President John Williams, an attorney with extensive experience in LLCs, says IncNow prepared its first Series LLC around 2002. Since then, their popularity has grown. “We are contacted by a lot of entrepreneurs, and we are doing it at a very affordable price,” says Williams.
They even registered the domain www.SeriesLLC.com.
IncNow makes it easy for entrepreneurs to incorporate. It gives lawyers and accountants “signature ready” documents for their customers. IncNow does not use blank form documents. Instead, its documents, such as Series LLC operating agreements, are filled in and ready for signature, with the principals’ names and business name already in the document. You can then add as many protected cells as you wish, without incremental fees.
IncNow remains an attorney-operated incorporation service that’s small enough to care and big enough to count on.
1201 N. Orange St., Suite 600, Wilmington
(302) 575-0877, www.incnow.com