Texas Series LLC — Multiple Protected Series Under One Entity

Texas is one of the leading states for Series LLCs, authorized under the Texas Business Organizations Code. A Series LLC lets you create separate internal "series" — each with its own assets, liabilities, members, and business purpose — while filing only one Certificate of Formation and one set of annual reports. See all LLC types or start with our formation guide.

What Is a Texas Series LLC?

A Series LLC is a single LLC entity that contains multiple protected series. Each series operates as a distinct liability shield:

• Separate assets — each series owns its own property, bank accounts, and contracts
• Separate liabilities — debts and lawsuits against one series cannot reach assets of other series (or the "master" LLC)
• Separate members — each series can have different owners
• Separate business purposes — each series can operate a different business
• One formation filing — only one Certificate of Formation with the Texas SOS ($300 total)
• One franchise tax report — all series report together on the master LLC's filing

Texas Statutory Authority

The Texas Series LLC is specifically authorized by the Texas Business Organizations Code:

• the Texas Business Organizations Code — Authorizes the creation of series with separate rights, powers, and duties
• the Texas Business Organizations Code — Requires the Certificate of Formation to contain notice that the LLC may establish series with limited liability
• the Texas Business Organizations Code — Debts, liabilities, and obligations of one series are enforceable against that series only, not against other series or the LLC itself
• the Texas Business Organizations Code — Each series may have its own members, managers, and operating provisions
• the Texas Business Organizations Code — Series can contract, hold title, sue, and be sued in their own name
• the Texas Business Organizations Code — Specific governance provisions for series

Formation Requirements

To form a Texas Series LLC:

1. Certificate of Formation must include series language — specifically, the notice required by the Texas Business Organizations Code that the LLC may establish one or more series
2. Supplemental operating agreement provisions for each series — defining the series' assets, members, and management
3. Proper record-keeping — assets of each series must be accounted for separately

Critical: If you want a Series LLC, the series provisions MUST be in your original Certificate of Formation (or added later via amendment). You cannot simply create series internally without the certificate language — the statutory liability shield will not apply.

Common Use Cases in Texas

Real estate investors: The most popular use case. Instead of forming a separate LLC for each rental property ($300 x N properties), form one Series LLC and create a series for each property. Each property's liability is isolated without multiplying filings and fees.

Example: A Texas investor with 8 rental properties forms one Series LLC with 8 series. Total formation cost: $300 (vs. $2,400 for 8 separate LLCs). One franchise tax report instead of 8. Liability isolation between all properties is maintained.

Multi-brand e-commerce: Sellers operating multiple online brands under separate liability shields.

Investment holdings: Separating different asset classes (real estate, stocks, notes) into distinct series.

Parent-subsidiary alternative: One master LLC with operating divisions as protected series.

Series LLC vs. Multiple Separate LLCs

Limitations and Risks

1. Interstate recognition — Not all states recognize Texas Series LLC liability shields. If you own property in a state that does not have a series LLC statute, the liability separation may not be honored there. Currently ~20 states recognize series.
2. Banking challenges — Some banks are unfamiliar with Series LLCs and may have difficulty opening accounts for individual series. Choose a bank experienced with series structures.
3. IRS treatment — The IRS has not issued final regulations on Series LLC taxation. The general position: each series is treated as a separate entity for tax purposes (separate EIN, separate return if multi-member). However, uncertainty remains.
4. Record-keeping burden — the Texas Business Organizations Code requires that the assets of each series be "reasonably identified" by records. Commingling assets between series destroys the liability shield.
5. Conversion difficulty — If you later want to separate a series into its own standalone LLC (for sale, for example), the process is not straightforward.

FAQ

How do I create a new series within my Texas Series LLC?

Creating a series is an internal action — no state filing required. You create a series by: (1) adopting supplemental operating agreement provisions for the new series (specifying its purpose, members, assets), (2) opening separate banking and accounting records for the series, (3) documenting the series designation in your LLC records. No fee to the SOS for creating individual series.

Does each series need its own EIN?

The IRS position (proposed regulations): yes, each series with more than one member should obtain its own EIN and file its own partnership return. Single-member series may be treated as disregarded entities of their respective members. Consult a tax professional for your specific situation.

Can creditors of one series reach assets of another series?

Not if you comply with the Texas Business Organizations Code's requirements: (1) the Certificate of Formation contains the required series notice, (2) records are maintained identifying each series' assets, and (3) the operating agreement establishes the series as separate. If you commingle series assets or fail to maintain records, a court may disregard the series separation.

Is the Series LLC right for me?

Best for: Texas-based real estate investors with 3+ properties, multi-brand operators, or anyone who would otherwise form multiple LLCs. Not ideal for: businesses needing to operate across many states (limited recognition), businesses planning to sell individual divisions (series are harder to transfer), or simple businesses with one activity.