How to Create a Series LLC in Indiana

What Is a Series LLC?

A Series LLC is a unique form of a limited liability company that allows for the creation of multiple, distinct series or cells within a single LLC. Each series operates independently, with its own assets, liabilities, and members. This structure allows for the segregation of assets and liabilities among the series, providing liability protection for each series from the debts and obligations of the others.

Does Indiana Allow Series LLCs?

Yes, Indiana permits the formation of Series LLCs under its state laws. The relevant statute governing Series LLCs in Indiana is found in the Indiana Code Title 23, Article 18, Chapter 1.5. It is essential to include specific language in the formation documents to authorize the creation of series within the LLC.

How a Indiana Series LLC Works

In an Indiana Series LLC, the master LLC acts as the umbrella entity, under which multiple series can be established. Each series can hold its own assets, incur liabilities, and have separate members and managers. The liability of each series is isolated, meaning that the debts and obligations of one series do not affect the others. Proper recordkeeping and structural compliance are crucial to maintaining this liability separation.

Benefits of Forming a Series LLC in Indiana

• Cost Efficiency: Forming a Series LLC can be more cost-effective than creating multiple separate LLCs, as it allows for the consolidation of administrative tasks and fees.
• Asset Segregation: Each series can hold distinct assets and liabilities, providing protection and separation from other series.
• Administrative Flexibility: The structure allows for streamlined management and operations across multiple business lines or asset holdings.

Limitations and Risks of a Indiana Series LLC

• Legal Uncertainty: The Series LLC structure is not universally recognized across all jurisdictions, which may lead to legal challenges.
• Banking and Lending Challenges: Some financial institutions may be unfamiliar with Series LLCs, complicating banking and lending processes.
• Tax Complexity: Navigating the tax obligations for each series can be complex and may require specialized accounting.

Who Should Consider a Indiana Series LLC?

A Series LLC may be suitable for businesses involved in real estate, asset holding, or intellectual property management, where asset segregation is beneficial. However, for businesses operating in multiple states or those with simpler structures, a traditional LLC might be more appropriate.

Step-by-Step: How to Create a Series LLC in Indiana

Step 1: Choose a Name for the Series LLC

The name of the Series LLC must comply with Indiana's naming requirements, including the use of "Limited Liability Company" or abbreviations like "LLC." Each series should have a distinguishable name that includes the name of the parent LLC.

Step 2: Appoint a Indiana Registered Agent

A registered agent must be appointed for the Series LLC. This agent must be a resident of Indiana or a business entity authorized to do business in the state, responsible for receiving legal documents on behalf of the LLC.

Step 3: File the Certificate of Formation

The Certificate of Formation must be filed with the Indiana Secretary of State. This document includes the LLC's name, registered agent information, and the principal office address. Filing can be done online or by mail.

Step 4: Include Series LLC Language

It is crucial to include specific language in the Certificate of Formation that authorizes the creation of series within the LLC. Failure to include this language may result in the inability to form series.

Step 5: Draft a Series-Compliant Operating Agreement

An operating agreement should be drafted to outline the internal governance of the Series LLC. This document should include provisions for asset and liability separation among the series.

Step 6: Establish Individual Series

Individual series are created internally within the LLC. Proper documentation and recordkeeping practices must be maintained to ensure the separation of each series.

Step 7: Obtain EINs (Parent and Series, If Needed)

An Employer Identification Number (EIN) is required for the parent LLC and may be needed for each series, depending on their operations and tax obligations.

Step 8: Open Separate Bank Accounts

Separate bank accounts should be opened for each series to maintain financial separation and avoid commingling of funds.

Step 9: Comply With Indiana Tax Requirements

The Series LLC must comply with Indiana's tax requirements, including state income tax and any applicable local taxes. Each series may have its own reporting and payment obligations.

Indiana Series LLC Filing Fees and Costs

The filing fee for the Certificate of Formation is $100. Additional fees may apply for each series and for ongoing compliance requirements.

Indiana Franchise Tax and Series LLCs

Indiana does not impose a franchise tax on LLCs. However, each series may have separate state tax obligations, which should be carefully managed.

Ongoing Compliance Requirements for Indiana Series LLCs

Series LLCs in Indiana must file biennial reports and maintain accurate records for each series. Compliance with state regulations is essential to maintain liability protection.

Common Mistakes When Forming a Series LLC in Indiana

• Missing Required Series Language: Failing to include series authorization language in the formation documents can prevent the creation of series.
• Poor Recordkeeping: Inadequate documentation can jeopardize liability protection.
• Mixing Assets Between Series: Commingling assets can lead to liability exposure across series.

Series LLC vs Traditional LLC in Indiana

A Series LLC offers a flexible structure with potential cost savings and asset protection benefits, while a traditional LLC may be simpler and more straightforward for single-business operations. The choice depends on the specific needs and complexity of the business.

Additional Resources

• Indiana Secretary of State Main Page
• Business Division/Formation Page
• Indiana Code Title 23, Article 18
• Online Filing System
• Indiana Department of Revenue
• Contact Information: Phone: (317) 232-6576, Email: sos@sos.in.gov

This article provides general information about Indiana LLC formation requirements under Indiana Code Title 23. It is not intended as legal advice. Persons forming an LLC should consult with a private attorney regarding their specific circumstances.