If you own a series LLC and plan to expand into other states, you may have to register as a foreign series LLC. Here’s what you need to know:
What is a foreign series LLC?
A “foreign” business entity is one that operates outside the jurisdiction where it formed, whether that’s in another country or in another state. A series LLC is a business structure that allows several companies to form in a given state under a single registration—the registering LLC is known as a “parent” or “master” LLC and the LLCs connected to it are known as “cells” or “series.” In this way, a foreign series LLC is simply a series LLC that registers to do business in another state.
For more on series LLCs, check out this Series LLC Guide.
When do I need to register as a foreign series LLC?
In general, you need to register as a foreign business entity whenever your company begins doing business in another state. This might sound vague, but “doing business” is an actual legal term. The parameters of “doing business” can vary from state-to-state, so it’s a good idea to check your state statutes or consult a business attorney to see if your company needs to register for Foreign Qualification. Things get a little murkier when it comes to foreign registering series LLCs.
Read more on Northwest’s page: What Exactly Does “Doing Business” in Another State Mean?
Can I register my series LLC in another state?
It depends. Series LLCs are only recognized in less than half of all US states. In states that DO recognize series LLCs, foreign registration can be as easy as filling out the appropriate paperwork. For example, Arkansas, Illinois, Utah and Texas all include foreign registration forms specific to series LLCs. And California, which doesn’t recognize domestic series LLCs, DOES allow foreign entities to Register as a California Series LLC.
That said, many more states do NOT provide statutes for series LLCs, which makes foreign registration complicated. In states where individual series are not recognized as stand-alone entities, the series LLC as a whole must simply register as a foreign LLC. Then, the foreign LLC may be able to obtain a fictitious name for the individual series to operate with.
Can I register an individual series as a foreign LLC?
Registering an individual series as a foreign LLC is not always possible because series LLC laws—even among states that have them—provide different takes on the individual rights of stand-alone series. In other words, some states tie the legal rights of individual series to the series LLC as a whole, while other states consider individual series to be separate legal entities.
In Texas, for example, TX Bus Orgs § 9.005 states that the entire series LLC is required for foreign registration, even if only one cell within the series LLC is actually doing business in the state. (If that individual series wishes to operate under its own name, the foreign series LLC would need a DBA Name.) In Florida, on the other hand, each individual series operating in the state is required to get its own Certificate of Authority (see FL Stat § 605.0902).
The bottom line:
“Series LLC” is a relatively new business model in the US, and state laws don’t necessarily accommodate series LLCs, or individual series. To make sure you’re doing business in accordance with the laws in your state (or wherever you plan to do business), it’s a good idea to reach out to a local business attorney for guidance.