A Texas series LLC is one LLC that holds separate “series” inside it, each with its own assets, liabilities and members. If one series gets sued, the others are protected. That lets a real estate investor or someone running several ventures get liability walls between them without forming and maintaining a separate LLC for each.
The savings are real. So is the extra work of keeping the series apart.
What is a Texas series LLC?
It has two layers: one master LLC (the “parent” or “series organization”) and any number of series under it, sometimes called “cells” or “child LLCs.” Each series has its own assets and liabilities, and a liability in one series doesn’t reach the others.
Think of an apartment building where each unit is separately owned. They share a building, but one owner’s debts aren’t the neighbors’ problem.
How does it work for a real estate investor?
Say you own five rental properties. The traditional approach is five separate LLCs: five $300 state filing fees ($1,500), five registered agents, five franchise tax reports and five bank accounts.
With a series LLC, you form one LLC with five series. That’s one $300 filing fee, one registered agent and one franchise tax report, plus five bank accounts, one per series. Each property sits in its own series. Series A owns Property 1, Series B owns Property 2, and so on. If someone sues over Property 1, only Series A’s assets are at risk.
What does Texas require for the protection to hold?
Texas law sets conditions:
- Separate records: each series keeps its own records.
- Separate accounting: assets and liabilities are tracked series by series.
- Disclosure: notice of the series structure goes in the Certificate of Formation.
- Operating agreement: it has to address the series structure.
Commingle funds or let the separation slide and you risk losing the protection.
How do you form a series LLC in Texas?
1. File the Certificate of Formation
You file Form 205 with language that enables series. The certificate must include a statement that the LLC is a “series LLC,” notice that the liabilities of one series are separate from the others, and a reference to Texas Business Organizations Code Section 101.601.
2. Write the master operating agreement
This governs the whole structure: how new series get created and named, the general rules for every series, who the master LLC’s members are, who can create or manage series, how a series is dissolved, and how the agreement gets amended.
3. Write an agreement for each series
Each series needs its own operating agreement covering its name (for example, “ABC Holdings LLC – Series A”), purpose, members and ownership percentages, assets, management, and how profit and loss are allocated within it.
4. Keep every series separate
Open a separate bank account for each series, keep separate financial records, title each asset to the right series, and sign contracts in the series’ name.
5. Get an EIN
You can get one EIN for the whole series LLC, which is simplest, or a separate EIN for each series, which some banks may require. The IRS hasn’t issued definitive guidance on series taxation, so practices vary.
What does a Texas series LLC cost?
| Item | Cost |
|---|---|
| Certificate of Formation | $300 |
| Registered agent | $50-$300/year |
| Master operating agreement | $0-$500 |
| Series operating agreements | $0-$200 each |
| EIN | Free |
| Total (first series) | $350-$1,000 |
Each additional series needs its own operating agreement ($0-$200) and a bank account, but no additional state filing fee. Compare that with $300 for every separate LLC.
Series LLC or multiple LLCs?
| Factor | Series LLC | Multiple LLCs |
|---|---|---|
| State filing fees | $300 (one time) | $300 per LLC |
| Franchise tax reports | 1 | 1 per LLC |
| Registered agent | 1 | 1 per LLC |
| Bank accounts | 1 per series | 1 per LLC |
| Administrative burden | Lower | Higher |
| Liability protection | Between series | Between LLCs |
| Complexity | Higher initially | Simpler individually |
| Portability | Limited | Better |
A series LLC wins when you have several similar ventures, your operations are in Texas, cost matters, and you’ll actually keep the series separate. Real estate portfolios are the classic case, but owners also use it for several small businesses (a consulting firm in Series A, an e-commerce store in Series B), investment funds, and franchise locations.
Separate LLCs win when you operate in multiple states, different ventures have different members, you want maximum certainty about liability protection, or you might sell or transfer one business on its own.
Our view: for a Texas-only rental portfolio with the same owners throughout, a series LLC is worth a serious look. If any property or business might be sold separately or has different partners, we’d form separate LLCs and accept the extra fees.
What are the risks?
Other states may not respect it
Texas, Delaware, Illinois and Nevada recognize series LLCs, along with others, but many states have no series LLC legislation. If you do business in a state that doesn’t recognize them, the protection between series may not be honored there.
Banks may not get it
Some banks have little experience with the structure. They may require separate accounts for each series (which you should have anyway) or want separate EINs.
The tax treatment isn’t settled
The IRS hasn’t issued comprehensive guidance on series LLC taxation. Open questions include whether each series is a separate entity for tax purposes, how K-1s work, and what happens when series have different members. Current practice is mostly to treat the master LLC as one entity for tax purposes, with the series as internal divisions.
There’s little case law
Series LLCs are relatively new. Courts haven’t said much about when they’ll respect the protection between series, how strict the separation has to be, or how series are treated in bankruptcy.
How do you keep the liability protection?
Keep separate bank accounts and accounting records for each series. Title every asset to a specific series, and sign every contract in a specific series’ name. Follow the formalities your operating agreement sets.
What breaks it is treating the whole thing as one business: moving money between series, paying one series’ debts with another’s assets, or signing contracts without naming the series.
What are the alternatives?
A holding company with subsidiary LLCs puts each venture in its own LLC owned by one parent LLC. It costs more, but the protection is clearer.
Multiple standard LLCs give you well-established protection for each venture, at the highest cost.
A single LLC with good insurance is the simplest setup, with less protection between ventures.
How do you get started?
Start by talking with an attorney familiar with series LLCs and a CPA who knows their taxation. Plan the structure, file the Certificate of Formation with series language, write the master agreement and the first series agreement, open the bank accounts, and set up record-keeping before the first asset goes in.
Form your Texas LLC
IncCraft helps Texas entrepreneurs understand their options and form the right structure, whether that’s a series LLC or a standard one.
Start your Texas LLC with IncCraft today. We’ll help you decide whether a series LLC makes sense for your business.