Legal Shelf Company ? Series LLC Basics for Foreign Investors

This week we are talking about LLC basics. Today, we want to expand a little and talk about Series LLCs.

A Series LLC is a special kind of LLC that allows you to create multiple subsidiary LLCs underneath it (called Cells). Each Cell can be owned by different people, if desired. A Series LLC can have as many Cells as it wants, yet will only pay one filing fee each year and one renewal fee each year. This reduces your ongoing filing costs, as you will not need to set up a new LLC every time you want to buy a new property.

Other benefits are asset protection and privacy. Each of the Cells is protected, under state law, from the other Cells. So you could place properties into different Cells as you buy them, gradually growing the structure. A lawsuit or problem on one of your properties will not necessarily spill over and impact your other properties (or the income from those properties), even in the event that you own each Cell. This is different from a regular LLC, where all of the assets are pooled into the one LLC, and everything could be equally at risk in the event of a claim on just one of the properties. Plus, Series LLCs are very private. In most US states there is no registration required for the Cells, so it is very difficult to find out who owns them.

Series LLCs are a little more complicated to set up than regular LLCs. First, you will need to make a special Series LLC election when you file your Articles with the Secretary of State. That needs to be worded carefully to make sure you get the asset protection. Then you will need to have a complex Operating Agreement drawn up for the Parent LLC, which allows it to create the Cells and sets out the rules on how the Cells will operate. And then you will also need all of the documentation for each Cell. That?s why you don?t see a lot of Series LLC Operating Agreements available on the Internet for download. They are pretty specialized.

The Series Limited Liability Company (Series LLC) is often the most affordable choice for foreign investors who have more than one property. Sometimes we don?t recommend them. For example, an investor with one or two properties, and who doesn?t want to buy more may not need this more complex structure. Or a foreign investor who wants to buy property in California. The high state fees in California don?t really give you an economic advantage over using regular LLCs. And we don?t like to see Canadians use LLCs or Series LLCs. There is a discrepancy between US and Canadian tax laws that means you, as a Canadian foreign investor, can get hammered in the US when it come to taxes.

The US tax and legal system is complicated. That?s why you need a powerful and knowledgeable ally. With LegalShelfCompany.com, you don?t have to worry. We can help you through the tax, legal and other requirements to holding and operating US property from overseas. To learn more, pick up our free eBook, Buying US Real Estate: What Foreign Investors Need to Know or watch our FREE webinar at www.legalshelfcompany.com/international

Categories: Blog
Tags: foreign investor, foreign investor US taxes, foreign investor USA

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