{"id":135951,"date":"2021-04-27T13:30:00","date_gmt":"2021-04-27T19:30:00","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=135951"},"modified":"2023-03-29T03:35:24","modified_gmt":"2023-03-29T09:35:24","slug":"holding-company-vs-series-llc","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/holding-company-vs-series-llc","title":{"rendered":"Holding Company vs. Series LLC: Which Provides the Most Protection?"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm?e=BIGPOC8131994355&#038;light=false\" width=\"100%\"><\/iframe>  \n\n\n\n\n<p>Do you run multiple businesses? Do you plan to expand the number of companies you manage? While a standard LLC, a professional LLC, or a corporation may work well for a single business, you\u2019ll find that administration tasks and compliance rules will expand right along with your portfolio.<\/p>\n\n\n\n<p>By establishing a holding company or a series LLC, you can gain both tax benefits and asset protection. But which structure is right for you? This article will examine what holding companies and series LLCs provide, as well as their pros and cons to help you decide.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n<div id=\"hero-block_62df1a82bfc88\" class=\"first:mt-0 hero-block py-4    has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">The Money Podcast<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\">Kickstart your personal finance journey with Scott and Mindy as they break down the good, bad, and ugly of people\u2019s personal money stories. From interviews with entrepreneurs and business owners to breakdowns of listener finances, you\u2019ll get actionable advice on how to get out of debt and grow your money.<\/p>\n\n\n\n<div id=button-custom-event-block_65400b52d0a76 class='button-custom-event'>\n      <a href=\"https:\/\/link.chtbl.com\/Money\" x-on:click=\"window.analytics.track(&#039;Money Podcast Blog CTA Click&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/holding-company-vs-series-llc&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-slate-dark-background-color has-text-color has-white-color\" target=\"_blank\" rel=\"noopener\">Listen Now<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  shadow-xl rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/12\/BP_Money_podcast_square-1024x1024-1-e1660861377128.jpeg\" alt=\"\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\">What is a series LLC?<\/h2>\n\n\n\n<p>A series limited liability company, known as a series LLC, is a form of a limited liability company that provides protection from liabilities arising from the other series. Each series serves as a separate LLC, with the original LLC often called the base, parent, master, or umbrella LLC.<\/p>\n\n\n\n<p>The primary goal of the series is legal liability protection, meaning if a lawsuit is filed against one business in the series, it will not impact the others.<\/p>\n\n\n\n<p>Let\u2019s say you purchase 10 real estate properties over the next year and do not set up a series LLC. For a few years, everything runs smoothly, but then a slip and fall accident occurs on the porch of one of your properties. The tenants sue you.<\/p>\n\n\n\n<p>In most cases, insurance kicks in at this point. However, the tenant\u2019s insurance company can claim you were negligent because you should have known a dangerous condition existed. If the lawsuit ends in a settlement or judgment, it can be executed against any property in your LLC.<\/p>\n\n\n\n<p>However, if you have a series LLC in place, the settlement or judgment can only impact the property involved in the lawsuit. Your remaining properties are legally separated.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Pros and cons of a series LLC<\/h2>\n\n\n\n<p>In addition to the legal liability protection, here are some other advantages of a series LLC.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Pros<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Easy to manage<\/strong>. Separate LLCs require separate administrations. A series LLC allows you to use one administration team.<\/li>\n\n\n\n<li><strong>Less complicated at tax time<\/strong>. One tax return can include all the LLCs in the series.<\/li>\n\n\n\n<li><strong>Can save on expenses<\/strong>. The initial starting fee for a series may be higher than for a separate LLC, but you can add other LLCs to the series without paying additional start-up fees. Also, depending on your state\u2019s regulations, the rent paid by one cell to another in the series might not be subject to sales tax.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Cons<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>State-limited.<\/strong> Not every state allows you to form a series LLC. Additionally, the states that do allow them have differing rules. You\u2019ll need to check with your state and the states in which you conduct business to find out their current regulations.<\/li>\n\n\n\n<li><strong>Separate agents.<\/strong> You may need separate registered agents for each LLC. States vary on this requirement, which can lead to additional time and expense.<\/li>\n\n\n\n<li><strong>Separate accounting.<\/strong> Each LLC in a series must have its own bank account and accounting structure, which can get complicated.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">What is a holding company?<\/h2>\n\n\n\n<p>Another option if you own multiple business ventures is to establish a holding company. A holding company exists for the sole purpose of owning assets in its operating companies, known as subsidiaries. The assets can include real estate, intellectual property, and equipment.<\/p>\n\n\n\n<p>It does not participate in the buying and selling of any products and services, nor does it perform other operational roles. Instead, a holding company makes management, financial, legal, and tax decisions on behalf of its subsidiaries.<\/p>\n\n\n\n<p>A holding company may be set up as an LLC.<\/p>\n\n\n\n<p>Here is an example of when a holding company would benefit you as a business owner. Let\u2019s say you own a horse farm that has been struggling financially and has been unable to pay its veterinarian, trainers, and other stable employees.<\/p>\n\n\n\n<p>Suppose these individuals decide to sue the horse farm. In that case, their suit will only impact the subsidiary that owns the horse farm, not the assets of the apartment building, restaurant, or other businesses that are subsidiaries of your holding company.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Pros and cons of a holding company<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">Pros<\/h3>\n\n\n\n<p>As with a series LLC, the main benefit of a holding company is asset and liability protection. Here are other advantages of this structure.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Easier operations. <\/strong>A holding company can be more affordable and easier to manage than separate LLCs. The company needs to control its subsidiaries, but it doesn\u2019t need to own all shares or membership interests.<\/li>\n\n\n\n<li><strong>Financial strength.<\/strong> The company often is able to obtain loans at a lower interest rate than its operating companies could on their own.<\/li>\n\n\n\n<li><strong>Less risk. <\/strong>Because operating companies are separate legal entities, there can be less risk in investing in new ventures.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Cons<\/h3>\n\n\n\n<p>Here are some disadvantages of a holding company.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Management challenges.<\/strong> The managers of the subsidiaries of a holding company do not have a legal say in the running of their businesses. Sometimes conflicts can arise.<\/li>\n\n\n\n<li><strong>Additional fees. <\/strong>The holding company and each subsidiary must pay formation fees and, in most cases, handle annual reports and franchise tax obligations.<\/li>\n\n\n\n<li><strong>Regulatory complexity. <\/strong>Holding companies are legal in all 50 states, but regulations vary. The rules for operating a holding company can be quite complex.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Is a series LLC or a holding company right for you?<\/h2>\n\n\n\n<p>As you can see, there are some similarities and some differences between series LLCs and holding companies. If you are in a state that does not allow you to operate a series LLC, then your choice is easy\u2014you\u2019ll want a holding company. However, if your state allows both structures, the decision may depend on your individual situation.<\/p>\n\n\n\n<p>Generally speaking, it\u2019s easier to set up a series LLC than a holding company. However, it\u2019s best to consult your legal and financial team to fully understand the implications of each option.<\/p>\n\n\n\n  <div id=\"posts_lists-block_606f204fb5aea\" class=\"  my-10\">\n    <div class=\"\">\n      <!-- Column One -->\n      <div>\n                  <h2 class=\"mt-0 mb-1 js-toc-ignore\">\n            More on LLCs at BiggerPockets          <\/h2>  \n                  \n        \n        \n        <div class=\"grid grid-cols-1 gap-y-4 lg:gap-y-7 mt-5\">\n          \n<article \n\tid=\"post-135244\" \n\tclass=\"content-card mb-0 flex flex-col  post-135244 post type-post status-publish format-standard has-post-thumbnail hentry category-real-estate-business-management category-biggerpockets-daily\">\n\n\t<header class=\"entry-header\">\t\t\t\n\t\t<!-- Image -->\n        \t\t\t<a class=\"post-thumbnail\" href=\"https:\/\/www.biggerpockets.com\/blog\/transfer-ownership-interest-llc\" target=\"_blank\" aria-hidden=\"true\" tabindex=\"-1\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"338\" height=\"225\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/02\/TRANSFER-OWNERSHIP.png\" class=\"size-card w-full  m-0 aspect-[68\/45] object-scale-down wp-post-image\" alt=\"Selling Your LLC? Make Sure You Transfer Your Ownership Interest Correctly\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/02\/TRANSFER-OWNERSHIP.png 1360w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/02\/TRANSFER-OWNERSHIP-300x200.png 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/02\/TRANSFER-OWNERSHIP-1024x682.png 1024w\" sizes=\"auto, (max-width: 338px) 100vw, 338px\" title=\"\">\t\t\t<\/a>\n\t\t        \n\n\t\t<!-- Content Wrapper -->\n\t\t<div class=\"py-4 \">\t\n                            <div class=\"flex gap-4 justify-between items-center\">\n                    <!-- Category  -->\n                                            <a href=\"https:\/\/www.biggerpockets.com\/blog\/category\/managing-scaling\/real-estate-business-management\" class=\"transition-colors bg-themeBlue\/20 text-themeBlue-medium hover:bg-themeBlue hover:text-white px-2 py-1 mb-2 inline-block rounded-sm no-underline text-sm\" target=\"_blank\">Real Estate Business Management<\/a>\n                    \n                                            <span class=\"text-sm text-gray-500 hidden lg:inline-block\">2 min read<\/span>\n                                    <\/div>\n            \n           <div class=\"flex gap-3 items-center my-2 flex-nowrap text-base\">\n                <!-- Avatar and Author Name -->\n                <img decoding=\"async\" src=\"https:\/\/bp-wp-migration.s3.amazonaws.com\/author_avatars\/23983.jpg\" class=\"w-8 h-8 object-cover my-0 inline-block rounded-full\" alt=\"\" title=\"\"><span class='leading-snug text-slate-500 flex items-center'><span class='hidden whitespace-nowrap sm:inline-block md:hidden lg:inline-block pr-1'><span class='posted-on'><time class=\"entry-date published\" datetime=\"2021-03-16T13:30:48-06:00\">Mar 16, 2021<\/time><time class=\"updated\" datetime=\"2024-01-27T11:35:55-07:00\">Jan 27, 2024<\/time><\/span><\/span>&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/contributors\/scottsmith-2\" class=\"no-underline line-clamp-1\" target=\"_blank\">Scott Smith<\/a><\/span>            <\/div>\n\n            <!-- Post title -->\n\t\t\t<h2 class=\"entry-title js-toc-ignore mt-4 mb-0 text-xl leading-snug text-left\">\n\t\t\t\t<a href=\"https:\/\/www.biggerpockets.com\/blog\/transfer-ownership-interest-llc\" rel=\"bookmark\" class=\"whitespace-normal no-underline font-bold  text-slate visited:text-slate hover:text-themeBlue\" target=\"_blank\">\n\t\t\t\t\tSelling Your LLC? Make Sure You Transfer Your Ownership Interest Correctly\t\t\t\t<\/a>\n\t\t\t<\/h2>\n\t\t\t\n                        <p class=\"text-lg font-normal mt-3 text-slate-500 mb-1 line-clamp-3\">If you want to transfer your ownership interest in an LLC, it\u2019s essential that you have your ducks in a row before moving forward. While transferring an LLC can be&hellip;<\/p>\n\t\t<\/div>\n\t<\/header>\n     <footer class=\"flex justify-between mt-auto\">\n        <!-- Comment Count -->\n        \t\t<span class='flex items-center space-x-2 text-sm' x-cloak x-data='commentCount()' :class=\"parseFloat(commentCount) < 1 || commentCount == '' ? 'hidden' : 'flex'\">\n\t\t\n            <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-5 w-5 text-slate text-opacity-50\" fill=\"none\" viewBox=\"0 0 24 24\" stroke=\"currentColor\">\n                <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M17 8h2a2 2 0 012 2v6a2 2 0 01-2 2h-2v4l-4-4H9a1.994 1.994 0 01-1.414-.586m0 0L11 14h4a2 2 0 002-2V6a2 2 0 00-2-2H5a2 2 0 00-2 2v6a2 2 0 002 2h2v4l.586-.586z\" \/>\n            <\/svg>\n\n            <span x-ref=\"comment_count\" class=\"disqus-comment-count text-slate text-opacity-80\" data-disqus-identifier=\"135244\">\n\t\t\t\t\t\t\t<\/span>\n        <\/span>\n\t    <\/footer>\n<\/article><!-- #post-135244 -->\n<article \n\tid=\"post-135246\" \n\tclass=\"content-card mb-0 flex flex-col  post-135246 post type-post status-publish format-standard has-post-thumbnail hentry category-real-estate-business-management category-biggerpockets-daily tag-business tag-incorporating\">\n\n\t<header class=\"entry-header\">\t\t\t\n\t\t<!-- Image -->\n        \t\t\t<a class=\"post-thumbnail\" href=\"https:\/\/www.biggerpockets.com\/blog\/sole-proprietorship-spouse\" target=\"_blank\" aria-hidden=\"true\" tabindex=\"-1\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"338\" height=\"225\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/02\/married-filing-jointly-2.png\" class=\"size-card w-full  m-0 aspect-[68\/45] object-scale-down wp-post-image\" alt=\"One Is the Loneliest Number: Owning a Sole Proprietorship With Your Spouse\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/02\/married-filing-jointly-2.png 1360w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/02\/married-filing-jointly-2-300x200.png 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/02\/married-filing-jointly-2-1024x682.png 1024w\" sizes=\"auto, (max-width: 338px) 100vw, 338px\" title=\"\">\t\t\t<\/a>\n\t\t        \n\n\t\t<!-- Content Wrapper -->\n\t\t<div class=\"py-4 \">\t\n                            <div class=\"flex gap-4 justify-between items-center\">\n                    <!-- Category  -->\n                                            <a href=\"https:\/\/www.biggerpockets.com\/blog\/category\/managing-scaling\/real-estate-business-management\" class=\"transition-colors bg-themeBlue\/20 text-themeBlue-medium hover:bg-themeBlue hover:text-white px-2 py-1 mb-2 inline-block rounded-sm no-underline text-sm\" target=\"_blank\">Real Estate Business Management<\/a>\n                    \n                                            <span class=\"text-sm text-gray-500 hidden lg:inline-block\">4 min read<\/span>\n                                    <\/div>\n            \n           <div class=\"flex gap-3 items-center my-2 flex-nowrap text-base\">\n                <!-- Avatar and Author Name -->\n                <img decoding=\"async\" src=\"https:\/\/bp-wp-migration.s3.amazonaws.com\/author_avatars\/23983.jpg\" class=\"w-8 h-8 object-cover my-0 inline-block rounded-full\" alt=\"\" title=\"\"><span class='leading-snug text-slate-500 flex items-center'><span class='hidden whitespace-nowrap sm:inline-block md:hidden lg:inline-block pr-1'><span class='posted-on'><time class=\"entry-date published\" datetime=\"2021-03-11T09:30:52-07:00\">Mar 11, 2021<\/time><time class=\"updated\" datetime=\"2024-01-27T11:27:16-07:00\">Jan 27, 2024<\/time><\/span><\/span>&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/contributors\/scottsmith-2\" class=\"no-underline line-clamp-1\" target=\"_blank\">Scott Smith<\/a><\/span>            <\/div>\n\n            <!-- Post title -->\n\t\t\t<h2 class=\"entry-title js-toc-ignore mt-4 mb-0 text-xl leading-snug text-left\">\n\t\t\t\t<a href=\"https:\/\/www.biggerpockets.com\/blog\/sole-proprietorship-spouse\" rel=\"bookmark\" class=\"whitespace-normal no-underline font-bold  text-slate visited:text-slate hover:text-themeBlue\" target=\"_blank\">\n\t\t\t\t\tOne Is the Loneliest Number: Owning a Sole Proprietorship With Your Spouse\t\t\t\t<\/a>\n\t\t\t<\/h2>\n\t\t\t\n                        <p class=\"text-lg font-normal mt-3 text-slate-500 mb-1 line-clamp-3\">Despite the name, a married couple can own a sole proprietorship together\u2014as long as they follow a few rules. Learn more here.<\/p>\n\t\t<\/div>\n\t<\/header>\n     <footer class=\"flex justify-between mt-auto\">\n        <!-- Comment Count -->\n        \t\t<span class='flex items-center space-x-2 text-sm' x-cloak x-data='commentCount()' :class=\"parseFloat(commentCount) < 1 || commentCount == '' ? 'hidden' : 'flex'\">\n\t\t\n            <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-5 w-5 text-slate text-opacity-50\" fill=\"none\" viewBox=\"0 0 24 24\" stroke=\"currentColor\">\n                <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M17 8h2a2 2 0 012 2v6a2 2 0 01-2 2h-2v4l-4-4H9a1.994 1.994 0 01-1.414-.586m0 0L11 14h4a2 2 0 002-2V6a2 2 0 00-2-2H5a2 2 0 00-2 2v6a2 2 0 002 2h2v4l.586-.586z\" \/>\n            <\/svg>\n\n            <span x-ref=\"comment_count\" class=\"disqus-comment-count text-slate text-opacity-80\" data-disqus-identifier=\"135246\">\n\t\t\t\t\t\t\t<\/span>\n        <\/span>\n\t    <\/footer>\n<\/article><!-- #post-135246 -->        <\/div>\n      <\/div>\n    <\/div>\n  <\/div>\n\n  ","protected":false},"excerpt":{"rendered":"<p>While an LLC works well for a single business, you\u2019ll find that administration tasks and compliance rules expand with your portfolio. Consider a series LLC or holding company instead. Here&#8217;s why.<\/p>\n","protected":false},"author":23983,"featured_media":137442,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4241,7119],"tags":[209,5195,7221,7207],"class_list":["post-135951","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-business-management","category-biggerpockets-daily","tag-business","tag-business-management","tag-business-comm","tag-incorporating"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/135951","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/23983"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=135951"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/135951\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/137442"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=135951"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=135951"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=135951"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}