Real Estate Agent · naperville, IL · Member since 2014 · 193 posts · 53 votes
Hello BP.....
I am reading a lot about Series LLC and plan to put all my rentals under Series LLC. I talked to my attorney and CPA but they seem to less/not familiar with the concept of Series LLC. I know, it is easy to set up a Series LLC and I can do it myself but I want to do it once and do it right, so looking for
1) experienced Attorney to help me Set up a new Series LLC, preparing Operating Agreement, EIN# etc and new series for each property.
2) experienced CPA for book keeping and/or accounting, tax preparation/filing
I would appreciate any inputs/referrals from BP members.....
Attorney · Chicago, IL · Member since 2016 · 14 posts · 13 votes
10y
Hi Kumar,
There are many benefits to forming a series LLC, and some drawbacks. It sounds like you've done your homework, but for the benefit of this thread, here is some general info regarding the series LLC relative to real estate investing:
- Unlike a regular LLC that is a single legal entity, a series LLC permits an unlimited number of "mini-LLCs" or series to be created, with the ability of each series to have different assets, purposes, business objectives, members or classes of members, and ownership interests.
The classic use of a series LLC is for a real estate holding company that holds multiple parcels of real estate. Instead of a structure with separate LLCs for each parcel, one series LLC could be used with a separate series for each parcel.
- Series LLCs are cost effective in that there is only one filing fee for the LLC. The cost will vary depending on the number of sub-entities but will be less than registering each entity separately. Likewise, thre is only one tax return filed for the series LLC. On the flip side, each entity must have its own bank account, and its own accounting, which can lead to more complicated (and more expensive) accounting.
- The series LLC is a newer form of entity (it has only been around since the 1990s and was enacted in Illinois in 2006), so there is not as much legal precedent as you would find with a traditional LLC or corporation. Likewise, not every state has adopted the series LLC, so if you have properties in multiple states, the "firewall" protection between sub-LLCs may not be recognized in all states.
My firm practices in real estate transactions and litigation, and I can assist in setting up the series LLC and drafting the operating agreement. I will private message you with more information. Good luck!
CPA · Raleigh, NC · Member since 2013 · 1k+ posts · 2k+ votes
10y
@Kumar Paj are you looking for a local CPA? If so, consider joining an REIA group and asking there. You could also explore Facebook groups of real estate investors local to your area.
If it doesn't matter where your CPA is located, browse the BP forums and see who is getting recommended. Many of us have clients around the globe and use technology to collaborate. The only thing we can't do is shake our client's hand.
At the end of the day, you truly do need a real estate CPA. Kudos to you for recognizing that.
Agree....after listening to the podcasts, I realized that I need a RE CPA and not a regular CPA.....
I am looking for local CPA since I believe they are more experienced with State laws and will be easy for me to meet him/her couple of times a year...(still believe in personal- offline meetings)...
Attorney · Chicago, IL · Member since 2016 · 14 posts · 13 votes
10y
Hi Kumar,
There are many benefits to forming a series LLC, and some drawbacks. It sounds like you've done your homework, but for the benefit of this thread, here is some general info regarding the series LLC relative to real estate investing:
- Unlike a regular LLC that is a single legal entity, a series LLC permits an unlimited number of "mini-LLCs" or series to be created, with the ability of each series to have different assets, purposes, business objectives, members or classes of members, and ownership interests.
The classic use of a series LLC is for a real estate holding company that holds multiple parcels of real estate. Instead of a structure with separate LLCs for each parcel, one series LLC could be used with a separate series for each parcel.
- Series LLCs are cost effective in that there is only one filing fee for the LLC. The cost will vary depending on the number of sub-entities but will be less than registering each entity separately. Likewise, thre is only one tax return filed for the series LLC. On the flip side, each entity must have its own bank account, and its own accounting, which can lead to more complicated (and more expensive) accounting.
- The series LLC is a newer form of entity (it has only been around since the 1990s and was enacted in Illinois in 2006), so there is not as much legal precedent as you would find with a traditional LLC or corporation. Likewise, not every state has adopted the series LLC, so if you have properties in multiple states, the "firewall" protection between sub-LLCs may not be recognized in all states.
My firm practices in real estate transactions and litigation, and I can assist in setting up the series LLC and drafting the operating agreement. I will private message you with more information. Good luck!
Real Estate Agent · naperville, IL · Member since 2014 · 193 posts · 53 votes
10y
@Diana Rdzanek thanks for your input. As per other threads and forums I was reading earlier, I was under impression that you don't need separate bank accounts for each Series, as long as you keep clean and separate accounting. Can you share some more and specific info in this regard and if there is any clear statute regarding separate bank account requirements.
also, from Asset Protection point of view, is it recommended to own properties under LLC and LLC to be owned by Land Trust? What are the implications from book keeping/accounting and compliance perspective?