Anyone know of anybody in town (Las Vegas or Henderson) willing to open a bank account for a series llc cell? Banks like Wells will open one for the master llc but not the cells, so that won't work.
I know the larger institutions typically shy away but I'm sure there are others in town willing to do it. Anyone have experience with this or know any specific banks that will do it?
@Jean G. I'm guessing you might know.
Thanks all
Can't believe I'm still struggling with this but just in case anyone is interested, BMO HARRIS ( a Chicagoland Bank) welcome's series LLCs. And they do open small business accounts for out of state investors.
All you need is the "master" account, that is the operating account, the cells can be on your books with each cell member. If they want a separate account, the should be able to open their own, not with you, that account might be ABC 1325 LLC, check with your accountant.
Banks don't do sub-accounts unless they are very large, like Allstate Claims Division, which is probably a subsidiary.
It's probably how you're explaining what you want at the banks. Good luck :)
Thanks @Bill Gulley.
To help clarify, there is an account for the master llc that has one member, but I want a cell to have two members and taxed as a partnership. If the payments for that cell go to the master llc, how does the master's bank account then distribute to the cell when the cell has no bank account? It sounds like you're saying that the cell can have a separate bank account opened as long as the master account is already in place (at the same bank) - is that correct?
Well, yes, or different banks, however, there may be an issue with Nevada cells, as to liability of the cell that a bank won't accept, you need to check on the "why". Drill deeper at the bank, you can't be the only Series LLC.
Each cell generally must have a registered agent filed in your state, it's name and its own operating agreement. Might be you're not set up properly to obtain a separate account.
I'm not sure if this is acceptable in your state, but an example might be;
the master would be Heavenly Homes, Series LLC, filed as required and obtain a certificate of good standing, tax ID number, etc. for the bank account....
Then, "Heavenly Homes Series One LLC" file it with that name, it has a tax ID, certificate of good standing, etc. take that to the bank show the Operating Agreement for the powers granted to those members.
Repeat as needed.
The accounting side;
An option is to open other accounts in the master's name and give that account a department name, A, B, C, etc. It can be on the check as well. The people in that cell can have signature authority, that is granted in the operating agreement of the master.
Your tax status has nothing to do with an operating account.
While separate accounts sure helps with the audit trail, it's not necessary if you note the reason for a a deposit and withdrawal on the drafts or "source" document.
As I mentioned, use sub accounts in a master account, this is like a subsidiary account, it is a set of books basically for each cell that when all are combined or consolidated add up to the balances of the master account. Any excess amounts in the master are then assets or liabilities or capital of the master which are noted on its books.
With a Series LLC, you'll need these sub accounts anyway, and consolidated statements. This is an internal accounting requirement
You can cut a check to any member as a drawing or return of capital, to them individually, that's not an issue.
My comments here are as to accounting, not legal advice.
I can also see the commingling of funds issues having funds held or owned by a cell in a master account, this could defeat the purpose of the liability protection between the cells and the master. I would think that setting each cell up as a separate entity would solve the matter. For that determination you need to ask an attorney. :)
My business banker at Case said they have a strict no series rule. Will only set up accounts for single LLC. So, starting to look around. Like Bill said lots of other people with SLLC's and lots of other banks! ByeBye Chase.
Series LLC, with its lack of filed Articles for the Cells is often a problem. First, develop a good relationship the "business banker" most banks have a dedicated person. Business bankers are far more likely to be up on current business-related issues than personal bankers. You can try: opening the initial account under the Series LLC first, which does have a set of filed Articles. After that's opened, then you can usually open the accounts for the Cells using a combination of the Series LLC's incorporation number and the individual Cell's Federal Tax Identification Number. Make sure you have copies of the Articles, Operating Agreements and Federal Tax ID number printouts with you when you go to open the account, so you can clearly show how the entities relate to each other.
If you find that your bank is stuck on the lack of Articles, or an incorporation number, a filed D/B/A/ application might do the trick. Most banks are familiar with setting up accounts using a D/B/A. This can take patience, while SLLC have been around for awhile they are still not a "normal" transaction for bank staff. Similar to setting up a Solo 401k many are unaware of the laws and regs and don't want to touch anything unfamiliar and so it is always easier to say "we don't, can't do that.
excerpt from atty Bradley Clark
"When applying for an employer identification number (“EIN") on IRS.gov you must provide the legal name of the LLC that is applying for the EIN. The dilemma presented to applicants is that the name of the LLC on file with the Texas Secretary of State (and the one that should therefore be used) will not match the name of the particular series for which you are applying for an EIN. And if you have multiple series inside the LLC you will not be permitted to use the name of the LLC on subsequent applications for additional series.
For example, if the legal name of the LLC is MY COMPANY, LLC, a Texas limited liability company, then the legal name used for the EIN application is MY COMPANY LLC [notice the comma was omitted on the EIN application as IRS.gov does not permit the use of special characters). If, however, the legal name of the LLC is MY COMPANY, LLC, a Texas series limited liability company, then the same legal name is used as in the previous example (i.e., MY COMPANY LLC).
But what should you do if you are applying for an EIN for the first series of MY COMPANY, LLC? After all, banks require a separate EIN for each series and each series is a separate entity for all purposes.
My approach is to use both the series name and the LLC's name in the EIN application. For illustration, let's assume my series LLC's legal name is MY CRE HOLDINGS CO., LLC, and let’s assume my first series is 123 MAIN ST., LLC, an individual series of MY CRE HOLDINGS CO., LLC, a Texas series LLC. Using this example, the legal name on the online EIN application would look like this:
Notice that, like before, I've omitted the commas and periods (what the IRS calls "special characters" and prohibits in the online application). I have told the IRS that the company applying for the EIN is 123 MAIN ST LLC and that this company is a series of MY CRE HOLDINGS CO which is a Texas series LLC.
Now, when I apply for an EIN for 456 MAIN ST., LLC–the second series in my series LLC–I am able to (1) actually obtain an EIN for this individual series of the company and (2) notify the IRS that this company is a series of a Texas LLC.
Neither the IRS, nor the public, will find a Certificate of Formation in Texas for 123 MAIN STREET, LLC. What can be found, however, is an assumed name certificate for 123 Main Street, LLC that identifies it as a series of MY CRE HOLDINGS CO., LLC.
Until the IRS adds the Series LLC to the list of legal structures applying for the EIN–and addressing the many issues raised by using the LLC for a Series LLC in the current online application process–I believe this is the best approach to applying for EINs for a Series LLC."
Thanks @Jim Biggs this is very useful as I didn't even realize the cells could get their own EINs. I knew about the DBA method which seems to work fine, but this would probably make it much easier for the banks not to push back when they're unfamiliar (which almost all personal bankers seem to be like you mentioned). And it's so simple to apply for the EIN that it's worth that minimal effort to avoid the potential bank hassles.
I found that US Bank is fine with the SLLCs but just depends on who you're speaking with. Wells Fargo can also do it but you almost certainly have to speak to someone quite experienced to get it set up properly, and they still want you to open sub-accounts for cells with DBAs as opposed to separate bank accounts.
I've opened series LLC accounts at Nevada State Bank and Wells Fargo, but as of today (March 15) it appears that Wells Fargo no longer will open Series LLC accounts. US Bank refused but on this thread people have had luck with them. Can anyone provide specific branches with contact info? I need to do several more. Thanks
thanks for sharing useful info. I am still little bit unclear about bank accounts/EIN and IRS requirements. (I am referring to Illinois Series LLC).
(1) Do I need separate EIN number and separate bank accounts for each Series in IL OR I can have only one EIN for master and one bank account?
(2) In either case, do I need to file only one consolidated IRS Return or separate returns for each Series? Each of my series as well as master llc will have two members (me and my wife).
will appreciate your inputs.
Sorry about my vacation time being away.
Are you the owner of the Series and all cells? If so, use one account as your operating account and the debits and credits are booked to the applicable cells, then consolidated to the one account for banking.
With other owners, they will have a separate account, could be XYZ LLC, Alpha under their own EIN, all owners/members may be required to be on the account, but then you limit the signature authority to those seected, could be just one other owner.
Taxes are consolidated for sole owners, other members then use the K-1 (I believe it is) breaking out their income. See your tax guy. :)
@Bill Gulley Thanks for the reply...
Yes, there are two owners/members of the master LLC and each of the cells/Series. If I understood correctly, you meant to say, using one bank account and keeping separate book of account/debit-credit for each of the Series so at end of the year, we know the exact financial status of each of the series..right?
With regard to tax, not sure what you meant and how to file tax returns, one for master LLC only or for each series AND Master???
I checked with my tax/accounting guy but he is not familiar with Series LLC so trying to figure out the right way to handle this.
I don't do taxes, but I think the LLC is consolidated and each member uses a K-1 for their earnings, the way we did it here, but then like I said, I don't do taxes. Yes, each series can be a sub-account of the "master". Good luck :)
@Jason R. @Kumar Paj one of the issues with getting individual EIN and one reason I like a series is that you can file one tax return . Potentially saving a great deal of money, but not if each llc under the series has its own EIN which many lawyers will advise to keep from piercing the corp. veil.
@Jason R. @Kumar Paj @Bill Gulley @Scott Smith @Amanda Han update
Make sure to check with your accountant and bank before deciding, this is not just a legal question. Many banks will not establish accounts of any kind with a series llc (Chase Bank). My Banker has advised me that older accounts/loans will be canceled at time of renewal. Some accountants will not want the hassle that comes from a much more detailed chart of accounts necessary to keep a strong corporate veil and /or will charge a lot more making any savings from a series mute. Although the series LLC structure has been available since 1996, and has expanded to 9 other states/province; it is still relatively uncommon. Many, if not most, are still unfamiliar with the concept. This can cause difficulties and delays in securing financing from lenders that don't understand the issues involved, as well as problems obtaining licenses and permits from governmental entities that are unused to dealing with the series LLC structure. Gaps in insurance coverage can also occur due to confusion regarding the proper insured parties, and transaction costs may also be higher if involved parties do not have experience with the series LLC structure.
Can't believe I'm still struggling with this but just in case anyone is interested, BMO HARRIS ( a Chicagoland Bank) welcome's series LLCs. And they do open small business accounts for out of state investors.
PNC Bank also allows Series LLCs. $1500 min per acct to avoid fees, $12/mo otherwise. I'm IL based, and setting up now -- for tax I'm told all Series LLCs "cells" are indeed issued K-1s and flow into Master LLC, which files return.
Series LLCs are only allowed and recognized in 20 different states, meaning, its not recognized on a federal level. This is why federal banks like Wellsfargo and Chase will not open a business Series LLC account since the business structure does not operate by federal laws. You should not have a problem opening an Series LLC account with a state bank or credit union bank.
I open series LLC's. You can have as many accounts as needed for each sub series (cell). Multiple account types including no minimum balances. Im located in vegas and can assist remotely. No "branch appointment bs)
@Joseph Collier have you checked www.baselane.com
If you're having trouble merely opening a bank account, what do you believe will happen when you want to finance real estate? Series LLC's are an example of an asset protection plan that probably does more harm and over complication of your business than it does good.
Recognition of Series LLCs across state lines remains a major legal gray area. Some states do not permit formation of Series LLCs but may still allow them to do business within their borders, while others do not recognize them at all. Even if you operate in a state that does recognize them, it does not mean a lender or bank is required to do business with you.
Your goal as a real estate investor should be to balance asset protection with the ability to operate your business as efficiently and effectively as possible. If your entities interfere with your ability to conduct business, then you may want to re-assess your entities. I would say struggling to open a bank account is the clearest example of this.