TEXAS BUSINESS LAW
What Is a Series LLC? How the Texas Series LLC Works
A series LLC is a single limited liability company that can create internal compartments — called series — each with its own assets, members, and business purpose, and each shielded from the debts of the others. Texas has authorized series LLCs since 2009 under Chapter 101, Subchapter M of the Business Organizations Code. You form one with a single $300 certificate of formation, and the parent can then spin up an unlimited number of series without paying a new formation fee for each. For investors holding multiple rental properties, that math is the whole appeal: one filing instead of one $300 LLC per asset.
The structure works — but only if you respect its conditions. Here is how the Texas series LLC operates, what changed in 2022, and when separate LLCs are still the better call.
What a Series LLC Is
A series LLC is a parent limited liability company whose company agreement allows it to establish one or more series of members, managers, membership interests, or assets. Each series can sue and be sued, contract in its own name, hold and convey property, and grant liens — even though a protected series is not a separate legal entity from the parent. The critical feature is the internal liability shield: debts and obligations of one series are enforceable only against the assets of that series, not against the parent LLC or any other series.
The parent files one certificate of formation with the Texas Secretary of State, maintains one registered agent, and — for state tax purposes — files as one taxable entity. (If you’re setting up the structure, the registered agent address rules apply to the parent just like any other LLC.)
Protected Series vs. Registered Series
Since June 1, 2022, Texas law recognizes two kinds of series. A protected series is created internally — through the company agreement — with no state filing. A registered series is created by filing a certificate of registered series with the Secretary of State for a $300 fee, which gives the series a public, state-verifiable existence.
| Feature | Protected series | Registered series |
|---|---|---|
| How created | Company agreement; no filing | Certificate of registered series filed with SOS |
| State filing fee | $0 | $300 per series |
| Public record | None | Yes — searchable with the SOS |
| Proof of status | Internal documents only | Can obtain a certificate of status from the state |
| Liability shield | Same internal shield | Same internal shield |
Why pay $300 for a registered series? Banking and title. Before 2022, banks and title companies often balked at protected series because there was no state record proving the series existed — no certificate of good standing, no entity to verify. A registered series solves that: lenders, title companies, and counterparties can confirm its existence directly with the Secretary of State. For real estate investors who finance or insure title on property held at the series level, registered series have largely removed the old friction.
What the Liability Shield Requires
The internal shield is conditional, not automatic. Under Section 101.602 of the Business Organizations Code, the series-to-series liability protection applies only if all three of the following are true:
- Separate records. Records are maintained for each series that account for its assets separately from the assets of the parent and every other series.
- Company agreement language. The company agreement contains a statement of the liability limitations between series.
- Certificate of formation notice. The certificate of formation includes notice of those limitations.
Miss any one and the shield does not hold. In practice this means separate books per series, no commingled bank accounts, documented transfers between series, and assets titled in the correct series name. Good bookkeeping is advisable for any business; for a series LLC it is the price of the liability protection itself.
Series LLC vs. Separate LLCs
| Factor | One series LLC (5 properties) | Five separate LLCs |
|---|---|---|
| Formation fees | $300 (plus $300 per registered series, if used) | $1,500 |
| Registered agents | One | Five (or one agent, five engagements) |
| Franchise tax reports | One combined report | Five reports |
| Liability separation | Internal shield, conditional on records | Separate legal entities — stronger, well-tested |
| Banking/title friction | Low for registered series; higher for protected series | Minimal |
| Out-of-state recognition | Uncertain in non-series states | Recognized everywhere |
Franchise Tax and Federal Tax Treatment
For Texas franchise tax, the Comptroller treats a series LLC as a single taxable entity. The parent files one franchise tax report and one Public Information Report covering all series under one taxpayer number — the series do not file separately, and their revenue is combined. For 2026 reports, no franchise tax is due unless combined annualized revenue exceeds $2.65 million, though the reporting obligation still applies.
Federal tax treatment is less settled. The IRS proposed regulations in 2010 that would treat each series as a separate entity for federal tax purposes, but those regulations have never been finalized. Most practitioners obtain guidance on whether to report series separately or together based on the structure’s facts — talk to your CPA before assuming one return covers everything.
The Uncertainties
Two open questions deserve honest treatment. First, non-series states: if your series LLC owns property or does business in a state without a series statute, there is no guarantee that state’s courts will respect the internal shields between series. Second, bankruptcy: federal bankruptcy courts have not definitively resolved whether a single series can file on its own or whether the whole structure gets consolidated. Neither risk makes the series LLC unusable, but if your assets sit outside Texas or you operate in a high-liability industry, separate LLCs remain the conservative choice.
Who a Series LLC Suits
The classic fit is a Texas real estate investor holding multiple rental properties who wants each property walled off from the others without paying for a stack of LLCs. It also works for businesses segregating distinct lines — equipment in one series, operations in another. If you’re weighing where to form in the first place, our comparison of the best state to form a real estate LLC covers why Texas property usually means a Texas entity. Operators with significant out-of-state assets, outside investors, or plans to raise capital should usually default to separate entities or a different structure.
Frequently Asked Questions
Is each series a separate legal entity?
A protected series is not a separate entity from the parent LLC, though it can contract, hold property, and sue in its own name. A registered series has a state filing behind it and functions much closer to a standalone entity for practical purposes like banking and title.
How much does a Texas series LLC cost?
$300 to file the parent’s certificate of formation — the same as a standard LLC. Protected series cost nothing to create. Each registered series costs an additional $300 filed with the Secretary of State.
Does each series file its own Texas franchise tax report?
No. The Comptroller treats the entire series LLC as one taxable entity: one report, one Public Information Report, combined revenue across all series.
Can one series go bankrupt without the others?
Unclear. Bankruptcy treatment of series LLCs remains unsettled in the federal courts, which is one of the main reasons high-liability operations often choose separate LLCs instead.
A series LLC saves real money, but the liability shield only works if the structure is drafted and maintained correctly — and the wrong setup costs far more than it saves. Reidel Law Firm forms series LLCs and advises Texas business owners on entity structure for transparent flat fees, so you know the cost before we start. Talk to a Texas business attorney before you file.
