How to Start a Series LLC in Delaware
To create a Series LLC in Delaware, you must submit a Certificate of Formation to the Delaware Secretary of State’s Division of Corporations. This document can be submitted online or by mail. The Certificate of Formation costs $90 to file. Once filed with the state, the Certificate of Formation officially creates your Delaware Series LLC, but truly preparing your new organization to do business involves several additional steps.
Delaware Series LLC Guide:
What is a Delaware Series LLC?
Delaware is one of several states where you can start a Series LLC. A Series LLC is a unique business entity that consists of a single parent organization or “master” LLC and one or more “series” or “cells” that can have separate finances, bank accounts, business purposes, and limited liability. Series LLCs are often formed as holding companies for real estate investments, but they can also serve other purposes. The basic idea is to set up protective walls between the organization’s various assets to protect those assets if the parent organization (or any of the individual series) ever gets sued.
What types of series can I form in Delaware?
Until recently, Delaware law recognized only one kind of series, called simply “series” in the Delaware Limited Liability Company Act (DLLCA). But recent Delaware Series LLC amendments to the DLLCA that took effect on August 1, 2019, distinguish a “protected series” from a “registered series.”
A protected series is the equivalent of what Delaware formerly called simply a “series,” and you can form or dissolve protected series by amending your Series LLC’s operating agreement. A Delaware registered series is a new possibility that includes a separate filing and registration fee with the Delaware Secretary of State. A Delaware Series LLC can establish or form both protected and registered series, and it is possible for protected series to convert to registered series and vice versa.
Learn more about Series LLCs in general at Northwest’s Series LLC Guide.
DE Series LLC Certificate of Formation Requirements
To form a Delaware Series LLC, you must complete and submit the Certificate of Formation with the Delaware Division of Corporations. This is the same document an ordinary Delaware LLC submits, but a Certificate of Formation for a Delaware Series LLC must add an additional Notice of the Limitation on Liabilities authorizing the Series LLC to establish or form series. See the document below and click on any number to see what information is required in the corresponding section.
Your Series LLC name must contain the words “Limited Liability Company,” the designation “LLC,” or the abbreviation “L.L.C.” It does not need to contain the word “Series,” but the name must be distinguishable from other businesses on record with the Delaware Secretary of State. The name may also contain the name of a member or manager.
Your Series LLC will need a Delaware registered agent to receive service of process and other official state documents on its behalf. You can appoint a willing individual (such as yourself or an associate) or hire a registered agent service like Northwest.
In this section you should include an addendum (called the Notice of Limitation on Liabilities) authorizing your Delaware Series LLC to establish individual series with their own limited liability protections separate from the parent organization.
Your Series LLC's organizer should sign and date the organization's Certificate of Formation. An organizer does not need to be a member or manager of your Series LLC.
How much does it cost to start a Delaware Series LLC?
The Delaware Division of Corporations charges a $90 fee to file your Series LLC’s Certificate of Formation. If you choose expedited processing, you’ll pay an additional $50.
How long does it take to form a Delaware Series LLC?
Delaware’s processing times differ depending on the way you submit your documents. If you submit online and choose normal processing, the response time is usually within 5 business days after the state receives your filing, though it may take several days longer to get your documents back in the mail. Mailed filings can take the state around 7-10 business days to process after receipt. Paying the expedite fee will shave off a few days from either option.
Does a Delaware Series LLC Need a Registered Agent?
Yes. Delaware requires a Series LLC, like an ordinary LLC, to appoint and maintain a Delaware registered agent to receive service of process (legal notices) for the parent organization and any series its forms. Your Delaware Series LLC’s registered agent must be available during normal business hours at the registered office address listed on your Certificate of Formation.
Does Each Series Need a Different Registered Agent?
No. Fortunately, Delaware doesn’t require each series in a Series LLC to appoint different registered agents. The registered agent for the Series LLC can also be the registered agent for each series within the series organization.
Delaware Certificate of Registered Series Requirements
Your Delaware Series LLC can add or remove protected series by amending your Limited Liability Company Agreement (see section 3 below), but forming a registered series requires filing a separate document called the Certificate of Registered Series and paying a $90 filing fee. A Certificate of Registered Series must be filed with the DE Division of Corporations for each registered series.
The requirements for the Delaware Certificate of Registered Series are simple. The Delaware Certificate of Registered Series should contain the following information:
- The full name of your Delaware Series LLC
- The name of the registered series
Importantly, the name of a registered series must be distinguishable from the names of other businesses on record with the Delaware Secretary of State, and the name must begin with the name of your Delaware Series LLC.
Learn more at Northwest’s guide on How to Form a Delaware Registered Series.
Delaware Series LLC Operating Agreement
Your operating agreement (called a Limited Liability Company Agreement in Delaware) is the document that lays out how your Series LLC will function, who owns it, which members are associated with which series, and how the organization will deal with internal disputes and dissolution proceedings (among a host of other details). It is also the means by which you will establish (and dissolve) protected series within your Series LLC. Essentially, the operating agreement is your Series LLC’s contract with itself, and it is one of your organization’s most important internal documents.
Creating an effective operating agreement from scratch isn’t easy, which is why Northwest provides a general template for crafting an LLC operating agreement that you can adapt to the needs of your Delaware Series LLC. Check out this and other free and adaptable LLC forms below:
Get Federal EINs from the IRS
Does My Series LLC Need a Federal EIN?
Yes, getting a federal employer identification number (FEIN or EIN) is pretty much a must for any Delaware series LLC. You’ll need an EIN if you’re going to hire employees, take advantage of tax elections like the S corporation, or get Delaware business licenses. Most banks will also expect your series LLC to have an EIN to open a bank account. You can apply for an EIN through the IRS website, by fax, or by mail.
Should I Get a Separate EIN for Each Series in My Series LLC?
If each series within your Delaware series LLC will open its own bank account, each series will need a federal employer identification number (FEIN or EIN). In general, it is necessary to keep each series’s finances separate from the parent organization, and opening separate bank accounts is one way to ensure that separation.
Open Bank Accounts For Your Series LLC
To open a bank account for your Delaware Series LLC, you will need to bring the following with you to the bank:
- A copy of your Delaware Series LLC Certificate of Formation
- Your Series LLC operating agreement
- Your Delaware LLC’s EIN
If your Delaware series LLC has multiple members, you may also want to bring an LLC resolution to open a bank account that states that the person going to the bank is authorized by the members to open the account in the name of the LLC.
Should I open separate bank accounts for each series?
Opening separate bank accounts (and keeping separate finances) is crucial to maintaining each series’s limited liability, and that usually means keeping separate bank accounts.
Fair warning: starting bank accounts for each series in your Series LLC can be a challenge. Many banks are not accustomed to starting multiple, independent bank accounts for what can appear, on the surface, to be a single organization. It’s best to call the bank ahead of time, explain your situation, and make sure that the bank is willing to work with you.
Obtain any Required Business Licenses
When you form a series LLC in Delaware, you’ll usually need a business license if you intend to do business inside state lines. You can register your Series LLC and/or its various series for any required business licenses using Delaware’s One Stop Business Registration & Licensing service.
The Delaware Annual Tax
Do Series LLCs pay the Delaware LLC annual tax?
Yes. Like ordinary LLCs operating in Delaware, Delaware Series LLCs pay a $300 annual tax to remain in good standing with the state. The payment is due by June 1st each year, and you can pay online at the Delaware Division of Corporation’s website.
Do individual series also pay the Delaware LLC annual tax?
That depends. Protected series within a Delaware Series LLC are not required to pay an additional annual tax, but each registered series will pay a $75 annual tax.