Mark Kohler explains what a series LLC is and how it works. A series LLC lets you hold multiple properties under one LLC with separate liability protection for each, saving you filing fees compared to creating individual LLCs. Not all states allow them, so Kohler covers alternatives for those that don't.
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Mark Kohler here with another tax and legal tip. Let's talk about the series LLC now. Every year another state adopts that series LLC statute. And now there are 12 to 13 states that allow for a series LLC. And it continues to grow and it's always a variable moving target. But the series LLC is a powerful way to get protection for my investors that have multiple rental properties. Now, the series LLC only works in states where there's a series, a series LLC statute. In my new book, I give a list of all those series states in the appendix and you can go out and Google this to find what states might be a series LLC state. I've got a blog article on this as well. But get in there and find out if this strategy will work in your state. And here's how it works. So essentially the normal problem people have is that they can say, well, I'll have one LLC and I'll put all my rentals in there. Well, that's kind of scary because all of your eggs are in one basket and it's cheap and it's easy, but it's scary having all of your rentals out there again in one little umbrella. So what do we do then? We go out and we get sold and scared into having an LLC for every rental. And that's a nightmare, right? Expensive. And we've got wonderful asset protection, but we got multiple checkbooks, multiple tax returns and it's, it's overwhelming. And there's those companies out there will sell you into this structure. So watch out. Well, this is where the series LLC comes in because it's a balance between this and I'll give a little tip here at the end of what you can do in a non series state. But if you're in a series state like Tennessee, Utah, Oklahoma, Nevada, again, just to name a few, you can have an LLC and it can have baby subs that will act like Little LLCs holding rental properties where you get extra asset protection in between each one of these. But you only have the cost of setting up one LLC and one tax return. So it gets to be really cost effective. Now you're going to still have to have multiple checkbooks and there'll be names for these different LLCs and you'll hold the properties in the names of those LLCs. But the beauty again is the filing fee savings and the tax return filing savings that can be really, really efficient. Some states like Illinois, it's like a $50 filing fee for each LLC. But when you're paying 600 for an LLC that's a big deal in Illinois. A lot of savings. Texas has a series LLC and again all sorts of states provide this option to set up as many baby LLCs as you want. So look into it and see if it's a good fit for you. Now for those of you that aren't in a series LLC state, I think you have two other options. 1. Find the balance that works for you with the number of LLCs that you have. You might put three to four properties in each LLC and it's not an issue of quantity but quality of your rentals and how much risk is involved. You still want some protection but you don't want to overdo it. For those of you that have 10 or 20 or more rental properties, I love to create a parent LLC in a charging order protection state. Another video on COPE Entities chapter in my book. But you have this LLC in a quality state and then set up baby LLCs much like a series LLC structure but you have different LLCs in other states all funneling into one one tax return but you're getting double layer protection. And for those of you that have a lot of rental properties this could be a good fit. So I guess in the big scheme of things we really have five options with the series LLC being that fifth option right down here and you know, find what works for you. But if you have rental properties, get protection and find a structure of the LLC model that fits you best. Hang in there and keep living your American dream. Thanks for listening and I hope that information was helpful and let me speak from the heart here. I've been talking about topics like this for 1015 years. I'm a CPA attorney, best selling author, radio show host and I am passionate about helping small business owners save taxes, build wealth and protect it. Please check out the link right here. Download my free ebook on 10 Common Mistakes Small business owners make in the tax and legal arena. Also check out my social media links here. I've got Daily Tips, a weekly blog radio show every week. This information is free and I'd love to help you. Click below, find out more about me and thanks for listening. Sat.
