A series LLC is a special type of LLC (limited liability company), that provides liability protection to multiple LLCs that all belong under the same group. The best way to gain a thorough understanding of a series LLC is to compare it with a parent corporation and its subsidiaries. The parent corporation is similar to the main LLC, the subsidiaries fall underneath the parent companies, but they are also their own businesses.
One of the best uses of a series LLC is to protect personal assets from any legal claim that is related to any business liabilities. For example, if your business was being sued and the LLC was found liable by the courts the entity must pay the amount owed, rather than the individual. If the LLC owned other limited liability companies that were not properly formed as a series LLC those companies would be considered assets of the main one, so all of the LLCs could be fair game in terms of assets to settle the business liability. By properly forming a series LLC the subsidiary LLCs would not be held responsible for the business liabilities of any of the others, including the parent company.
If any of the businesses owns real estate, forming a series LLC can be beneficial because you might be able to avoid any sales tax that would be due on any rent paid by the operating series to the real estate holding series. The reason that the sales tax could be avoided is because all of the assets are in theory owned by the main company, so you are not doing business with a separate entity. Series LLCs file one tax return, no matter how many companies are combined in a series.
The one thing that you need to remember is that if you want to take advantage of the benefits that are offered by series LLCs you will need to take specific action to ensure the proper formation of your company structure into a legal series LLC.