Forming a limited liability company requires that a state LLC filing be made with the state agency responsible for regulating legal entities. One important requirement is that the proposed name for an LLC be available for use as an LLC name in that state.

When you submit an LLC filing, the state will review and make a decision on your proposed name. Generally it cannot be the same as or similar to another legal entity name registered with the state.

A DBA name filing, also known as doing business as name filing, is made at the local level. This is the county or city/municipality where the business is located.

Each locality has its own set of rules on when a name must be registered with the locality. In most cases, if the LLC is going to use the same name to promote its business as its state LLC name, a locality will not require a DBA filing. However, check with your particular locality to be sure.

If an LLC is going to use other business names in the promotion of its business, the LLC, after it is formed, should submit a DBA name filing application in its locality. An LLC may do this when it has several businesses under one LLC, several divisions or wants to associate a DBA with certain products or services.

The series LLC is a specific kind of limited liability company that can be formed in a few states in the United States.

A series LLC is an LLC that can have separate divisions to run different businesses.  Each division will be considered separate and apart from the other divisions in the LLC when it comes to asset and liability protection.

For example, a series LLC can operate a real estate landlord business under one series (division) and a real estate development business under another series (division).

If a tenant were to sue the landlord business and obtain an expensive judgment, all the assets owned and used for the development business would not be at risk to satisfy the liabilities of the other series.

In concept, the series LLC is a wonderful mechanism because it rids an entrepreneur of the need to create multiple LLCs to run multiple business ventures if that entrepreneur wants to shield liabilities of each venture from the other.

In reality, a series LLC currently has some major limitations.

UNCERTAINTY OF ENFORCEMENT IN ALL STATES

First, it is only recognized in a handful of states so it is uncertain whether the liability protections should apply if the LLC conducts business in other states which do not have a series LLC component to their LLC statute.

If each business were operated under a separate LLC, there would be no risk of separation of assets and liabilities for each business.

SERIES LLC GOVERNANCE IS COMPLEX

Also, a series LLC is organizing multiple businesses under one legal entity and this requires the drafting of a complex operating agreement and operational procedures to ensure that each business is run as if it is a separate independent entity business.

It is a lot easier to separate each business into independent limited liability company entities and as a result you have an extra precaution for keeping them separate from each other.

SUMMARY OF SERIES LLC TREND

In time, the series LLC could become a major element of every LLC entity and when it does, the uncertainty surrounding its enforcement will be addressed.

Furthermore, series LLC forms, operating and governance procedures will have evolved and be established and these will make it easier for any series LLC business to be more easily set up and maintained.

Until then, if you choose to create a series LLC, make sure you understand the requirements and limitations in your state’s laws and consult with a competent and experienced LLC lawyer who can be sure you set up the proper paperwork to structure your businesses based on your particular circumstances.

In fact, many times, a business gets too large or complex for the one member to be able to handle all the management of the business.  In such a case, he/she will want to appoint other managers and have a Board of Managers or at least hire a slate of officers to help with day to day management.

Any limited liability company, regardless of the number of owners, can choose a member managed or a manager managed governance structure.  And, even within each of those structure, the LLC can be tailored with specific operational and governance rules that are necessary for that business.

The decision and the details of a manager managed LLC is evidenced in the single member LLC operating agreement.  It is important to document the structure and for the LLC to follow the provisions set forth in that agreement.

If you are appointing an outside manager for an LLC corp, make sure that he/she understands what authority and what limitations are part of the role.  And, always retain the ability to remove a manager with or without cause.

There is no one national body of LLC law.  The LLC (also known as a limited liability company) is a creature of state law.

Each state passes its own set of legal provisions that govern the formation, governance, operation and dissolution of this kind of legal entity.

Having said this, most states started with a standard set of LLC provisions which is called a uniform statute.  They then amended and added to it to make a state specific body of law that the legislature felt was proper.

Because of this, the procedures and other provisions that apply to an LLC vary by state.  Some are more onerous than others.  Some provide more privacy than others.  Some impose more fees than others.

As with any law, the differences are the result of what the government feels is important, providing trade offs between constituencies and political considerations.

While there are variations in formation and administrative procedural requirements, one thing common in most state LLC laws is that the law, with some limited exceptions, allows the members or managers of a ttp to define their own set of governance procedures, limitations and rules.

If you want to review the LLC laws in your state, you will likely find it by googling [your state] limited liability company act.  Some states have named their laws something different (like California where the LLC law is known as Beverly Killea Limited Liability Company Act) but this google search will work for most states.

As a result, many of the LLC statutes passed provisions that required that an LLC have a life limited to a term of years.  For most of them, the members could always vote to renew the term but this was a necessary additional step.

However, once the IRS adopted the check the box regulations in 1997 which took away the complicated and hard to apply test they had imposed, there was no longer a need to limited the life of limited liability companies under state laws.

Most states have since amended their statutes to get rid of the limited life requirement.  However, if the members so desire, an LLC still has the option of limiting its life if it makes sense for that particular business.  An example might be a special purpose entity set up to accomplish a certain purpose that would be completed after so many years.

In summary, the LLC is very similar to a corporation in that it can have a perpetual life and does not have any limitations on how long or short of an existence it can have.

VIDEO BLOG POST:

Click below to watch a video we recently made that outlines the major benefits of an LLC for operating a small business.  The limited liability company is not the most common choice for small business owners precisely because it was designed to offer them most benefits for small businesses.  Watch Now!

The first step when a party has decided to sue a limited liability company LLC is to determine the best method for effectuating service of process on the LLC. This is also known as serving legal notice to the LLC of the lawsuit in a way that is proper notice under the laws.

The methods for service of process to a business entity like an LLC is set forth in the general service of process rules for each state and these can vary but in all states one confirmed method is by delivering the notice to the Registered Agent of the LLC.

The LLC laws specifically created the registered agent role to serve this purpose because with a legal entity, it may sometimes be difficult to determine who the members are or which persons are managing the business sufficiently to meet other service of process notice methods. Now, you need to check your specific state’s rules.  For example, in Delaware, service of process delivered to a member is only good if that member materially participates in the management of the LLC business.

The safest route is to deliver service of process documents to the registered agent. With a registered agent service of process, you can obtain the name and address of a registered agent of any LLC formed or registered in a state by calling up the state’s corporation agency (this agency is called the Secretary of State in most states).

In addition to serving the registered agent, if you are aware of any member managers or executive officers of the LLC business, it is recommended you serve these persons as well.  This means delivering papers to them personally and having them sign confirmation receipts.

Always check with the attorney in your state for proper service of process requirements.

In every state in the US, the state legislature has adopted an entire set of laws governing the limited liability company in their state.  These laws are generally incorporated into one Act and so they are quite easy to find.

In a great majority of states, the name of the Act is the [State] Limited Liability Company Act so for example, the Virginia Limited Liability Company Act or the Georgia Limited Liability Company Act. But, in a few states, the LLC laws have a different name.  For example, in California the LLC act is called the Beverly Killea Limited Liability Company Act.

The best way to find these on the Internet is to look first search for your states statutes.  Type “Illinois statutes” into Google.  You should find a database with all the laws for your state.  From there, look for a search button where you can search “limited liability company.” This should take you to the section with the LLC laws.

Most LLC laws are contained either next to or within a state’s corporation code so if you have trouble searching, look at the table of contents of index and find Corporations, Limited Liability Company or Business Entities.

This is the most common question we get at The LLC Expert- What is an LLC?  Then, How Does an LLC Benefit Me?

I think it is important for any new business owner to fully understand the importance of proper business and protection planning.  Starting a business off properly with an asset protection legal entity is the first key step.

I have written a prior answer post explaining briefly What is a limited liability company LLC. But if you want more information about this and to know exactly how the LLC benefits you, I have also written a Report with more detailed information- see below to get it.

It is smart to understand what the limited liability company LLC can do for you and your business.  Read my Report which explains this in plain English.  Go ahead and get it- its totally free on The LLC Expert website:

You can get instant download to the Free Report by clicking here.  FREE LLC REPORT. You may need to scroll down to the bottom of the page to find the Free Report Box where you can get the Report.

This is usually done with a deed.  The most common way to do this when you are both the owner of the property and the owner of the real estate LLC is to use what is known as a quitclaim deed.  A quitclaim deed basically states that you are transferring whatever ownership interests you have in the property to the LLC.

The form of the deed will need to contain specific language that can vary based on your state.  Accordingly, you can seek the help of a local real estate attorney or find a state specific form to use if you do it yourself.  If you cannot find a form, then go to your local county and search the records for actual quitclaim deeds that were filed there.  You should be able to to find several basic forms used.

When you transfer the property to your real estate limited liability company, there may be some fees charged by your locality so call your county for specific fee details.

Your LLC should execute a resolution or consent agreeing to take on ownership of the property.

Finally, one issue that is common in this area is whether there re any issues if the property is subject to a mortgage.  If you are a borrower on a mortgage/deed of trust with a bank for the property, you need ro read your loan documents to see what conditions, limitations or restrictions they may have on the ability to transfer the property to an LLC without paying the loan off.  There is often a clause called a Due on Sale Clause which you should be aware of.If you own 100% of the LLC, there may be ways around this so check with your local real estate attorney for advice.

Having said this, many entrepreneurs form a separate LLC for each business.  This is because everything owned by each LLC will be subject to the business risks of all activities in the LLC.  For example, if a real estate investor owns three properties and all of them are owned and managed by one LLC, then if a problem with one property arises, all of the properties are at risk.  Say, a tenant slips and falls in one property and gets a large judgment beyond the insurance limits.  In this case, the other properties are reachable by the tenant to fulfill the judgment.

Now, some LLCs are formed as holding companies to own interests in multiple businesses.  This is another great method.  The holding company LLC only owns stock or LLC interests in other businesses so is never at risk for business problems.  Under it are other LLCs or corporations which run the multiple businesses.

Bottom Line.  Yes an LLC can run more than one business but if may be wroth thinking about whether the added liability protection for each business is worth the small costs to form multiple LLC entities for your businesses.

LLC NAME AVAILABILITY WITH THE STATE AGENCY WHO FORMS LLCs.

Choosing an acceptable LLC name for your new limited liability company should be done early in the pre-formation process.

In all states, you cannot use a name which is the same as or too similar to another name already being used by another limited liability company or other legal entities (such as corporations) in a state.  In some states where companies can register fictitious names, those states will also not allow an LLC to use the name of a filed fictitious name as well.

So, prior to finalizing your LLC name choice, you should check with your state of formation to see if your name is available for use in that state for a limited liability company. Informal name checks are not binding and sometimes you can get an approval on the phone and then find out that the person processing your paperwork rejects your name because it is “deceptively similar” to another LLC name.

One way to prevent this surprise is to reserve an available name with the state. In most states, there is a process to reserve a name for a stated period upon the filing of a form and payment of a nominal fee.  Consider this when your LLC name is very important for your business.

TRADE NAME PROTECTION

Just because a name is available for use as an LLC name by the state agency who forms LLCs does not mean that there are no other potential issues with using that name to promote your business.  Trademark and trade name laws protect other people and businesses who are using a pre-existing name in the event someone else tries to use such name in its business and the use causes confusion in the marketplace.

Accordingly, you should check do some research to see if another business with a similar business model or similar products/services as yours is using your desired name in the areas where you will sell your products.  For local businesses, conduct local Internet searches and check in telephone books or in directory lists of local chambers of commerce.  For national businesses, you should research nationally and consider ordering a trademark search to see if there could be any potential issues.

Name litigation fights are very costly and will not arise until you have made huge investments in promoting your business and name.  Do your homework on the front end and ensure at the beginning of your LLC business that your chosen name is proper.

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The LLC is a great choice for medium and large businesses as well.  Regardless of size, the limited liability company offers businesses the same benefits and advantages including the most tax choices.

FIDELITY INVESTMENTS IS A LIMITED LIABILITY COMPANY

In 2007, Fidelity Investments, one of the largest investment brokerage businesses in the US , converted itself into a limited liability company. Fidelity has over 3,000 employees and over a billion in profits each year.

According to reports, they did so in order to significantly reduce tax burdens and pass higher returns on to ownership.   A senior executive stated that it was the most advantageous choice of legal entity for the business.

A LIMITED LIABILITY COMPANY BUSINESS HAS NO GROWTH LIMITATIONS

The LLC laws do not limit how many members can be members of a limited liability company.  There are no limits on how many businesses a limited liability company can engage in.  The limited liability company has enough flexibility to have a simple governance structure for a single member LLC or an incredibly complex governance structure needed when there are layers of investors and owners and layers of management and required committees.

I have worked with fast growing LLC businesses that have millions in revenue and multiple offices worldwide.

THE LLC IS NOT RIGHT FOR A COMPANY THAT WANTS TO GO PUBLIC

Now, Fidelity is a private company.  If a business has serious desires to go public, which means to have an initial public offering and sells its ownership in the public markets, then a corporation is the required choice as LLC interests currently are not available to be publicly traded.

Another misnomer is the llc corporation.

This is because there is no such thing as a limited liability corporation or an llc corporation. .  at least there is no legal entity with those official names. Many people mistakenly think there is an entity called a "limited liability corporation".  While the naturally interpretation of this is that they are looking for information on a corporation legal entity (which incidentally does offer limited liability protection), the great majority of people that use the term "limited liability corporation" are really looking to learn more about the limited liability company (also known as the LLC).

Make sure you really understand this because a corporation is a very different kind of legal vehicle than a limited liability company.  A corporation was the gold standard for businesses prior to the uprise of the limited liability company.  While publicly traded businesses and very big companies . . . or those with complicated ownership and tax considerations can choose the corporation over the limited liability company, most small and medium sized, private businesses find that the limited liability company is th preferred vehicle.

So, if you are looking to understand what a "limited liability corporation" is or an llc corporation is, you will not find any such legal vehicles.  Determine whether it is a corporation or a limited liability company that you are inquiring about and then go from there. 

Compared to corporations and partnerships, the limited liability company is a much newer entity.  Wyoming was the first state to enact the laws to create the first kind of LLC back in 1977. Other states slowly followed but it was not until the IRS enacted regulations in 1997 to provide the limited liability company with tax choice flexibility that he LLC really took off.

The fact that the limited liability company is a relatively new entity is actually a good thing because it is a result of creating a best of breed legal vehicle.  The limited liability company has all the advantages of the two other main legal entities: the corporation and the partnership but without the disadvantages of those same entities.

A corporation’s biggest advantage is limited liability protection for all owners.  Some disadvantages of a corporation include more legally required meetings and formalities, less flexibly statutorily mandated management structures, double taxation, and higher maintenance costs in some states.

The limited liability company affords its owners the same solid limited liability protection as corporations but with much less formalities and other requirements and more choices when it comes to taxation including the default tax classification for an LLC which is pass through taxation (a single layer of taxation).  In addition, the limited liability company can alter its management and ownership structure in many more ways than a corporation can.  This allows for a wider variety of business planning if need be for the business and a lot more flexibility in determining how to best operate and manage the LLC business.

The partnership entity’s biggest disadvantage is that with a general partnership, all owners are personally liable for the obligations of the partnership and with a limited partnership at least one partner is liable.  On the other hand, the partnership entity does provide a lot of flexibility in how the partnership is structure and operated as well as the ownership relationships among partners.

The limited liability company provides the same governance, ownership and operational flexibility as a partnership but also grants limited liability protection for ALL owners.

I will write more about the specific differences in the legal entities in other posts but just know that the LLC is designed to give owners the best of both worlds.

The formation of limited liability companies each year has now surpassed corporations being incorporated – this is a sign that the LLC really is a preferred vehicle for private businesses, real estate, joint ventures, and estate or family planning.