Series LLC | FTB.ca.gov (2024)

FAQs

Does CA recognize Series LLC? ›

Although California does not currently recognize Series LLCs formed elsewhere for intrastate business as distinct series, it generally permits these LLCs to register as foreign entities to conduct business within the state.

Another potential disadvantage of the series LLCs is that tax treatment and reporting requirements vary depending on the state. Sometimes, the rules aren't crystal clear. States might treat each series as a separate tax entity or have the master LLC and all series treated as a single entity.

Federal Taxes as a Series LLC

Currently, the IRS taxes a series LLC as a single entity that files one tax return. Just like a traditional LLC, which is also a pass-through entity, a series LLC has tax advantages that can save you money on your taxes.

Every LLC that is doing business or organized in California must pay an annual tax of $800. This yearly tax will be due, even if you are not conducting business, until you cancel your LLC. You have until the 15th day of the 4th month from the date you file with the SOS to pay your first-year annual tax.

If the series LLC is registered in California, the first LLC in the series uses the SOS number as the identification number on its initial payment voucher. All other LLCs in the series must leave the identification numbers blank on their first payment vouchers.

Unlike a traditional LLC, the Series LLC allows for the sorting of individual properties into separate compartments that are isolated and insulated from each other. This type of LLC is especially useful for dealing with real estate investors and other clients dealing with multiple assets.

Alabama, Delaware, the District of Columbia, Illinois, Indiana, Iowa, Kansas, Missouri, Montana, Nevada, North Dakota, Oklahoma, Puerto Rico, Tennessee, Texas, Utah, Wisconsin, and Wyoming all allow some form of the series LLC. California does not form domestic series LLCs, but a series LLC formed elsewhere can ...

Series LLCs are an ideal choice for real estate investors looking for a strong liability shield. There is no minimum or maximum limit on the assets an LLC can hold so investors could potentially keep each property they own in a separate LLC under the parent LLC.

Each series is a separate entity for liability purposes. A Series LLC typically only has to file one tax return because the earnings and losses of the underlying series flow through to the master LLC. Furthermore, it only needs one bank account. This makes a Series LLC great for holding multiple rental properties.

From 2020-2023, California Assembly Bill 85 (“AB85”) waived the first year's $800 Annual Franchise Tax payment for new California LLCs. Unfortunately, AB85 expired at the end of 2023. Now, every California LLC must pay the $800 Annual Franchise Tax every year.

How to avoid CA LLC fee? ›

To avoid the California LLC Fee, avoid having your California LLC taxed as either a disregarded entity or a partnership by electing to have it taxed as an S-Corp or a C-Corp. LLCs that elect to be taxed as S-Corp or C-Corp in California receive relief from the California LLC Fee.

Every year after that, the tax payments are due on the 15th of the fourth month of your tax year — April 15 for most businesses. Plus, California's LLC annual fee is tax deductible for federal taxes. You can deduct the $800 Franchise Tax – and any additional annual fee you pay.

Alabama, Delaware, the District of Columbia, Illinois, Indiana, Iowa, Kansas, Missouri, Montana, Nevada, North Dakota, Oklahoma, Puerto Rico, Tennessee, Texas, Utah, Wisconsin, and Wyoming all allow some form of the series LLC. California does not form domestic series LLCs, but a series LLC formed elsewhere can ...

Limited Liability Company (LLC)

A California LLC generally offers liability protection similar to that of a corporation but is taxed differently. Domestic LLCs may be managed by one or more managers or one or more members.

Series LLCs are an ideal choice for real estate investors looking for a strong liability shield. There is no minimum or maximum limit on the assets an LLC can hold so investors could potentially keep each property they own in a separate LLC under the parent LLC.

You can convert an existing LLC into a series LLC by filing the appropriate amendment forms in states that allow it or dissolve and create a new foreign series LLC.