Can an LLC Own Another LLC?

The answer to the question is YES. This can be accomplished by utilizing a series LLC structure.

A series LLC is essentially a traditional LLC with the added ability to create cells or subsidiary LLCs within the framework of one LLC. This structure is often used to protect against personal liability and to insulate one business from the debts and obligations of another.

Before states began to authorize the use of series LLCs, business owners, and investors needed one business entity for each company or property they owned if they wanted to insulate each from the liabilities of the others.

Now, a business owner or investor can insulate him or herself from personal liability and insulate multiple businesses or properties from each other by utilizing a single series LLC.

There are two primary advantages to using a series LLC - limited liability and tax simplicity:

1. Limited Liability If you are operating multiple businesses or if you own one business with several different business operations, you might consider separating each business or business operation into its own LLC. The reason why you would want to do this is because then the liabilities of one business, or business operation, won't put the assets of the others at risk. For instance, if you operate three different businesses under one LLC, and one of the businesses gets sued, the assets of the other businesses in the LLC will also be liable for that lawsuit, because they are all under one LLC. But, by separating each business, you are also separating their assets and liabilities, to insulate each business from the debts and liabilities of the others. Then, if there is a lawsuit filed against one LLC, the assets of the other two LLCs, as well as, your personal assets will all be insulated against a judgment against the LLC that is being sued.
2. Tax Simplicity If you own multiple separate LLCs, you will need to file a tax return for each one. This can be somewhat cumbersome, especially if you own a lot of LLCs. However, if those LLCs are held in a series LLC structure, the profits and losses of each subsidiary LLC will pass through to the parent LLC, so you would only have to file one tax return for all of your LLCs. This is because subsidiary LLCs are typically single-member LLCs, meaning that they have only one owner - the parent LLC. Single-member LLCs are disregarded entities for tax purposes, which simply means that the income they earn is reported on the owner or parent company's income tax returns. Thus, a series LLC structure can provide the owner of multiple LLCs with a great deal of tax simplicity by avoiding the need to file multiple tax returns.

As you can see, a series LLC is tailor-made for certain types of business owners, especially real estate investors and those who own and operate multiple properties. If you're intrigued by the advantages offered by a series LLC structure, don't hesitate to reach out to us now via our contact form or by calling +1 (307) 683-0983. Our team of Business Success Advisors are available to provide assistance.