How to Create a Series LLC in Nebraska

What Is a Series LLC?

A Series LLC is a unique form of a limited liability company that allows for the creation of multiple, distinct series within a single LLC. Each series operates independently, with its own assets, liabilities, and members. This structure allows for the segregation of assets and liabilities, providing protection for each series from the debts and obligations of the others.

Does Nebraska Allow Series LLCs?

Yes, Nebraska permits the formation of Series LLCs under its state laws. The relevant statute governing Series LLCs in Nebraska is found in the Nebraska Uniform Limited Liability Company Act. It is essential to include specific language in the formation documents to authorize the creation of a Series LLC.

How a Nebraska Series LLC Works

In a Nebraska Series LLC, the master LLC acts as the umbrella entity, under which multiple series can be established. Each series can hold its own assets and incur its own liabilities, effectively isolating them from the other series. This structure requires meticulous recordkeeping to ensure the separation of assets and liabilities among the series.

Benefits of Forming a Series LLC in Nebraska

• Cost Efficiency: Forming a Series LLC can be more cost-effective than creating multiple separate LLCs, as it reduces the need for multiple formation filings.
• Asset Segregation: Each series can hold distinct assets, protecting them from the liabilities of other series.
• Administrative Flexibility: The structure allows for streamlined management and operations across different series.

Limitations and Risks of a Nebraska Series LLC

• Legal Uncertainty: The Series LLC structure is not universally recognized, which may lead to legal challenges in jurisdictions outside Nebraska.
• Banking and Lending Challenges: Some financial institutions may be unfamiliar with Series LLCs, complicating banking and lending processes.
• Tax Complexity: Managing tax compliance for multiple series can be complex and may require specialized accounting.

Who Should Consider a Nebraska Series LLC?

A Nebraska Series LLC is suitable for businesses that require asset segregation, such as real estate investment companies, asset holding entities, and intellectual property management firms. However, for businesses with simpler structures, a traditional LLC may be more appropriate.

Step-by-Step: How to Create a Series LLC in Nebraska

Step 1: Choose a Name for the Series LLC

The name of the Series LLC must comply with Nebraska's naming requirements, including the use of "Limited Liability Company" or abbreviations like "LLC." Each series within the LLC should have a distinct name that includes the name of the parent LLC.

Step 2: Appoint a Nebraska Registered Agent

A registered agent must be appointed for the Series LLC. This agent must be a resident of Nebraska or a business entity authorized to do business in the state, responsible for receiving legal documents on behalf of the LLC.

Step 3: File the Certificate of Formation

The Certificate of Formation must be filed with the Nebraska Secretary of State. This document includes basic information about the LLC, such as its name, address, and the name of the registered agent. Filings can be submitted online or by mail.

Step 4: Include Series LLC Language

It is crucial to include specific language in the Certificate of Formation that authorizes the creation of series within the LLC. Failure to include this language may result in the inability to form series under the LLC.

Step 5: Draft a Series-Compliant Operating Agreement

An operating agreement should be drafted to outline the internal governance of the Series LLC. This document should include provisions for asset and liability separation among the series.

Step 6: Establish Individual Series

Individual series are created internally within the LLC. Proper documentation and recordkeeping practices must be maintained to ensure the separation of each series.

Step 7: Obtain EINs (Parent and Series, If Needed)

An Employer Identification Number (EIN) is required for the parent LLC and may be necessary for each series, depending on their operations and tax obligations.

Step 8: Open Separate Bank Accounts

Separate bank accounts should be opened for each series to maintain financial separation and avoid the commingling of funds.

Step 9: Comply With Nebraska Tax Requirements

The Series LLC must comply with Nebraska's tax requirements, including state income tax and any applicable sales tax. Each series may have its own reporting and payment obligations.

Nebraska Series LLC Filing Fees and Costs

The filing fee for forming a Series LLC in Nebraska is $100. Additional fees may apply for each series established under the parent LLC.

Nebraska Franchise Tax and Series LLCs

Nebraska does not impose a franchise tax on LLCs. However, each series within the Series LLC must comply with state tax reporting obligations.

Ongoing Compliance Requirements for Nebraska Series LLCs

Nebraska Series LLCs must file annual reports and maintain accurate records for each series. Compliance with state regulations is essential to maintain the liability protections offered by the Series LLC structure.

Common Mistakes When Forming a Series LLC in Nebraska

• Missing Required Series Language: Failing to include series authorization language in the formation documents can prevent the establishment of series.
• Poor Recordkeeping: Inadequate documentation can jeopardize the liability protections of each series.
• Mixing Assets Between Series: Commingling assets can lead to legal challenges and loss of liability protection.

Series LLC vs Traditional LLC in Nebraska

A Series LLC offers a more complex structure with asset segregation benefits, while a traditional LLC provides simplicity and ease of management. The choice between the two depends on the specific needs and complexity of the business operations.

Additional Resources

• Nebraska Secretary of State Main Page
• Business Division/Formation Page
• Nebraska State Statutes
• Nebraska Department of Revenue
• Contact Information: Phone: (402) 471-4079, Email: sos.info@nebraska.gov

This article provides general information about Nebraska LLC formation requirements under the Nebraska Uniform Limited Liability Company Act. It is not intended as legal advice. Persons forming an LLC should consult with a private attorney regarding their specific circumstances.