How to Create a Series LLC in Missouri

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 Missouri Allow Series LLCs?

Yes, Missouri permits the formation of Series LLCs under its state laws. The authorization for Series LLCs is provided by the Missouri Revised Statutes, specifically under Section 347.186. It is essential to include specific language in the formation documents to establish a Series LLC.

How a Missouri Series LLC Works

In a Missouri Series LLC, the master LLC acts as the umbrella entity, controlling the individual series. Each series can hold its own assets, incur liabilities, and have separate members and managers. The liability of each series is isolated, meaning that the debts and obligations of one series do not affect the others. Proper recordkeeping and adherence to structural requirements are crucial to maintaining this separation.

Benefits of Forming a Series LLC in Missouri

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

Limitations and Risks of a Missouri Series LLC

• Legal Uncertainty: Some jurisdictions may not recognize the liability protections of a Series LLC, leading to potential legal challenges.
• Banking and Lending Challenges: Financial institutions may be unfamiliar with Series LLCs, complicating banking and lending processes.
• Tax Complexity: Navigating tax obligations for each series can be complex, requiring careful compliance with state and federal tax laws.

Who Should Consider a Missouri Series LLC?

A Missouri Series LLC is suitable for businesses involved in real estate, asset holding, or intellectual property management, where asset segregation is beneficial. However, for simpler business structures, a traditional LLC may be more appropriate.

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

Step 1: Choose a Name for the Series LLC

The name of the Series LLC must comply with Missouri naming requirements, including the use of "LLC" or "Limited Liability Company" as a designator. Each series should have a distinguishable name that includes the name of the parent LLC.

Step 2: Appoint a Missouri Registered Agent

A registered agent must be appointed to receive legal documents on behalf of the LLC. The agent must be a Missouri resident or a business entity authorized to do business in Missouri.

Step 3: File the Certificate of Formation

The Certificate of Formation must be filed with the Missouri Secretary of State. This document includes the LLC's name, registered agent information, and management structure. 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 to authorize the creation of series. Failure to do so may result in the inability to form separate series.

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 detail the separation of assets and liabilities among the series.

Step 6: Establish Individual Series

Individual series are created internally by the LLC. Proper documentation and recordkeeping are essential to maintain 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.

Step 8: Open Separate Bank Accounts

Separate bank accounts should be opened for each series to ensure financial separation and prevent commingling of funds.

Step 9: Comply With Missouri Tax Requirements

Each series must comply with Missouri tax obligations, including state income tax and sales tax, where applicable. Proper reporting and payment are essential.

Missouri Series LLC Filing Fees and Costs

The filing fee for forming a Series LLC in Missouri is $50 for online submissions and $105 for paper filings. Additional fees may apply for each series.

Missouri Franchise Tax and Series LLCs

Missouri does not impose a franchise tax on LLCs. However, each series must comply with state tax reporting obligations.

Ongoing Compliance Requirements for Missouri Series LLCs

Missouri Series LLCs must file an annual report with the Secretary of State and maintain accurate records for each series to ensure compliance.

Common Mistakes When Forming a Series LLC in Missouri

• Missing Required Series Language: Failing to include series authorization language in formation documents.
• Poor Recordkeeping: Inadequate documentation can jeopardize liability protection.
• Mixing Assets Between Series: Commingling assets can lead to liability issues.

Series LLC vs Traditional LLC in Missouri

A Series LLC offers asset segregation and cost efficiency, while a traditional LLC provides simplicity and ease of management. The choice depends on the specific needs and complexity of the business.

Additional Resources

• Missouri Secretary of State Main Page
• Business Division/Formation Page
• Missouri Revised Statutes
• Online Filing System
• Missouri Department of Revenue
• Contact: (573) 751-4936, corporations@sos.mo.gov

This article provides general information about Missouri LLC formation requirements under the Missouri Revised Statutes. It is not intended as legal advice. Persons forming an LLC should consult with a private attorney regarding their specific circumstances.