Categories

Pros and Cons of Series LLCs for Illinois Landlord

ILLINOIS REAL ESTATE INVESTOR ATTORNEYS: SERIES LLC ATTORNEYS

What is a Series LLC?

 A Series LLC is a special form of a Limited Liability Company that allows you to form a “parent” company that functions like an umbrella organization over multiple subsidiary LLCs. These Subsidiary LLCs, or “cells” as they are commonly referred to, are all part of the same Parent LLC, but have limited liability protection from each other. The goal of a Series LLC is to separate assets so that the debts and obligations of one asset cannot infect other assets of the same company. Each property that a landlord acquires is held in a separate Series under the parent LLC, and if a lawsuit arises in connection with one of the properties, the other properties are not at risk. It is best understood using a visual, which is displayed below.

Pros to starting a Series LLC

There are many advantages to starting a Series LLC, especially for rental properties. By setting up each property as its own Series in a Series LLC, investors can reduce liability, minimize expense, and consolidate federal income tax preparation.

By creating a Series LLC for multiple rental properties, you significantly reduce your liability. If one Series gets sued, other Series are not liable. For example, if someone falls and becomes injured at Residential Rental Property 1, only the assets of the Series set up for this individual property are at risk. No other properties within the ParentCo, LLC will be affected.

A Series LLC also helps to minimizes expenses. No matter how many properties are under the Parent Company, the business pays only one formation filing fee instead of paying a filing fee for each LLC created for each individual property. This can drastically save money for landlords who own multiple properties as it gets very expensive to keep filing for new LLCs.

Furthermore, a Series LLC for rental properties consolidates federal income tax preparation. With a properly structured Series LLC, all of the Series’ taxes can be reported on a single tax return for the Series LLC. This creates ease and peace of mind for landlords when it comes time to doing taxes.

 

Cons to starting a Series LLC

Although typically the benefits greatly outweigh the costs of creating a Series LLC, there are still some cons associated with it. First and foremost, not all states allow Series LLCs. Fortunately, Illinois is one of the states that allows them.

The cost of formation is also higher than creating a regular LLC, but for landlords with multiple properties, it is cheaper to create one Series LLC than to create one LLC for each separate property.

Keeping up with current laws and regulations is another draw-back of Series LLCs. Each state has different laws surrounding Series LLCs, so it is important to keep up on Illinois Laws and Procedures to ensure you are staying compliant and lawful.

Call Sean Robertson and Gateville Law Firm today at 630-780-1034 for a telephone or zoom consultation.

 SERIES LLC LAWYERS FOR CHICAGO SUBURBS

Gateville Law Firm is a Real Estate Law Firm that concentrates in representing Landlords and Rental Property Owners. Our Real Estate Lawyers have a niche in the following areas of Real Estate Law:

  • - Real Estate Asset Protection including the Use of Parent and Subsidiary Companies for Real Estate Investments
  • - Real Estate Closings for Investors and Landlords
  • - Set-up and formation of Private Land Trust
  • - Coordination of Estate Planning and Asset Protection Planning
  • - Formation of LLCs and Series LLCs
  • - Landlord Evictions for Real Estate Property Owners
  • - Estate Planning for Real Estate Landlords and Property Owners
  • - Flipping Properties and Wholesaling Consultation Planning

Our Law Firm services the following areas of Chicago and the Suburbs of Chicago. We help people in the following areas:

  • - DuPage County (Lombard, Wheaton, Naperville, Lisle, Glen Ellyn, Warrenville, Downers Grove, Oak Brook, West Chicago, Carol Stream, Bloomingdale, Elmhurst, Villa Park, Darien, Wood Dale, Clarendon Hills)
  • - Kendall County (Yorkville, Newark, Bristol, Plainfield, Joliet, Plano, Montgomery, Aurora, Minooka, Oswego, & Boulder Hill)
  • - Kane County (Aurora, Batavia, Elburn, St. Charles, Geneva, Elgin, Pinegrove, Sugar Grove, Carpentersville, Hampshire & N. Aurora)
  • - Will County (Aurora, Naperville, Plainfield, Joliet, Shorewood, Lockport, Bolingbrook, Romeoville, Channahon, Minooka, Wilmington, Crest Hill, Crete, Homer Glen, New Lenox, Manhattan, Peotone, Elwood, Beecher, Preston Heights, Park Forest, & Willowbrook)
  • - Cook County & Chicago
  • - DeKalb County, LaSalle County, and Grundy County
CALL YOUR REAL ESTATE LANDLORD AND
ASSET PROTECTION LAWYERS AT 630-780-1034

Helpful? Share with others.