Texas Series LLC: What it is and How to Form One

Thinking about holding several rental properties or side businesses under one roof? A Texas series LLC can do that. It is one LLC that splits into separate “series,” and each series keeps its own assets and liabilities. Although each protected or registered series has certain independent rights and powers, it is not a separate domestic legal entity. It remains part of the parent LLC under Texas law.

To form one, you file a standard Certificate of Formation (Form 205) with the Texas Secretary of State and add a liability notice in the supplemental provisions. Then you set up each series in your company agreement. Each series then keeps its own separate records and bank account.

It sounds technical, but it is very doable. Let’s walk through the paperwork, the costs, and the mistakes to avoid.

What is a Series LLC in Texas?

A Texas series LLC is a single limited liability company that can divide itself into separate compartments called "series." Each series can hold its own property, have its own members and managers, and run its own business. If it is set up and run correctly, a debt or lawsuit against one series generally cannot reach the assets of the parent or any other series. Texas authorized series LLCs in 2009, and the rules sit in Subchapter M of Chapter 101 of the Texas Business Organizations Code (TBOC), starting at §101.601.

Think of it as one building with fireproof rooms. You file one formation document with the state, but each room is protected from a fire in the room next door.

Example: Lone Star Rentals LLC owns three houses. It puts each house in its own series: Series A (Elm St.), Series B (Oak Ave.), and Series C (Pine Dr.). If a tenant at Elm St. sues, only the assets of Series A are exposed. The Oak Ave. and Pine Dr. properties are shielded.

For a broader look at how series LLCs compare with single-member, multi-member, and other LLC structures, see our guide to the different types of LLCs.

Protected Series vs. Registered Series

Texas law changes that took effect on June 1, 2022, split Texas series into two kinds. Both protect assets the same way. The difference is whether the state has a public record of the series.

Which should you choose? If a series will hold real estate, borrow money, or sign contracts with outside parties, a registered series is often easier because banks and title companies can verify it. If privacy and cost matter more, a protected series works.

How Does a Series LLC Work in Texas?

Liability separation

Each series' debts can be collected only from that series' assets, but only if three conditions are met:

1. The parent's certificate of formation contains a notice of the limitation on liabilities.
2. The company agreement states that same limitation.
3. Each series keeps separate records that account for its own assets.

The notice in the certificate of formation doesn't have to name any specific series. That means you can file it once at formation and add series later.

What can break the shield: Commingling money between series, sharing one bank account without clear records, signing contracts in the wrong series' name, and missing paperwork.

Ownership and management

Each series can have different members, managers, and profit splits. For example, you and a partner might co-own Series A, while you own Series B alone.

Texas franchise tax

The Texas Comptroller treats a series LLC as a single legal entity. It pays one filing fee, registers once with the Secretary of State, and files one franchise tax report and one Public Information Report under one taxpayer number. The individual series don't file separately.

There's a catch: if any one series has nexus (a taxable presence) in Texas, the entire series LLC has nexus in Texas.

Federal taxes

For federal purposes, each series can generally be treated as its own entity. Many owners get a separate EIN for each series and choose a tax classification for each one. Work through this with a professional who has handled series LLCs before.

Series LLC vs. Separate LLCs: Quick Comparison

How to Form a Series LLC in Texas (Step-by-Step)

Step 1: Choose your parent LLC name

The parent name must be distinguishable from other Texas entities and include "LLC" or a similar designator. Pick a name that works as an umbrella, like "Lone Star Holdings LLC," because each series name will build on it.

Naming a registered series: Include the parent name and identify the series as registered. For example: Lone Star Holdings LLC-Series A (RS), a registered series of Lone Star Holdings LLC.

Step 2: Appoint a Texas registered agent

Every Texas LLC needs a registered agent with a physical Texas street address. One registered agent can serve the parent and every series, but confirm your agent is willing to act for a series LLC. A professional Texas registered agent service keeps your home address off the public record.

Step 3: File Form 205 with the series notice

Texas has no separate form for series LLCs. You use the standard Certificate of Formation (Form 205) and add the notice of limitation on liabilities in the Supplemental Provisions section.

Important: The Texas SOS says its online Form 205 web form isn't specifically designed for series LLCs and recommends talking to a private attorney. Many filers upload a completed PDF of Form 205 instead, so they control exactly where the series language goes.

Filing fee: $300, plus a 2.7% convenience fee if you pay by card online.

Step 4: Draft a series company agreement

Your company agreement (Texas's term for an operating agreement) is what actually creates each series. It should cover:

• The same notice of limitation on liabilities that appears in your certificate of formation

• How new series are created and named
• Which assets belong to which series
• Members, managers, and ownership percentages for each series
• Separate records and accounting for each series
• Who can sign contracts for each series
• How a series is dissolved

A standard LLC agreement template won't include these series provisions. Have a professional draft or review the agreement.

Step 5: Get an EIN for the parent and each series

Banks generally require an EIN to open an account. Because each series usually needs its own bank account, most owners get a separate EIN for each active series.

Step 6: Open a separate bank account for each series

Separate money is the backbone of the liability shield. When you open each account, bring:

• Your Certificate of Formation
• Your series company agreement
• The EIN for that series
• A resolution authorizing who can open the account

Some banks aren't familiar with series LLCs. If a large bank turns you away, local banks and credit unions are often more flexible.

Step 7: File assumed names and register series (optional)

If a series does business under its own name, file an Assumed Name Certificate for that name. The fee is $25 per series. If you want a registered series, file a certificate of registered series for $300 each.

Texas Series LLC Certificate of Formation: Sample Language

Below is sample language for the Supplemental Provisions section of Form 205. It reflects the notice required by TBOC §101.602. Have a Texas attorney review it before you file.

Supplemental Provisions For a Series Limited Liability Company

The Company may establish one or more designated series of members, managers, membership interests, or assets, including protected series and registered series, as provided in its company agreement and in accordance with Subchapter M, Chapter 101 of the Texas Business Organizations Code.
Notice of Limitation on Liabilities: Pursuant to Section 101.602 of the Texas Business Organizations Code, the debts, liabilities, obligations, and expenses incurred, contracted for, or otherwise existing with respect to a particular protected series or registered series shall be enforceable against the assets of that series only, and shall not be enforceable against the assets of the Company generally or of any other series. None of the debts, liabilities, obligations, and expenses incurred, contracted for, or otherwise existing with respect to the Company generally or any other series shall be enforceable against the assets of a particular protected series or registered series.

Leaving this notice out is one of the most damaging mistakes you can make. The state may still approve your filing, but your series won't have the protection you were counting on.

How Much Does a Texas Series LLC Cost?

Cost example: An investor with five rental properties would pay $1,500 in state formation fees to form five separate LLCs. With one series LLC and five protected series, the state formation fee is $300.

Already Have a Texas LLC? How to Add Series Provisions

You don't need to start over. An existing Texas LLC can become a series LLC. File a certificate of amendment that adds the series liability notice, then update your company agreement.

You'll also need to update your company agreement. For the full walkthrough, see how to change from an LLC to a series LLC.

Registering an Out-of-State Series LLC in Texas (Form 313)

If your series LLC was formed in another state (for example, Delaware or Wyoming) and you want to do business in Texas, you don't use the standard foreign LLC form. Instead, file Form 313, Application for Registration of a Foreign Series Limited Liability Company. The filing fee is $750.

Form 313 asks for extra information about your series structure, so Texas has notice of the liability limits between series.

Texas Series LLCs for Real Estate Investors

Real estate is the most common use for a Texas series LLC. Here's how to make it work in practice:

• One property per series. Title each property in the name of its series, not the parent.

• Talk to lenders before you buy. Conventional mortgage lenders may hesitate to lend to a series. DSCR and portfolio lenders tend to be more flexible, but confirm before you go under contract.

• Use a registered series when proof matters. A Certificate of Fact from the SOS gives title companies and lenders a public record to rely on.

• Insure each series separately. Name the correct series as the insured on each policy.

• Keep the books clean. Rent, repairs, and mortgage payments for each property should flow through that series' own account.

• Watch out-of-state property. If you own property outside Texas, courts in states without series LLC laws may not respect the shield between series. Talk to an attorney before placing out-of-state property in a Texas series.

Is a Texas Series LLC Right for You?

A series LLC may fit if you:

• Own or plan to buy 3 or more properties in Texas

• Run several business lines you want kept separate

• Are prepared to keep separate books and accounts for each series

• Have access to a CPA and attorney familiar with series LLCs

A regular Texas LLC may be simpler if you:

• Have one property or one business

• Need conventional mortgage financing

• Own assets in states that don't recognize series LLCs

• Prefer the simplest possible bookkeeping

If a single LLC is the better fit for your business, see how to start an LLC in Texas.

Get Your Texas Series LLC Set Up Right

A series LLC only protects you if the paperwork and the follow-through are done correctly. Swyft Filings can help with the pieces around it, like registered agent, EIN filing, and compliance management. Reach out to learn what else we can do for you!

Disclaimer: Swyft Filings is not a law firm. This article is for general information only and is not legal or tax advice.