Each series can have a separate bank account, but it is not required.
Separate bank accounts are often recommended for two main reasons: (1) separate bank accounts will better insulate the cash of one series from the creditors of the others, and (2) separate bank accounts make compliance (or non-compliance) with the statutory record-keeping requirements more evident. To better understand this, we first need to understand the record-keeping requirements described in the Texas Business Organizations Code (TBOC):
According to TBOC Sec. 101.602(b), the limited liability characteristics of a particular series “applies only to the extent the records maintained for that particular series account for the assets associated with that series separately from the other assets of the [Series LLC] or any other series.”
According to TBOC Sec. 101.603(b), records must be maintained “in a manner so that the assets of the series can be reasonably identified by specific listing, category, type, quantity, or computational or allocational formula or procedure, including a percentage or share of any assets, or by any other method in which the identity of the assets can be objectively determined, the records are considered to satisfy the [record-keeping requirements].”
If you’d like to have individual bank accounts for each series, you can either (1) open multiple LLC accounts (using the LLC’s EIN and Certificate of Formation) and designate each account for a specific series; or (2) obtain an EIN for each series and open the account in the name of series.
What banks make it difficult to open an account for an individual series?
Multiple clients have told us that Chase Bank will not allow a series (or even the Series LLC) to open a bank account. Bank of America is similar, but some branches will work with you (unlike Chase). We have heard that Bank of Texas and most credit unions will allow you to open a bank account in the name of a series.
FAQs
Each series should have its own name, bank account, and records to ensure clear separation of assets and liabilities.
Does each Series LLC need its own bank account? ›
Under the series LLC, owners can create an unlimited number of child series with separate assets, members and operations. Each child series or sub-LLCs should have its own bank account, name and records. If there is a lawsuit incurred by one series, the other series are protected from liability.
Do I need separate bank accounts for each LLC? ›
How many bank accounts should an LLC have? A single business checking account may suffice for smaller operations or LLCs with no employees. Otherwise, your company will want multiple business accounts that each serve different purposes — payroll, operating expenses and business taxes, for example.
Does each Series LLC need a separate EIN? ›
Does each series need to file a separate tax return? Under Texas law1, each series is not a separate entity. The IRS, however, issued a proposed regulation2 in 2010 that articulates their view that each series should be treated as a separate entity for federal tax purposes.
Do I need a separate bank account for side hustle? ›
If your side business is incorporated or an LLC, the answer is a cut-and-dry “yes, you need a business bank account.” But if it's a hobby that you work on during your spare time to pick up some extra cash, then the answer is more along the lines of “you don't have to, but you should.” Here's why!
Do series LLC files separate tax returns? ›
Each series is a separate entity for liability purposes. A Series LLC typically only has to file one tax return because the earnings and losses of the underlying series flow through to the master LLC. Furthermore, it only needs one bank account. This makes a Series LLC great for holding multiple rental properties.
How do you structure a series LLC? ›
A Series LLC consists of the “parent” or “umbrella” LLC with one or more series that are established under the parent. Each series can have characteristics that are separate from the Series LLC itself and every other series. Each series can have its own assets, members, managers, purpose, and investment objectives.
Can you use your personal bank account for an LLC? ›
There isn't a federal law saying an LLC owner must have a separate business bank account, but you may get penalized indirectly if you don't – such as potentially losing limited liability protection, and “unintentional” tax evasion.
Is it illegal to pay personal expenses from a business account LLC? ›
To put it simply, when you mix your business and personal finances, you're essentially treating your business as a personal piggy bank. 🐷 And while it's not technically against the law to make a personal purchase from your business account, it can lead to major issues with taxes, bookkeeping, and compliance.
Does an LLC need an EIN to open a bank account? ›
Having an EIN proves to your bank that you're running a legitimate business. That's why sole proprietors with employees, LLCs, partnerships and corporations are typically required to provide one when applying for a business bank account.
Currently, the IRS taxes a series LLC as a single entity that files one tax return. Just like a traditional LLC, which is also a pass-through entity, a series LLC has tax advantages that can save you money on your taxes.
Can you have multiple LLCs under one EIN? ›
You cannot use the same EIN for multiple businesses, even if they are owned by the same person. EINs are not limited, so you may apply for as many as you need. You are dividing your business into separate entities.
Which states do not recognize series LLC? ›
Alabama, Delaware, the District of Columbia, Illinois, Indiana, Iowa, Kansas, Missouri, Montana, Nevada, North Dakota, Oklahoma, Puerto Rico, Tennessee, Texas, Utah, Wisconsin, and Wyoming all allow some form of the series LLC. California does not form domestic series LLCs, but a series LLC formed elsewhere can ...
Do I need a separate bank account for each business? ›
The IRS recommends that all small business owners have separate bank accounts. While a sole proprietor—an individual who owns a business and is personally responsible for its debts—is not legally required to use a business checking account, it's still a good idea from a tax perspective.
At what point does a side hustle become a business? ›
As soon as your side hustle starts earning money, you (and the government) can consider it a business, even if it's not a full-time business.
Do all members of an LLC have to be present to open a bank account chase? ›
All General Partners must be present to open the account.
If they cannot be present, they can be pre-authorized during account opening, but will need to go to the branch, with both forms of ID, within 30 days, to be authorized.
Do series LLCs have separate operating agreements? ›
In a series, there is a parent LLC (or a master LLC) that holds separate LLCs (also called series or subsidiaries) that are each treated as a separate entity with their own bank accounts, operating agreement, asset protection, members and name.
Can a series LLC have different members? ›
Series LLCs offer flexibility in terms of ownership and management. Different series can have different members and managers, allowing investors to tailor each series to the specific needs of each property or investment group.
