If you’re interested in forming a series LLC in District of Columbia (DC), read on to find out how it’s done.
The limited liability company (LLC) has been an incredibly popular business structure for decades, but in the grand scheme of things, it’s still a relatively recent addition to the American business landscape.
There are actually still new variations of the LLC popping up across the country, with the most popular one being the series LLC.
The series LLC is only available in certain states, including District of Columbia (DC). A series LLC is a collection of LLCs that are grouped under one parent LLC. This enables businesses to separate different parts of the company into separate LLCs, allowing them to isolate the liabilities of each segment from the others.
Because the series LLC is still relatively new in some states, we get a lot of questions about what exactly the series LLC is, and how you can form one. That’s why we decided to write these articles, which break down how the series LLC formation process works in each state.
If you’re interested in forming a series LLC in the District of Columbia, read on to find out how it’s done.
IMPORTANT Note: While the series LLC can make a lot of sense in theory, it certainly has its advantages and disadvantages. We recommend speaking with an attorney before setting up a series LLC in D.C.
That said, if you’re looking for a time-tested way to protect yourself and personal assets as a business owner, the traditional LLC is the way to go. You can either form it yourself or through an LLC formation service.
Let’s start by briefly covering what a series LLC actually is. In general, a series LLC is exactly what it sounds like ― it’s a collection of LLCs that operate under the umbrella of a master LLC. While each LLC in the series is part of the larger company, this business structure also keeps each LLC financially insulated from the others. In theory, this means that a lawsuit against one of the LLCs should have no effect on the others in the series.
Each LLC in a series has the same limited liability protections that a standard LLC has, meaning that if you’re sued, creditors can only come after your business assets rather than pursuing your personal possessions. While a series LLC does still protect your personal car, house, bank accounts, etc., it also protects the other LLCs in the series from the lawsuit. In other words, creditors can only pursue the assets of one LLC, rather than the entire series.
The first step to forming any type of LLC is to first select a name for your new business. You should choose a name that is memorable, and also one that briefly describes what your business does, or what your organization stands for. You will also need to run a business name search to make sure your chosen name is available in the District of Columbia, and isn’t already being used by another company.
Also, you’ll need to include either the phrase “limited liability company” or the letters “LLC” in your business name. Finally, you cannot include any terms that refer to specific business types ― like “bank” or “hospital” ― unless you actually run one of those businesses, and you also can’t use any words that refer to other business types, such as “incorporated” or “inc.”
Additionally, it’s important to note that in the District of Columbia, each segment of your series LLC must include the parent LLC’s name. However, each LLC in your series must have a different name from the others. For example, if your parent LLC is called “Scott’s Foods,” and you want to differentiate your fine-dining LLC from your fast-casual LLC, you could name these segments “Scott’s Foods Dining LLC” and “Scott’s Foods Fast LLC.”
For more info on naming an LLC ― whether that’s a series LLC or a traditional LLC ― check out our comprehensive guide to naming an LLC.
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Next, you’ll need to choose a registered agent for your series LLC. The registered agent must have an office located in the District of Columbia, and they must be available to receive document deliveries from the state during all standard business hours.
You don’t need to worry about designating different registered agents for each segment of the LLC, as you can have the same registered agent for every LLC in the series if you want to.
In the District of Columbia, the document used to create a series LLC is the same as the form used for a traditional LLC — “Articles of Organization for Domestic Limited Liability Company.” The only difference in the preparation of this document is that you’ll need to include a designation that your company is a series LLC in Section 6 (Miscellaneous provisions).
The District of Columbia Articles of Organization form is a relatively simple document that requires basic information about your business. You’ll need to tell them your business name and address, along with your registered agent’s name and address. You will also indicate the date your formation will take effect, indicate that your LLC is a series, and tell them the name and address of each of your members and/or managers.
Finally, you just need your LLC organizer to sign and date the form. At this point, you’re ready to file your Articles of Organization with the D.C. Corporations Division, along with your $220 formation fee.
While your Articles of Organization form officially creates your parent LLC, you will still need to file the “Certificate of Series Designation for Domestic Limited Liability Company” form to create the individual LLCs in your series. You don’t need to file a separate form for each LLC, but rather file one form for all of the LLCs within the series.
The Certificate of Series Designation only requires you to include the name and address of your parent LLC, the date that parent LLC was created, the name of each LLC segment within your series, the effective date of this filing, and the name/signature of your LLC organizer.
Once you’ve finished filling out this form, you can file it with the Corporations Division for a fee of $220.
Next, you should obtain a federal tax ID number known as an Employer Identification Number (EIN) from the Internal Revenue Service for each LLC in your series. The EIN is essentially a Social Security Number for your business, as it is a nine-digit numerical code that you can use to identify your business on tax forms, and it also helps you open business bank accounts and hire employees.
It’s quite easy to get an EIN from the IRS. All you need to do is fill out the free form located on the IRS website, and you’re good to go. You will receive your number immediately upon filing.
The District of Columbia doesn’t strictly require traditional LLCs to have operating agreements, but the way their series LLC laws are phrased, we believe they are required of series LLCs. This is due to the fact that the district has some requirements for the information they want included in a series LLC’s operating agreement. Obviously, if you didn’t need an operating agreement, they wouldn’t have requirements for its content, would they?
Even if it wasn’t an actual legal requirement, we would still strongly recommend that all of our readers create this important document. An operating agreement describes many aspects of how your series LLC will operate. In this agreement, you’ll outline what the different segments of your series LLC are, indicate the roles of each member/owner, detail the owners’ voting rights, and explain the financial contribution and allocation plans.
You should also indicate whether you want your business to be managed by its members or by a manager, discuss how an owner can be replaced if necessary, and outline a dissolution procedure in case you ever need to close up shop.
In addition, the operating agreement is a great place to describe the purpose of each individual LLC in your series. You probably don’t need to create a separate operating agreement for each LLC, but it’s a good idea to explain what each one is for in this document.
It’s crucial for any LLC to open a business bank account, as this helps you maintain the separation of personal and business finances that is required of all formal business entities. However, there’s an extra layer to this step for series LLCs, as you’ll need to open a bank account for the series’ parent LLC, as well as for each of the separate LLC segments under its umbrella.
If you fail to open a separate bank account for each segment, you will run the risk of losing the isolated liability of each LLC in the series. You need to be able to prove that these segments are truly separate if you want to maintain the liability shields between them.
In addition, this would be a good time to either hire an accountant or purchase accounting software for your series LLC. For traditional LLCs that don’t have particularly complex accounting needs, it’s usually sufficient to use accounting software, but a series LLC is a bit more complicated, and we therefore prefer hiring an accountant to make sure everything is done correctly.
The vast majority of business entities in the District of Columbia are required to acquire a Basic Business License from the Business Licensing Division. You can learn more about this requirement by visiting the D.C. Business Center website.
Additionally, the district has a variety of professional licenses that are required based on the industry you operate in. For more information on these licenses, check out the Registration and Licensing Services page on the D.C. Department of Consumer and Regulatory Affairs website.
Keep in mind that you may also need to get licenses or permits from your county or municipal government agencies, so make sure to check with the relevant entities in these jurisdictions.
All business entities operating in the District of Columbia are required to file a biennial report with the Corporations Division. This report must be filed by April 1st of your first full year in operation, and every other year after that.
This is a simple report which keeps the state updated regarding some crucial details of your business, like your business name and address, and the names and addresses of your owners or managers. Once you’re ready to file the report, you can submit it and your $300 filing fee to the Corporations Division.
When forming a series LLC, you have three options. You can tackle the DIY route, you can hire an attorney, or you can use a reputable online business formation service. The DIY option can be quite the hassle, and hiring a lawyer is obviously very expensive. That’s why we prefer hiring a business formation service.
These companies provide convenience and peace of mind that you don’t get from the DIY route, and they’re also much cheaper than hiring a lawyer to form your business. However, compared to the dozens of services that form traditional LLCs, there aren’t nearly as many companies offering series LLC formations.
Fortunately, one of our favorite LLC formation providers does offer series LLC formations, and that’s Northwest Registered Agent. They will not only form your series LLC, but their industry-best registered agent service (included at no extra charge) includes local scanning of every document they receive on your behalf. They also have the best customer support available for LLC formation services.
The process of forming a series LLC in the District of Columbia isn’t too terribly different from the formation process for a standard LLC. However, you do need to make sure that you designate your business as a series LLC in Section 6 of the Articles of Organization, and also that you file the Certificate of Series Designation to create your LLC segments.
At the end of the day, if you want to skip some of the hassles and worries that come with forming your own District of Columbia series LLC, you always have the option to hire Northwest Registered Agent to handle it for you.
We hope this article helped you develop your understanding of how to form a series LLC in the District of Columbia!
How to Form a Series LLC
We break down the Series LLC formation process in each state that allows it. View our guides below.
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