What Is a Series LLC in Illinois and How It Works?

A Series LLC in Illinois is a single parent limited liability company — called the Master LLC — that can spin off any number of independent sub-units known as series, each holding its own assets and carrying its own debts. Illinois authorizes the structure under 805 ILCS 180/37-40, and the appeal is simple: a lawsuit or creditor claim against one series generally cannot reach the assets of another series or of the Master LLC itself, as long as you set the company up correctly and run it the right way.¹

What a Series LLC Is and Why People Use It

Think of the Master LLC as a shell that contains separate internal compartments. Each series inside it can hold title to property, enter contracts, grant security interests, and sue or be sued in its own name.² The structure is especially common among real estate investors who hold several properties: a tenant injury or mortgage default tied to one property stays contained within that property’s series rather than exposing the entire portfolio.

The reverse also holds. Debts of the Master LLC generally cannot reach a series’ assets unless the operating agreement says otherwise.¹

What Keeps the Liability Shield Intact

The internal shield is not automatic. Illinois conditions it on five requirements, all of which must be satisfied:

You maintain separate and distinct records for each series, tracking which assets belong to which.
Each series’ assets are held and accounted for separately from the Master LLC’s and from every other series.
The operating agreement expressly creates the series and provides for the liability separation.
The Master LLC’s articles of organization contain a notice that the company is authorized to establish series with limited liability.
Each series that wants limited liability protection has a Certificate of Designation on file with the Secretary of State.

If any one of these breaks down — if you commingle funds between series or let the bookkeeping blur, for example — a court can treat the whole arrangement as a single entity and let creditors reach across series.¹ As a practical matter, each series should have its own bank account to show real separation, and most tax professionals recommend a separate Employer Identification Number for each series to keep financial records cleanly divided.

Forming the Master LLC

Name Rules

The Master LLC’s name must include “Limited Liability Company,” “L.L.C.,” or “LLC,” cannot include terms like “Corporation,” “Inc.,” or “Limited Partnership,” and must be distinguishable from every other entity name on file with the Secretary of State.³ You can check availability through the Secretary of State’s business database before filing.

Each individual series has its own naming rule: the series name must begin with the full legal name of the Master LLC and be distinguishable from the other series. If the Master LLC is “Lakeside Holdings LLC,” a series might be “Lakeside Holdings LLC — Series 1.”¹

Registered Agent

Every Illinois LLC needs a registered agent with a physical street address in Illinois, not a P.O. box. The agent receives legal notices, service of process, and state correspondence on the company’s behalf, and can be an Illinois resident or an entity authorized to do business in the state.³ You can serve as your own, but the name and address become public record and someone has to be reachable at that address during business hours.

Operating Agreement

Illinois does not require you to file the operating agreement with the state, but a Series LLC cannot do without one. The statute conditions the liability shield on an operating agreement that expressly authorizes the series and provides for the separation of each series’ assets and liabilities.⁴ Without that language the shield does not attach, even if every state filing is in order. The agreement should also set out how each series is managed, how profits and losses are allocated, and whether debts of the Master LLC can reach series assets, since the default protection can be overridden in the agreement.

Articles of Organization

You create the Master LLC by filing Form LLC-5.5, Articles of Organization, with the Illinois Secretary of State’s Department of Business Services. The form asks for the LLC name, the principal place of business, the registered agent and office, the names and addresses of managers or members, and a statement that the company is authorized to establish series with limited liability. That series notice is what activates the statutory shield.

The standard filing fee is $150.⁵ Expedited processing costs an extra $100 and shortens the review to 24 hours (excluding weekends and holidays); standard processing typically runs about ten business days. Once approved, you get back a stamped copy of the articles, and the Master LLC can begin forming series.

Adding Each Series

Each series that needs its own liability protection requires a separate Certificate of Designation filed with the Secretary of State using Form LLC-5.40. The certificate identifies the series by name and confirms that its assets will be held separately from the rest of the company.¹ The fee is $50 per series.⁶ There is no cap on how many series a single Master LLC can create, and you can verify a series’ status through the Secretary of State’s online business database once the certificate is processed.

Annual Reports and Ongoing Costs

Illinois requires one annual report for the entire Series LLC. Individual series do not file their own. The fee, however, scales with how many series you run. The base annual report fee is $75, plus $50 for each series with an active Certificate of Designation on the last day of the third month before the company’s anniversary month.⁶ A Master LLC with four active series would owe $275.

The report is due before the first day of the LLC’s anniversary month each year. Missing the deadline triggers a delinquency penalty and can eventually lead to administrative dissolution of the entire company.

Federal Tax Treatment

Illinois treats each series as a separate entity for state purposes, but federal treatment is less settled. The IRS published proposed regulations in 2010 that would treat each series as its own entity for federal income tax purposes, meaning each series would be classified independently as a partnership (two or more owners), a disregarded entity (one owner), or a corporation (by election) under the same default rules that apply to any standalone LLC.⁷ Those regulations have never been finalized.

Most tax professionals treat each series as a separate entity in practice and obtain a separate EIN for each one. A series with two or more members would generally file its own partnership return on Form 1065; a single-member series would typically be reported on the owner’s individual return as a disregarded entity.

Dissolving One Series Without Ending the Whole Company

You can shut down an individual series without touching the rest. You file a certificate of designation with the Secretary of State identifying the series being dissolved, and the remaining series keep their liability protection.¹ The relationship does not run the other way: if the Master LLC itself dissolves under Article 35 of the Illinois Limited Liability Company Act, every series terminates with it and must wind up its affairs.

What Happens When You Operate in Other States

The biggest practical risk of an Illinois Series LLC is how other states will treat it. Only a minority of states have their own Series LLC statutes. If you operate a series in a state that does not recognize the structure, courts there may decline to honor the internal shields between your series. A court could view the whole arrangement as a single ordinary LLC, which still protects your personal assets as a member but puts every series’ assets into one pool available to creditors.

Whether a court outside Illinois must defer to Illinois law on the internal asset separation, or can apply its own rules about creditors’ access to LLC assets, has not been definitively settled in most jurisdictions. If you plan to hold assets or do business in more than one state, talk to an attorney about whether the shields will hold up outside Illinois before you rely on them.

1
Illinois General Assembly. Illinois Compiled Statutes 805 ILCS 180/37-40 – Series of Members, Managers or Limited Liability Company Interests
2
Illinois General Assembly. Illinois Compiled Statutes 805 ILCS 180 – Limited Liability Company Act
3
Illinois General Assembly. Illinois Compiled Statutes 805 ILCS 180/1-10 – Limited Liability Company Name
4
Illinois General Assembly. Illinois Compiled Statutes 805 ILCS 180/37-40 – Full Text
5
Illinois Secretary of State. Limited Liability Company Information
6
Illinois General Assembly. Illinois Compiled Statutes 805 ILCS 180 – Article 50, Fees and Other Matters
7
Federal Register. Series LLCs and Cell Companies – Proposed Rulemaking