A Texas Series LLC is one limited liability company, formed with the Secretary of State, that can create multiple internal divisions called “series.” Each series can own property, sign contracts, and run its own line of business, and the debts of one series stay walled off from the assets of every other series and the parent company. The structure is authorized by Chapter 101, Subchapter M of the Texas Business Organizations Code, and it’s popular with real estate investors and operators who want the separation of many LLCs without paying to form and maintain each one.1State of Texas. Business Organizations Code Chapter 101 – Subchapter M The liability shield only holds if three specific conditions are met, and since 2022 Texas recognizes two different kinds of series, which affect how you set each one up.
How the Structure Works
A Series LLC has two layers. The top layer is the master LLC, which is the legal entity you form with the Texas Secretary of State. Underneath the master, you create individual series through the company’s operating agreement (Texas law calls it a “company agreement”). Each series can own property, enter contracts, and conduct a distinct business.1State of Texas. Business Organizations Code Chapter 101 – Subchapter M
The flexibility goes beyond asset separation. Each series can have its own members, managers, classes of membership interests, and voting rights, and none of those people need to participate in any other series.1State of Texas. Business Organizations Code Chapter 101 – Subchapter M One series might hold a commercial property with three investors, while another holds residential rentals under entirely different ownership. Both live inside the same master LLC and operate independently.
Protected Series and Registered Series
Since June 1, 2022, Texas recognizes two kinds of series. Both carry the same internal liability shield. They differ in how you create them and in what they can do with lenders.
A protected series is created entirely through the company agreement. There is no state filing and no state fee. For many real estate investors this is enough, because lenders secure interests in real property through county deed-of-trust recordings rather than Secretary of State filings.
A registered series is formed by filing a certificate of registered series with the Secretary of State at a cost of $300. The state assigns the series its own filing number, which a lender needs to properly file a UCC lien against non-real-estate collateral such as inventory, equipment, or receivables. The name of a registered series must include the words “registered series” or the abbreviation “RS.”2Office of the Texas Secretary of State. Formation of Texas Entities FAQs3State of Texas. Business Organizations Code Chapter 101 – Section 101.623
If a series will only hold real estate or won’t need to borrow against personal property, a protected series is usually enough. If borrowing against business assets is part of the plan, register the series.
The Three Conditions for the Liability Shield
The point of the whole structure is keeping one series’ debts away from the assets of the others and of the master. Texas gives you that protection only when all three of these are true:4State of Texas. Business Organizations Code Chapter 101 – Section 101.602
- The assets of each series are accounted for separately from the assets of the master company and every other series.
- The company agreement states that debts of a series are enforceable only against that series’ assets, not against the master or any other series.
- The master LLC’s certificate of formation includes notice of that same limitation.
Miss any one of these and the shield fails, which means creditors of one series could potentially reach assets held in another series or in the master. The certificate of formation notice is valid even if no series exists yet, and it doesn’t need to name any specific series or use the words “protected” or “registered.”5State of Texas. Business Organizations Code Chapter 101 – Section 101.604
What It Costs and How to File
You form the master Series LLC by filing a Certificate of Formation (Form 205) with the Texas Secretary of State for $300.6Office of the Texas Secretary of State. Form 205 Instructions for Certificate of Formation – Limited Liability Company The certificate must identify the entity name (including “LLC” or an equivalent), a registered agent with a physical Texas address, the management structure, the initial governing persons, and the series liability notice described above.
Once the Secretary of State issues a Certificate of Filing, the master entity exists. Protected series are then created internally through the company agreement with no additional state filing. Each registered series requires its own certificate of registered series at $300.2Office of the Texas Secretary of State. Formation of Texas Entities FAQs
Keeping the Shield Intact
Separation is not a one-time act. The statute makes the entire protection depend on separately maintained records for each series.4State of Texas. Business Organizations Code Chapter 101 – Section 101.602 Each series needs its own books tracking income, expenses, and property ownership. Without that, a court could disregard the series boundaries and let creditors of one unit reach the assets of others.
Texas is flexible about how you show separation. Records satisfy the statute as long as each series’ assets can be “reasonably identified” by specific listing, category, type, quantity, or a computational formula such as a percentage share.4State of Texas. Business Organizations Code Chapter 101 – Section 101.602 A separate bank account for each series is the cleanest way to avoid commingling. Running several series through one account makes it much harder to prove the assets were truly kept apart if a creditor challenges the shield.
When moving an asset between the master and a series, or between two series, document the transaction the way you would a deal between unrelated parties: date, asset, value, reason. A transfer that leaves the sending series unable to pay its existing debts could be challenged as a fraudulent transfer.
Federal and Texas Taxes
The IRS has not finalized how to classify series within a Series LLC. Proposed regulations published in 2010 would treat each series as a separate entity for federal income tax purposes, with each series independently choosing its own classification as a disregarded entity, partnership, or corporation. Most tax professionals already follow that approach and obtain a separate EIN for each series with its own members or employees. The proposed regulations don’t yet address federal employment tax questions such as wage bases and payroll responsibilities across series, so those remain unresolved.7Federal Register. Series LLCs and Cell Companies Because these are still proposals, working with a tax professional familiar with Series LLCs matters.
Texas imposes its franchise tax on all LLCs doing business in the state, and Series LLCs are specifically included. For franchise tax purposes, each entity that exists as a separate legal entity under Texas law files its own franchise tax report, regardless of federal income tax treatment.8Texas Comptroller of Public Accounts. 2026 Franchise Tax Instructions For the 2026 report year, the no-tax-due threshold is $2,650,000 in annualized total revenue.9Texas Comptroller of Public Accounts. Franchise Tax Entities under the threshold owe no tax, but they must still file either a Public Information Report (Form 05-102) or an Ownership Information Report (Form 05-167) with the Comptroller. Missing that annual filing can put the LLC’s good standing at risk.