What Is a Series LLC in Texas? Structure, Liability, and Taxes

A Series LLC in Texas is a single limited liability company, formed with one Certificate of Formation, that can create internal divisions called series. Each series can hold its own assets, take on its own debts, and have its own members and managers, and if the structure is set up correctly, a creditor of one series generally cannot reach the assets of another series or of the parent LLC. The structure is authorized under Subchapter M of the Texas Business Organizations Code and is often used to run several ventures, or hold several properties, without paying to form and maintain a separate LLC for each.

How the Structure Is Organized

Picture a parent LLC at the top with any number of internal units beneath it. Section 101.601 of the Business Organizations Code lets the company agreement establish one or more designated series, each with separate rights, duties, members, managers, and business purposes.¹ One series might hold a portfolio of rental houses while another runs a consulting practice, all under the same parent.

A series is not just a bookkeeping line. Under Section 101.605, a series can sue and be sued in its own name, buy and sell property (including real estate), grant security interests in its assets, and become a member or partner in another organization.² It behaves, in day-to-day operation, much like its own small company.

How the Liability Shield Works

The appeal of this structure is internal asset protection. Section 101.602 says the debts and obligations tied to one series can only be enforced against that series’ assets, and that the debts of the parent LLC or of another series cannot reach a particular series’ assets either.³ The walls run in both directions.

The shield only applies if three conditions in Section 101.602(b) are all satisfied:

Each series keeps records that account for its assets separately from the parent LLC and from every other series.
The company agreement contains the required statement about the liability limitations between series.
The Certificate of Formation filed with the Secretary of State includes a notice of those same liability limitations.

Miss any one of these and a creditor has a strong argument that the series are not really separate. The record-keeping piece is where most owners slip, and courts are not forgiving when a business claims internal shields but keeps sloppy books.

Protected Series and Registered Series

Senate Bill 1523, effective June 1, 2022, split Texas series into two types.¹ The choice between them matters most when you deal with banks and lenders.

Protected Series

A protected series is created inside the company agreement with no separate state filing.⁴ It is cheap and quick, but because there is no public record of it, third parties have no easy way to confirm it exists. Series created before June 1, 2022, are classified as protected series.

If a protected series does business under a name that does not include the parent LLC’s full legal name, the parent must file an assumed name certificate under Chapter 71 of the Texas Business and Commerce Code. That requirement came in through Senate Bill 1514, effective September 1, 2023.⁴

Registered Series

A registered series is formed by filing a Certificate of Registered Series with the Secretary of State, which creates a formal public record. The certificate must state the parent LLC’s name and the registered series’ name, and the series’ name must include the parent LLC’s full legal name along with any abbreviation or phrase required by Section 5.0561.⁵ All members of the registered series must sign the certificate, or if there are none, all of its managers.⁶ Once filed, the state issues a certificate of existence, which is what most banks and lenders want to see before opening an account or extending credit to an individual series.

Forming the Parent LLC

You start by filing a Certificate of Formation with the Texas Secretary of State. There is no dedicated Series LLC form; you use the standard Form 205 and add the required series language in the supplemental text area.⁴ The filing fee is $300.⁷

That supplemental text must give notice of the liability limitations required by Section 101.602. Without it, the shield does not apply.³

Alongside the state filing, you need a company agreement that authorizes series and carries the matching liability-limitation language. The company agreement is not filed with the state, but it is the backbone of how the series are governed: how assets are allocated, who manages what, and how decisions get made inside each unit.

Keeping the Shield Alive

Section 101.602(b)(1) conditions the whole protection framework on each series maintaining records that account for its assets separately from the parent LLC and every other series.³ In practice, that means a separate bank account for each series, a separate set of books, and property titles and contracts that name the specific series involved rather than just the parent LLC.

Commingling is the fastest way to lose the internal protection. If a creditor can show money flowing freely between series accounts, or property titled to one series being used to pay another’s debts, a court can treat everything as one pot. The paper trail matters more than the structure on paper.

Federal Tax Treatment

The IRS has not issued final regulations for Series LLCs, but proposed rules published in 2010 are the framework most tax professionals follow. Under those proposed regulations, each series is treated as its own entity for federal tax purposes, and then classified under the standard entity rules that apply to any business.⁸

A series with one owner defaults to a disregarded entity, taxed like a sole proprietorship. A series with two or more owners defaults to a partnership. Either can elect corporate taxation by filing Form 8832. Each series treated as a separate tax entity generally needs its own Employer Identification Number. A disregarded-entity series with no employees or excise tax obligations can use the owner’s taxpayer identification number, though most will want a separate EIN for banking and reporting.⁹

The IRS proposed regulations do not address employment tax treatment for series, so owners running payroll out of individual series should work through the setup with a tax professional.¹⁰

Texas Franchise Tax

For franchise tax, Texas treats the Series LLC as a single legal entity. The parent and all its series file one franchise tax report, not one per series.¹¹ For the 2026 report year, entities with total revenue at or below $2.65 million owe no franchise tax.¹²

That single-report rule is a real cost advantage over running the same ventures as separate LLCs, which would each have their own filing. The flip side: because the revenue of all series combines for the no-tax-due threshold, five profitable series can push a parent past $2.65 million even if no single series would get there alone.

Banking and Loans for Individual Series

Opening a bank account or getting a loan for a single series has historically been the biggest practical pain point. Banks need to verify that an entity legally exists, and a protected series has no public filing to point to. That is why the 2022 legislation created registered series: the state-issued Certificate of Registered Series gives banks and lenders something they can verify, much the way a standalone LLC’s Certificate of Formation does.

If a series needs its own account, line of credit, or loan, registering it is usually the practical move despite the extra filing. A protected series can in theory open accounts, but expect more friction and more documents from compliance; some institutions simply will not open an account for a protected series without a state certificate of existence. Each series with its own account will also need its own EIN, since using the parent’s EIN would undermine the separate-records requirement the shield depends on.

1
State of Texas. Texas Business Organizations Code 101.601 – Series of Members, Managers, Membership Interests, or Assets
2
State of Texas. Texas Business Organizations Code Chapter 101 – Limited Liability Companies – Section 101.605
3
State of Texas. Texas Business Organizations Code Chapter 101 – Limited Liability Companies – Section 101.602
4
Office of the Texas Secretary of State. Formation of Texas Entities FAQs – Section: Series LLCs
5
State of Texas. Texas Business Organizations Code Chapter 101 – Limited Liability Companies – Section 101.626
6
State of Texas. Texas Business Organizations Code 101.623 – Filing of Certificate of Registered Series
7
Office of the Texas Secretary of State. Form 205 – Certificate of Formation – Limited Liability Company
8
Federal Register. Series LLCs and Cell Companies – Proposed Rule
9
Internal Revenue Service. Single Member Limited Liability Companies
10
Internal Revenue Service. Collecting from Limited Liability Companies
11
Texas Comptroller of Public Accounts. Taxable Entities – Franchise Tax Frequently Asked Questions
12
Texas Comptroller of Public Accounts. Texas Franchise Tax Report Forms for 2026