Garrett Sutton is a corporate attorney, asset protection expert, and bestselling author who has sold more than 900,000 books to guide entrepreneurs and investors. For more than 30 years, Sutton has assisted entrepreneurs and real estate investors by protecting their assets and maximizing their financial goals through sound management and asset protection strategies. The companies he founded, Corporate Direct and Sutton Law Center, have helped more than 10,000 clients protect their assets and incorporate their businesses. With all the uncertainty and confusion still surrounding this new entity, we consider it advisable to stick with the traditional LLC for now. Even though you may need to pay filing fees for each entity, you will be assured that the IRS, banks, other institutions, and CPAs will be familiar with the structure. And, most importantly, you can be sure your entity structure will stand up to legal scrutiny—as long as everything is set up correctly and you have kept up with the corporate formalities. • LEGAL SCRUTINY Another issue with the series LLC is that it has not yet been tested legally, even in the states that permit them. That means there is no guarantee that limited liability protection will be extended to each series until each state rules on the subject. Do you want this type of uncertainty when you are trying to protect your assets? TAX QUESTIONS To make matters even more confusing, how to deal with the series LLC in business situations is unfamiliar territory across the board. The IRS isn’t quite sure how to deal with them yet and if your CPA isn’t well versed in series LLCs (many are not), you may find yourself in trouble at tax season. The series LLC is not yet recognized in the U.S. Bankruptcy Code, so it is unknown whether a series may file for bankruptcy on its own or the entire LLC must file for bankruptcy. ADDITIONAL CONSIDERATIONS Furthermore, people have reported issues with everyday tasks such as getting an EIN for each individual series and getting separate bank accounts for each series as banks are still unfamiliar with the structure. And when it comes to financing, banks have been known to gain security on all the series—and the umbrella itself—instead of the one series seeking a loan.
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