Texas Series LLC: How Series and Protected Series Work

A Texas series LLC lets you operate multiple business lines, investment portfolios, or rental properties under a single LLC while keeping each one's assets and liabilities separate. It sounds like a workaround, and in some ways it is. But it's also a powerful legal structure that Texas law explicitly allows, and if you set it up correctly, it can save you filing fees, paperwork, and the complexity of managing dozens of separate entities.

Here's what you need to know about how series LLCs work in Texas, what separates protected series from registered series, and what it takes to actually get the liability shield you're counting on.

What Is a Series LLC and Why Use One?

A series LLC is a single LLC that contains multiple series, each with its own assets, liabilities, and sometimes its own members. Think of it as a holding company structure, but without the overhead of forming separate legal entities.

Real-world examples: A real estate investor might use a series LLC to hold ten rental properties, with each property as its own series. A business owner might create separate series for different product lines or service divisions. A venture might establish series for different investment opportunities, each managed by different co-investors.

The payoff is operational and financial. You file one LLC with the Texas Secretary of State, pay one filing fee (currently $300), and one annual franchise tax filing instead of managing multiple entities. Each series can have its own separate bank account and separate records. The liability of one series does not automatically flow to another series or to the parent LLC, provided you follow the rules.

The catch: that liability separation is not automatic. It only works if your records, your company agreement, and your Secretary of State filing are all properly structured. Get one of these wrong and the series protection falls apart.

The Two Types: Protected Series vs. Registered Series

Texas recognizes two kinds of series LLCs under Business & Organizations Code sections 101.601 to 101.636. The distinction matters, especially if you're adding series after your initial LLC formation.

Protected Series

A protected series is created entirely within your company agreement. It requires no separate filing with the Texas Secretary of State. You create it by stating in your company agreement that the LLC will be series-based and describing how the series work, how assets are segregated, and how the series' liabilities are isolated.

Because there's no separate filing, protected series can be added, modified, or removed simply by amending your company agreement. You do not pay a separate fee to the Secretary of State for each protected series you create. This makes protected series the lower-cost option when you need flexibility and do not need a public record of each series' individual identity.

Protected series suit owners who want internal separation of properties or revenue streams without a public filing for each one.

Registered Series

A registered series is created by filing a Certificate of Registered Series with the Texas Secretary of State, under section 101.623. Each registered series you create requires a separate filing and a separate fee. Check the current SOS fee schedule for the filing fee; it is separate from the LLC formation fee.

Because each registered series has its own Secretary of State filing, it has a distinct public identity. That can be important if a series needs to enter into contracts in its own name, obtain its own business licenses, or be clearly identified to third parties as an entity with its own assets and liabilities.

A registered series can make sense when you want each series to appear on the public record.

How to Protect Liability: The Three Requirements

Here is where most people stumble. Simply creating a series in your company agreement or filing a registered series certificate does not automatically give you liability protection. You must satisfy three conditions, all at once.

1. Separate Accounting and Records

Each series must keep separate accounting records and account for its own assets and liabilities distinctly. This means separate bank accounts, separate general ledgers, and clear documentation of which assets belong to which series. If you commingle funds or fail to track which series owns which property, courts can ignore the series structure and hold the parent LLC or other series liable for one series' debts.

This is not optional bookkeeping. It is the foundation of the protection. If you do not have it, the series structure will not hold up if a creditor challenges it.

2. Company Agreement Must State the Limitation

Your company agreement must explicitly state that the LLC will be series-based and that the debts or liabilities of one series are not binding on other series or on the parent LLC. The agreement should describe how assets are allocated to each series and should reserve the right to manage each series' business independently.

For registered series, you also need to file the Certificate of Registered Series with the Secretary of State. But the company agreement is your first line of defense, so it must be clear and comprehensive.

3. Certificate of Formation Must Include the Notice

Your Certificate of Formation must contain a notice that the LLC will operate as a series LLC. This is required under Business & Organizations Code section 101.602(b). The notice alerts third parties that the LLC may have series and that liabilities may be allocated among them.

If you form a regular LLC without this notice, you cannot later add series and expect the protection to work. The notice must be in place from formation, or you need to amend your Certificate of Formation and refile it with the Secretary of State to add the series notice.

All three of these pieces must be in place. Missing one means no protection.

A Critical Distinction: Series Are Not Separate Entities

Under Texas law, a series is not a separate legal entity from the LLC itself. This point matters for contracts, title, and tax filings. A series has the rights, powers and duties that the statute gives it, but it is not a separate domestic entity. The LLC is the entity; the series is a division of that entity with protected assets and liabilities.

What does this mean in practice? When a series enters into a contract or takes title to real property, it is typically done in the name of the LLC, often denoted as "Parent LLC, on behalf of Series Name" or similar language. The title company, lender, or counterparty is contracting with the LLC, but the terms of that contract and the title policy may note the series designation to flag the segregation.

This is why you need to work with a title company and possibly an attorney when a series holds real property. They need to understand the series structure and ensure the deed, title policy, and any liens properly reflect the series designation so that the liability protection is effective.

Tax and Title Considerations

Two areas demand professional guidance before you finalize your series structure.

Franchise Tax Treatment

Texas imposes a franchise tax on most business entities, not an income tax. The no-tax-due threshold for 2026 and 2027 is $2,650,000 in total revenue. Entities at or below that threshold owe no tax but must still file a Public Information Report with the Texas Comptroller of Public Accounts by May 15 each year.

How your series are treated for franchise tax purposes is not settled in this guide. A series might be taxed as a single entity (all series combined) or treated individually depending on the structure. Confirm this with the Comptroller before you structure your series, especially if you are operating near the no-tax-due threshold or if different series have different revenue levels. The tax consequence could be material.

Holding Title and Deed Conventions

When a series holds real property, the deed and title insurance policy must be structured to reflect the series designation and preserve the liability protection. Title companies and county recorders have different practices and levels of familiarity with series LLCs. You should work with a Texas title company and an attorney experienced in series LLCs to ensure that the deed conveys to the LLC on behalf of the series, that the title policy is issued in the series' name (or in the LLC's name with a clear series designation), and that any future liens or encumbrances note the series assignment.

This is not something to DIY. If title is held incorrectly, you lose the liability protection for that property, and you may create confusion for future sales or refinancing.

Formation Steps for a Series LLC

To form a series LLC in Texas, follow these basic steps:

1. Draft a comprehensive company agreement. This agreement must spell out the series structure, how assets are allocated, how liabilities are isolated, and how the business of each series will be managed. Have an attorney review it.
2. File a Certificate of Formation with the Texas Secretary of State. The certificate must include the notice that the LLC will operate as a series LLC under section 101.602(b). File online through SOSDirect at https://direct.sos.state.tx.us/acct/acct-login.asp, by mail, or in person. The filing fee is $300. Processing times vary; electronic filing is fastest.
3. If using registered series, file a Certificate of Registered Series for each series. Check the SOS fee schedule for the filing fee. Again, this is only for registered series, not protected series.
4. Establish separate records for each series. Open separate bank accounts, maintain separate general ledgers, and document asset allocations clearly.
5. Obtain an Employer Identification Number (EIN) for the LLC and, if needed, for each series. Ask your CPA whether any series needs its own EIN.
6. Register with the Texas Comptroller for franchise tax and sales tax. File your first Public Information Report by May 15 even if you owe no franchise tax.
7. For series holding real property, work with a title company and attorney to ensure proper deed and title conventions.

Key Takeaways

A series LLC is a legitimate, cost-effective way to operate multiple business lines or hold multiple assets under one LLC while protecting each series' assets from the others' liabilities. But that protection only works if you follow three mandatory steps: maintain separate accounting records for each series, state the liability limitation in your company agreement, and include the series notice in your Certificate of Formation.

If you plan to hold real property in a series, work with a Texas title company and attorney to ensure deeds and title policies properly reflect the series structure. If your series will involve multiple members or different revenue levels, confirm the franchise tax and EIN treatment with the Texas Comptroller and your CPA before finalizing the structure.

A series LLC can be a smart move. It can also backfire if you skip steps or assume the protection is automatic. The cost of getting it right upfront, with professional help, is far lower than the cost of losing that protection in a lawsuit.

Disclaimer

This article is informational only and is not legal or tax advice. Series LLCs involve complex questions of Texas law, liability, tax treatment, and title conventions. Consult with a qualified Texas business attorney and a CPA before forming a series LLC or adding series to an existing LLC. The Texas Secretary of State, Texas Comptroller of Public Accounts, and a title company can also answer specific questions about filings, tax treatment, and title practices.