Series LLCs vs. Holding Companies: A Modern Legal Guide for Growing Entrepreneurs

A Question was presented the other day that I would like to answer for more than just a single client.

I have noticed a rise in Small business entrepreneurs who have multiple ideas for expanding their business and come to my office thinking they want to start or convert to a corporation so they can hold everything under one business.

Given the complexity of business entity selection and the evolving nature of Series LLC law, consultation with experienced legal counsel remains essential for making informed decisions about business structure optimization.

I would like to briefly summarize my determinations to date and invite anyone who may want to scale up or expand their business: The Series LLC structure, a relatively new creation, offers small businesses significant advantages over traditional corporate holding company arrangements, particularly in terms of cost efficiency, liability protection, and operational flexibility. The ability to compartmentalize assets and liabilities within a single entity while maintaining pass-through taxation and simplified administration makes Series LLCs an attractive option for entrepreneurs managing multiple business interests or investment properties.

However, businesses considering this structure must carefully evaluate their specific circumstances, including the likelihood of seeking customers or operating outside of Alabama because some states do not recognize the Series LLC.

Additionally, there are administrative tasks that require attention, which do not apply to individual LLCs. Your own long-term growth plans will also factor into determining the best business structure for you and your strategic objectives.