Resources

Client Alerts, News Articles, Blog Posts, & Multimedia

Everything you need to know about BMD and the industry.

A New Formation Solution – is the SSLC Right for Your Business?

Client Alert
March 4, 2021

In early January 2021, Ohio adopted Senate Bill 276 which established a Revised Limited Liability Company Act (“ORLLCA”) as Ohio Revised Code Chapter 1706, which effectively replaces the current Ohio Limited Liability Company Act (Ohio Revised Code Chapter 1706). The ORLLCA will become effective on January 1, 2022.

One of the principal changes within the ORLLCA is the ability to establish “series LLCs”. Ohio becomes the 15th state to adopt a “series LLC” (“SLLC”). The below FAQs will help you better understand the mechanics and nuances of a series LLC.

Is forming a Series LLC right for you?

SLLCs provide unique benefits for individuals and entities. If you own multiple businesses, the SLLC structure can assist with minimizing risk and limiting exposure to liabilities with respect to certain assets held by SLLC.

  1. What is a Series LLC?

The formation of the SLLC was introduced in Delaware in 1996 by top business lawyers in the state. This was prompted by business owners who wanted to form a unique entity that consisted of separate, individual interests but had the same asset and liability protection as the traditional limited liability company (“LLC”). Due to the rising popularity of SLLCs in Delaware, many states have adopted similar statutes. Synonymous with Delaware law, a SLLC in Ohio can establish, through its operating agreement, multiple divisions or “series” with separate assets, purposes, business objectives, members, and ownership interests. Each series is legally separate from one another and is only liable for its own debts and obligations. In short, each series operates similar to an independent subsidiary under the master limited liability company.

    2. How is it different from a traditional LLC?

The traditional LLC protects the owners from liability – but, in an effort to diversify risk within an entity structure – many entities form an “umbrella” of LLCs. The umbrella generally consists of a parent LLC and several subsidiary LLCs under the parent LLC’s control.

The SLLC is a variation of the traditional LLC and offers additional simplicity and flexibility to a business owner. The SLLC offers reduced setup and maintenance costs because only one Secretary of State filing is needed, regardless of how many series are a part of it. The most significant difference between these two types of entities is the enhanced liability and asset protection offered by the SLLC. With an SLLC, an owner no longer has to form the “umbrella” structure of several LLCs. So long as the entities with the SLLC adhere to the rules of the ORLLCA, the liabilities of the master LLC are not enforceable against any series that is a part of it and the liabilities of each series are not enforceable against another series.

    3. What types of businesses would benefit from the SLLC?

The SLLC structure can be beneficial for many different types of business owners. Specifically, real estate investors who own investment properties can utilize the SLLC structure to diversify risk within a portfolio. This structure is extremely valuable for business owners who have capital and other assets invested in multiple segments of an LLC and wish to have those assets protected.

    4. What are the drawbacks?

Since the SLLC structure is relatively new and only 14 other states permit their formation, there is little guidance by the IRS and state tax departments on the tax treatment of the SLLC. As such, there are tax risks associated with the formation of a SLLC and individuals and entities should consult their tax advisors regarding such risks.

To explore if utilizing and/or forming a SLLC will be advantageous for you or your business(es), please contact BMD Corporate and Mergers & Acquisitions Attorney Michael D. De Matteis, Esq. at mddematteis@bmdllc.com.

business and corporate lawMichael D De MatteisOhio Revised Limited Liability Company ActSeries LLC
Client Alert

Interim Final Rule for Surprise Billing

July 12, 2021In an effort to implement the new bipartisan No Surprises Act, on July 1, 2021, the Department of Health and Human Services (HHS), along with the Departments of Labor and Treasury, issued an interim final rule to safeguard patients against unforeseen medical bills arising from out-of-network care.Client Alert

President Biden Seeks to Limit Non-Compete Agreements

July 8, 2021Today, President Biden announced he would issue an Executive Order that calls on the Federal Trade Commission (FTC) to adopt rules to curtail worker non-compete agreements. Interestingly, a week ago, the FTC approved changes to its Rules of Practice to modernize and expedite the way it issues Trade Regulation Rules. If you have followed our alerts, we predicted the elimination of non-competes would probably happen. In 2016, then-Vice President Biden was a vocal opponent against non-compete agreements. He led the Obama administration’s initiative seeking to limit or eliminate non-compete agreements. In his presidential campaign, Biden promised to “work with Congress to eliminate all non-compete agreements, except the very few that are absolutely necessary to protect a narrowly defined category of trade secrets . . ..”Client Alert

New NIL Opportunities for Student-Athletes Require Diligent Review

July 8, 2021On June 28, 2021, Governor Mike DeWine signed Executive Order 2021-10D, “Establishing the Duties of Colleges and Universities as to Name, Image, and Likeness Compensation of Student-Athletes.” The Executive Order was motivated by the passage of similar name, image, and likeness (“NIL”) regulations in seventeen (17) other states; Ohio followed suit to avoid a significant competitive disadvantage in attracting student-athletes to the state.Client Alert

Tax Savings Potentially on the Chopping Block under President Biden’s American Jobs Plan and American Families Plan

June 18, 2021Recently, President Biden has proposed several tax law changes in his American Jobs Plan and American Families Plan. Outlined below, are a few of the tax savings that could be significantly changed or eliminated under Biden’s plans.Client Alert

Here are the Final Candidates for Mayor of Cleveland

June 17, 2021Earlier this year, current Cleveland Mayor, Frank Jackson, announced he would not run for re-election this fall. With no need to beat an incumbent, the Cleveland mayoral race suddenly became competitive. Thirteen individuals declared their intent to run for mayor. The City of Cleveland, however, has a difficult qualification requirement to run: 3,000 valid signatures from Cleveland residents. The deadline to file a petition to run, with the 3,000 valid signatures, had to be submitted by June 16 (yesterday).
Older posts
Newer posts