Keeping Your Series LLC Legit
⚠️ A monkey can form an LLC if he just hits the right buttons on his keyboard. Forming an LLC and having one survive an attack are two separate matters. This is especially true for a series LLC.
In addition to having a solid operating agreement, there are a few key elements to be mindful of with managing any entity. The following guidelines are not all-inclusive. You should consult competent counsel with regard to the management and formation of a Texas Limited Liability Company.
1. Maintain Separation Between Business and Personal
Maintain a firm wall of separation between your business and personal financial matters. The liability protection of an LLC erodes when assets of the LLC are commingled with those of its owner(s). The LLC liability shield will be honored by Texas courts to the extent that you:
- Respect the separateness of the LLC
- Are cautious to ensure that the persons with whom the LLC is dealing know that they are dealing with an LLC and not with you, personally
- Avoid co-mingling your property and debts with those of the LLC
2. Keep Proper Records
Keep your Certificate of Formation, copies of your Assumed Name Certificates filed with the Secretary of State and the county clerk's office, and warranty deeds to the rental properties in the Company Record Book that we will order for you. Be diligent about filing required state paperwork. Ensure that the Certificate of Formation remains current and that any changes to the LLC, its mailing address or the identity and/or address of its registered agent are communicated to the Texas Secretary of State.
3. Avoid Mixing Credit Lines
Avoid mixing personal and business credit lines. Strive to establish credit in the name of the LLC, but be aware that credit defaults may still apply to you as the sole member-owner. If however, your personal credit will secure funding or collateral for business purposes, confer with an accountant on how to book the transaction as revenue of the business.
4. Follow All Formalities
It's very important that all necessary formalities be followed in order to maintain the existence and activities of the Company distinct from your personal affairs in order to ensure that you do not become personally liable for the liabilities or claims against the Company. Your personal property must not be commingled with the property of the Company. You should at all times do business under the Company name exactly as specified in the Certificate of Formation or as specified in the Assumed Name Certificates of the respective series.