Banks willing to open accounts for a cell in a Series LLC?

Question

Anyone know of anybody in town (Las Vegas or Henderson) willing to open a bank account for a series llc cell? Banks like Wells will open one for the master llc but not the cells, so that won't work.

I know the larger institutions typically shy away but I'm sure there are others in town willing to do it. Anyone have experience with this or know any specific banks that will do it?

@Jean G. I'm guessing you might know.

Thanks all

Jim Biggs · Answer

Can't believe I'm still struggling with this but just in case anyone is interested, BMO HARRIS ( a Chicagoland Bank) welcome's series LLCs. And they do open small business accounts for out of state investors.

https://www.bmoharris.com/main/about-us

Wes Thompson · Answer

PNC Bank also allows Series LLCs.  $1500 min per acct to avoid fees, $12/mo otherwise.  I'm IL based, and setting up now -- for tax I'm told all Series LLCs "cells" are indeed issued K-1s and flow into Master LLC, which files return.

Jim Biggs · Answer

excerpt from atty Bradley Clark

"When applying for an employer identification number (“EIN“) on IRS.gov you must provide the legal name of the LLC that is applying for the EIN. The dilemma presented to applicants is that the name of the LLC on file with the Texas Secretary of State (and the one that should therefore be used) will not match the name of the particular series for which you are applying for an EIN. And if you have multiple series inside the LLC you will not be permitted to use the name of the LLC on subsequent applications for additional series.

For example, if the legal name of the LLC is MY COMPANY, LLC, a Texas limited liability company, then the legal name used for the EIN application is MY COMPANY LLC [notice the comma was omitted on the EIN application as IRS.gov does not permit the use of special characters). If, however, the legal name of the LLC is MY COMPANY, LLC, a Texas series limited liability company, then the same legal name is used as in the previous example (i.e., MY COMPANY LLC).

But what should you do if you are applying for an EIN for the first series of MY COMPANY, LLC? After all, banks require a separate EIN for each series and each series is a separate entity for all purposes.

My approach is to use both the series name and the LLC’s name in the EIN application. For illustration, let’s assume my series LLC’s legal name is MY CRE HOLDINGS CO., LLC, and let’s assume my first series is 123 MAIN ST., LLC, an individual series of MY CRE HOLDINGS CO., LLC, a Texas series LLC. Using this example, the legal name on the online EIN application would look like this:

Notice that, like before, I’ve omitted the commas and periods (what the IRS calls “special characters” and prohibits in the online application). I have told the IRS that the company applying for the EIN is 123 MAIN ST LLC and that this company is a series of MY CRE HOLDINGS CO which is a Texas series LLC.

Now, when I apply for an EIN for 456 MAIN ST., LLC–the second series in my series LLC–I am able to (1) actually obtain an EIN for this individual series of the company and (2) notify the IRS that this company is a series of a Texas LLC.

Neither the IRS, nor the public, will find a Certificate of Formation in Texas for 123 MAIN STREET, LLC. What can be found, however, is an assumed name certificate for 123 Main Street, LLC that identifies it as a series of MY CRE HOLDINGS CO., LLC.

Until the IRS adds the Series LLC to the list of legal structures applying for the EIN–and addressing the many issues raised by using the LLC for a Series LLC in the current online application process–I believe this is the best approach to applying for EINs for a Series LLC."

Jim Biggs · Answer

@Jason R. @Kumar Paj  @Bill Gulley @Scott Smith @Amanda Han update

Make sure to check with your accountant and bank before deciding, this is not just a legal question. Many banks will not establish accounts of any kind with a series llc (Chase Bank). My Banker has advised me that older accounts/loans will be canceled at time of renewal. Some accountants will not want the hassle that comes from a much more detailed chart of accounts necessary to keep a strong corporate veil and /or will charge a lot more making any savings from a series mute. Although the series LLC structure has been available since 1996, and has expanded to 9 other states/province; it is still relatively uncommon. Many, if not most, are still unfamiliar with the concept. This can cause difficulties and delays in securing financing from lenders that don’t understand the issues involved, as well as problems obtaining licenses and permits from governmental entities that are unused to dealing with the series LLC structure. Gaps in insurance coverage can also occur due to confusion regarding the proper insured parties, and transaction costs may also be higher if involved parties do not have experience with the series LLC structure.

Jim Biggs · Answer

@Jason R. @Kumar Paj one of the issues with getting individual EIN and one reason I like a series  is that you can  file one tax return .  Potentially saving a great deal of money, but not if each llc under the series has its own EIN which many lawyers will advise to keep from piercing the corp. veil.

Jason R. · Answer

Thanks @Jim Biggs this is very useful as I didn't even realize the cells could get their own EINs. I knew about the DBA method which seems to work fine, but this would probably make it much easier for the banks not to push back when they're unfamiliar (which almost all personal bankers seem to be like you mentioned). And it's so simple to apply for the EIN that it's worth that minimal effort to avoid the potential bank hassles.

I found that US Bank is fine with the SLLCs but just depends on who you're speaking with. Wells Fargo can also do it but you almost certainly have to speak to someone quite experienced to get it set up properly, and they still want you to open sub-accounts for cells with DBAs as opposed to separate bank accounts.

Bill Gulley · Answer

Well, yes, or different banks, however, there may be an issue with Nevada cells, as to liability of the cell that a bank won't accept, you need to check on the "why". Drill deeper at the bank, you can't be the only Series LLC.

Each cell generally must have a registered agent filed in your state, it's name and its own operating agreement. Might be you're not set up properly to obtain a separate account.

I'm not sure if this is acceptable in your state, but an example might be;

the master would be Heavenly Homes, Series LLC, filed as required and obtain a certificate of good standing, tax ID number, etc. for the bank account....

Then, "Heavenly Homes Series One LLC" file it with that name, it has a tax ID, certificate of good standing, etc. take that to the bank show the Operating Agreement for the powers granted to those members.

Repeat as needed.

The accounting side;

An option is to open other accounts in the master's name and give that account a department name, A, B, C, etc. It can be on the check as well. The people in that cell can have signature authority, that is granted in the operating agreement of the master.

Your tax status has nothing to do with an operating account.

While separate accounts sure helps with the audit trail, it's not necessary if you note the reason for a a deposit and withdrawal on the drafts or "source" document.

As I mentioned, use sub accounts in a master account, this is like a subsidiary account, it is a set of books basically for each cell that when all are combined or consolidated add up to the balances of the master account. Any excess amounts in the master are then assets or liabilities or capital of the master which are noted on its books.

With a Series LLC, you'll need these sub accounts anyway, and consolidated statements.  This is an internal accounting requirement

You can cut a check to any member as a drawing or return of capital, to them individually, that's not an issue.

My comments here are as to accounting, not legal advice.

I can also see the commingling of funds issues having funds held or owned by a cell in a master account, this could defeat the purpose of the liability protection between the cells and the master. I would think that setting each cell up as a separate entity would solve the matter. For that determination you need to ask an attorney. :)

Joseph Collier · Answer

I open series LLC’s. You can have as many accounts as needed for each sub series (cell). Multiple account types including no minimum balances. Im located in vegas and can assist remotely. No “branch appointment bs)

Tasha Carvalho · Answer

Series LLCs are only allowed and recognized in 20 different states, meaning, its not recognized on a federal level. This is why federal banks like Wellsfargo and Chase will not open a business Series LLC account since the business structure does not operate by federal laws. You should not have a problem opening an Series LLC account with a state bank or credit union bank.

Bill Gulley · Answer

I don't do taxes, but I think the LLC is consolidated and each member uses a K-1 for their earnings, the way we did it here, but then like I said, I don't do taxes. Yes, each series can be a sub-account of the "master". Good luck :)

Banks willing to open accounts for a cell in a Series LLC?

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