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Home Q&A Forum LLC and subsidiary formation?

Business

LLC

California

Asked on May 20, 2023

LLC and subsidiary formation?

I am in the process of starting a business and am looking to form a Limited Liability Company (LLC). I plan to have a subsidiary company, and am looking for advice on the best way to structure the LLC and subsidiary. I am also interested in learning what other legal considerations I should be aware of when setting up the LLC.

1 Attorney answer

Answer

Business

California

Answered 369 days ago

Gagandeep K.

ContractsCounsel verified

Business Lawyer
Licensed in California
Free Consultation

If you are interested in forming a series LLC (SLLC) in which a group of LLCs are owned in a tiered-down structure such that the top tier LLC owns the lower-tiered LLCs, then you have to from the SLLC in another state. A SLLC cannot be formed in California. You must register with the foreign SLLC with the California Secretary of State (SOS) before they start doing business in California. In California, LLCs can have one or more members. A member can be an entity or an individual. So if you are forming the LLCs in CA, then one LLC can own another LLC. There are various considerations when forming a LLC in California such as filing the appropriate documentation with the CA Secretary of State (e.g., Articles of Organization, Statement of Information), and having an Operating Agreement to govern, among other things, the LLC's business; LLC's management; members' rights, financial obligations and managerial duties; allocation of profits, losses, and distributions; tax implications; admitting new members or transferring interest; dissolution and winding up of the LLC.

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