Does each series need a separate bank account?

Does each series need a separate bank account?

Each series can have a separate bank account, but it is not required.

Separate bank accounts are often recommended for two main reasons: (1) separate bank accounts will better insulate the cash of one series from the creditors of the others, and (2) separate bank accounts make compliance (or non-compliance) with the statutory record-keeping requirements more evident. To better understand this, we first need to understand the record-keeping requirements described in the Texas Business Organizations Code (TBOC):

According to TBOC Sec. 101.602(b), the limited liability characteristics of a particular series “applies only to the extent the records maintained for that particular series account for the assets associated with that series separately from the other assets of the [Series LLC] or any other series.”

According to TBOC Sec. 101.603(b), records must be maintained “in a manner so that the assets of the series can be reasonably identified by specific listing, category, type, quantity, or computational or allocational formula or procedure, including a percentage or share of any assets, or by any other method in which the identity of the assets can be objectively determined, the records are considered to satisfy the [record-keeping requirements].”

If you’d like to have individual bank accounts for each series, you can either (1) open multiple LLC accounts (using the LLC’s EIN and Certificate of Formation) and designate each account for a specific series; or (2) obtain an EIN for each series and open the account in the name of series.

What banks make it difficult to open an account for an individual series?

Multiple clients have told us that Chase Bank will not allow a series (or even the Series LLC) to open a bank account. Bank of America is similar, but some branches will work with you (unlike Chase). We have heard that Bank of Texas and most credit unions will allow you to open a bank account in the name of a series.

Zachary Copp, Esq.

Attorney at Copp Law Firm, PC

Mr. Copp is a graduate of the University of Texas at Austin and the founder of the Copp Law Firm. He has been licensed in Texas for 20 years and has personally formed over 3,500 Texas LLCs since 2015. He was recognized as a Rising Star by SuperLawyers® for seven straight years. See full bio →