Many of our clients ask about the differences between protected series and registered series (the two types of series within a Texas Series LLC). On paper, both provide the same liability protection—yet forming a registered series comes with a $300 filing fee (in addition to the $300 filing fee for the master Series LLC). So why pay extra if the legal benefits are the same?

In this article, I’ll explain the key differences, share practical examples, and help you decide which option is right for your situation.

Before diving into registered series vs protected series, let’s quickly recap what a Series LLC is.

• A Series LLC is a special type of limited liability company allowed in Texas.
• A Series LLC is one LLC with the ability to create one or more insulated cells or “series” inside of it.
• Each series resembles its own LLC in that each series can hold its own assets, operate a business, and even have its own members/owners.
• Most importantly, if used properly, the assets of one series are insulated from the liabilities of the other series.

Think of a Series LLC as a bank vault: the Series LLC is the vault, and each series is a separate safety deposit box. If one box is compromised, the others remain locked and protected. Read more about Texas Series LLCs.

Prior to June 1, 2022, each cell in a Series LLC was simply referred to as a “series.” With the passage of Senate Bill 1523, Texas began allowing series to be formally registered with the State—creating two distinct types of series: protected series and registered series.

If there are no legal benefits to creating a registered series vs a protected series, why would anyone pay $300 to the state to register a series? Registering a series will allow the Texas Secretary of State to provide the registered series with a unique state filing number. A unique filing number is required if the series intends to pledge non-real estate assets (receivables, inventory, etc.) to a lender as collateral. A lender cannot properly perfect a lien (i.e., file a UCC lien with the state) on the non-real estate assets of a specific series unless the series has its own state filing number issued by the Secretary of State (who only issues state filing numbers upon registration).

A registered series may be desirable if you intend to use the series to operate a business that will pledge non-real estate assets as collateral for a loan. It is important to note here that real estate investors typically do not need to register a series because of the way lenders perfect liens on real estate (i.e., by filing a deed of trust/lien in the real property records maintained by the county clerk’s office).

Read more about using a Texas Series LLC for real estate investments.

Example 1 - Protected Series Use: Maria owns a real estate portfolio with three single-family houses. She sets up a Texas Series LLC with three protected series, one for each house. Since the bank can perfect a lien by filing a deed of trust in the real property records of the county(ies) where the properties are located, the lower cost and simplicity of protected series work for her.

Example 2 - Registered Series Use: James is a franchisee with three laundromats. He sets up a Texas Series LLC with three registered series, one for each laundromat. James can borrow against the value of the washing machines (pledge them as collateral for a loan) because each protected series has its own state filing number, and therefore, the bank can properly file UCC liens on the non-real estate collateral of each registered series.

A protected series offers the advantage of being simple to create, with no additional filing fees required. However, it can be difficult to pledge non-real estate collateral when dealing with lenders.

By contrast, a registered series provides the benefit of being able to pledge non-real estate collateral, making it more flexible in financing situations. The tradeoff is cost—each registered series requires a $300 filing fee with the Texas Secretary of State.