Legal Question in Business Law in Delaware

How to setup and maintain a Serial LLC in Delaware

Dear Counselors,

I am the proprietor of a number of commercial websites of differing topics. Each is currently set up as a sole proprietorship. I would like to incorporate and keep each of these websites and any future websites under this new corporation.

I also, however, want to insulate each website from the other in respect to liability. From my research I have found that I can only accomplish this by becoming a Series LLC in the state of Delaware. Is this accurate?

If this is the case, then I am a little lost about how to properly execute this. Should I have each website processing orders through its own merchant account and having the funds deposited into its own bank account? That would be 4 merchant accounts and 4 bank accounts. Or do I process orders for all the websites through 1 merchant account and have all funds from all websites deposited into 1 bank account?

Which is the best route to take in order to maintain the integrity of the Series LLC I will form and the liability protection it provides the individual sites from the others?

Thank you in advance for any assistance or advice you can provide on this matter.


Asked on 12/30/02, 2:39 pm

2 Answers from Attorneys
Kenneth J. Ashman Ashman Law Offices, LLC

Re: How to setup and maintain a Serial LLC in Delaware

There are a number of ways to accomplish the result you seek. As for that matter, it is not essential that you file under Delaware law, for New York law can also meet your expectations.

For example, you could create a holding company, which would own a number of subsidiaries, each of which would be separately incorporated. You could also set up a series of limited liability companies. The botton line is that if you want to co-mingle funds, such that you only have one merchant and bank account, you will expose each entity to the liability of the other. In order for you to insulate, as best as possible, the funds from one entity from another, you will have to ensure that the entities truly are acting separate from one another.

Setting up corporate/business structures depends upon a number of factors, which is usually undertaken with tax considerations.

-- Kenneth J. Ashman; Ashman Law Offices, LLC; www.lawyers.com/alo

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Answered on 12/30/02, 10:58 pm
Bruce W. McCullough Bodell, Bove', Grace & Van Horn. P.C.

Re: How to setup and maintain a Serial LLC in Delaware

From what you describe, either a series LLC or separate corporations would provide the protection you seek. Note that the issue is that the businesses be separate, not just the websites. To keep the businesses separate, you will need to use separate merchant and bank accounts for each one.

Please feel free to contact me if you want to discuss this matter further.

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Answered on 12/31/02, 10:32 am


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