series llc vs professional llc alabama: The Basics
A series LLC is a unique, flexible structure. In Alabama, it offers businesses a way to create “miniLLCs” (called series or cells) under one parent company. Each cell operates independently—owning assets, signing contracts, and holding separate liability. If one cell is sued, the others are (in theory) insulated.
A professional LLC (PLLC) is a legal entity reserved for regulated professionals—think doctors, lawyers, architects, engineers, accountants. Alabama law requires professional services to use PLLCs. The catch: only statelicensed professionals can be members or managers in a PLLC, with no outside or “silent” investors allowed.
Who Uses a Series LLC?
Ideal users:
Real estate investors (one property per series/cell) Entrepreneurs with multiple product lines or revenue streams Business owners wanting to “silo” risk between different ventures or projects
In practice, a series LLC can reduce paperwork and annual fees by bundling entities—without crashing all assets under one lawsuit.
Who Uses a Professional LLC in Alabama?
Mandatory for:
Any business offering regulatory/licensed services (medicine, law, pharmacy, engineering, accounting, vet, etc.) Business groups where each member/principal needs to be individually licensed in the same field
A PLLC shields licensed owners from business debts and the mistakes of other members—but not from their own malpractice.
Key Differences: series llc vs professional llc alabama
| Aspect | Series LLC | Professional LLC (PLLC) | |||| | Who Can Form? | Anyone (individuals or entities) | Only licensed professionals | | Asset Segregation| Yes (each series is legally distinct) | No (one company for all work) | | Liability | Each cell isolated (if records kept) | No protection from malpractice | | Regulation | State SOS oversees general LLC law | Subject to additional licensing board oversight | | Use Case | Investment, multiple lines, real estate | Medical, legal, accounting, etc.| | Members | Anyone (broad flexibility) | Only statelicensed professionals| | Naming Rules | “Series LLC” | Must indicate “PLLC” and profession |
Pros and Cons of Each Structure
Series LLC—Advantages
Asset protection between unrelated ventures One annual report and state filing for all series Allows for easy expansion without dozens of new LLCs
Series LLC—Limitations
Complexity—independent books, bank accounts, and contracts are mandatory to keep protection intact Not every state recognizes the series structure (problems if expanding or operating outside Alabama) Investors and lenders may not understand or trust the format
PLLC—Advantages
Required (and respected) in regulated professions Shields personal assets from business debts and the errors of partners Satisfies state licensing authorities and regulatory boards
PLLC—Limitations
No asset segregation between different “projects” or partners—liability is shared (except for malpractice) Only for professional use—not for multiple unrelated businesses Outside (nonlicensed) investors prohibited
Taxation Comparisons
Both the series LLC and PLLC are “passthrough” entities by default in Alabama—meaning profits and losses flow to members’ personal returns. Each series in a series LLC may require a separate EIN, especially if it has distinct members. PLLCs file as standard LLCs (unless electing otherwise), but all members must report income as required by their licensing body.
Setup and Compliance
Series LLC: File certificate of formation indicating use of series. Draft an internal operating agreement for each series. Keep all financials, assets, and obligations totally separate. PLLC: File PLLC paperwork plus proof of all member licenses. Comply with licensing board rules and update annually.
For both: Stay on top of annual filings, business privilege licenses, and board reports (for PLLCs).
When to Choose Each
Series LLC: If your business is assetheavy, segmented, and not in a regulated/infoprofessional field—especially real estate, multibrand stores, product development, etc. PLLC: If your core work is a stateregulated licensed practice—no other choice is permitted. Required for firms of doctors, lawyers, CPAs, architects, etc. in Alabama.
Common Pitfalls
Series LLC: Mixing accounts or failing to keep clear records destroys liability protection for all cells. PLLC: Admitting a nonlicensed member violates state law. Failing to report changes in licensure promptly risks legal and regulatory consequences. Both: Neglecting annual reports or misreading compliance rules can lead to dissolution or fines.
series llc vs professional llc alabama: RealWorld Examples
A local real estate investor in Birmingham buys three rental houses, each in a separate cell under one series LLC. A lawsuit over mold at House 2 doesn’t threaten Houses 1 or 3. An accounting partnership in Montgomery forms a PLLC—each CPA member is properly licensed. If one faces a malpractice suit, the rest aren’t exposed for that error, but business debts affect all.
Consulting for DecisionMakers
Don’t guess. The differences in series llc vs professional llc alabama are significant—and getting it wrong can be expensive. Consult with a business attorney or CPA familiar with Alabama entity law and your industry. Review local board rules for professionals, and always err on the side of caution with compliance and recordkeeping.
Final Thoughts
There’s no “one right answer” for every Alabama business, but the right LLC structure protects your assets, reputation, and growth. Series LLCs maximize protection for multiventure entrepreneurs. Professional LLCs guarantee regulatory legitimacy for licensed service groups. Evaluate the series llc vs professional llc alabama rules against your needs, then build a solid foundation for years of hasslefree business.