Understanding the Groundwork: LLC Basics
An LLC (Limited Liability Company) shields owners (“members”) from personal liability for business debts and lawsuits. Alabama has added flexibility with unique variations: the series LLC, a newer tool for asset separation, and the PLLC, designed for regulated professions like medicine, law, and engineering.
series llc vs professional llc alabama: What’s the Basic Idea?
Series LLC: Imagine a parent company (the “master LLC”) spawning multiple, legally distinct smaller entities (the “series” or “cells”). Each series has its own assets, members, and liabilities. If one series gets sued, the others (in theory) remain protected. Professional LLC (PLLC): Specifically for licensed professionals. Law, medicine, accounting, and other stateregulated services in Alabama require this structure. Only practitioners licensed by the state can be PLLC members—no outside investors or nonprofessionals allowed.
Key Features: Series LLC
Asset Segregation: The biggest draw. Each series is legally shielded from claims against others. Popular with real estate investors (one property per series) and entrepreneurs juggling multiple ventures. Administrative Efficiency: One filing, one annual report, but multiple internal “lines of business.” Compared to forming multiple LLCs, it can save effort and fees. Compliance Risks: Each series must keep spotless, independent records—comingling funds or paperwork can “pierce the veil” and destroy protection. Recognition: Not all states recognize the structure outside Alabama. Moving, operating, or expanding across state lines can cause headaches.
Key Features: Professional LLC
Regulatory Compliance: Only available to those offering professional services requiring a state license (doctors, CPAs, etc.). Alabama law demands the PLLC structure for these fields. Ownership Restrictions: All members must hold a valid license in the company’s service field. No “silent partner” capital investors. Malpractice: PLLCs offer liability protection for company debts and coowner actions, but not for your own malpractice (you’re still personally liable for your professional conduct).
series llc vs professional llc alabama: Feature Comparison
| Feature | Series LLC | Professional LLC (PLLC) | |||| | Who Can Own? | Anyone (individuals or entities) | Only licensed professionals | | Ideal For | Real estate, multibusiness, startups that want risk isolation | Medical, legal, accounting, and other licensed fields | | Asset Protection | Yes—among series | Yes—against company debts, not malpractice | | Regulation by Boards | No | Yes—subject to state licensing authority | | Cost & Complexity | Higher (spotless records needed) | Moderate—must file licenses, but administrative structure is standard | | CrossState Ops | Risky—not recognized in some states | Standard for professional practices |
When to Use Each Structure
Opt for a Series LLC in Alabama when:
You plan to own multiple assets (rental properties, product lines) and want to shield each from risk tied to others. Your business is not a regulated, licensed profession. Administrative efficiency and strong internal barriers matter more than national expansion. You’re comfortable with higher legal/accounting complexity in exchange for compartmentalized risk.
Choose a Professional LLC (PLLC) in Alabama when:
Your business is a regulated profession—medicine, law, architecture, engineering, accounting, etc. All members are statelicensed in your practice field. You require a straightforward compliance path with state boards and don’t need asset “cells.” You understand that personal liability for your own malpractice remains.
Setup, Filings, and Operations
Series LLC: File a certificate of formation stating “series” intent. Draft an operating agreement specifying how each series operates, keeps records, and divides members/assets. PLLC: File as a PLLC, provide evidence of licensure for all members, and note any boardimposed naming or paperwork requirements.
Both must register with Alabama, file annual reports, and fulfill relevant tax obligations.
Tax Treatment
There’s little difference at the core—both default to “passthrough” taxation. Each series within an LLC might require its own EIN if run independently. PLLCs are taxed like regular LLCs at the federal and state level.
Compliance Traps and Pitfalls
Series LLCs: Lose protection fast if you mix bank accounts, contracts, or internal accounting. Strict lines are a must. PLLCs: Beware letting nonlicensed partners or managers have ownership stakes—this can void your compliance and provoke state action.
series llc vs professional llc alabama: The Bottom Line
Choose a series LLC for flexibility, asset isolation, and holding multiple Alabama businesses or properties under one parent. Use a PLLC if you are a group of professionals—in law, medicine, accounting, etc.—as required by Alabama statutes.
Final Thoughts
The series llc vs professional llc alabama comparison isn’t just technical trivia—it drives your risk, cost, and longterm strategic options. Consult with an Alabama business attorney or CPA who understands both structures before forming your entity. Make your decision on what fits your business model, not just what seems easiest today. The right structure lets you grow, adapt, and safeguard your hard work for years to come.