Series LLC vs Professional LLC (PLLC): A Detailed Comparison

Series LLC vs Professional LLC: Professional LLC is a type of LLC that provides limited liability protection to business owners in licensed professions such as accountants, lawyers, doctors, etc. While in a series LLC multiple companies or lines of business are registered under a master LLC where each business operates as a separate LLC.

In this Series LLC vs Professional LLC article, you will learn:

1. The basic definition of a series LLC and Professional LLC
2. The similarities between Series LLC and Professional LLC
3. The differences between Series LLC and Professional LLC
4. Pros and cons of forming Series LLC and Professional LLC

When it comes to starting a business, there are several options available such as sole proprietorship, general partnership, LLP, LLC, C corporation, S corporation, etc. 

However, if you’re looking for an entity that offers both the flexibility of a sole proprietorship and the liability protection of a corporation, then you might want to take a closer look at the two types of LLCs: Series LLC and Professional LLC. 

Here’s a comparison that will help you determine which one is best for your business.

What is a Series LLC?

A Series limited liability company or SLLC is a type of business structure that works somewhat like its traditional LLC counterparts, but with the added benefit of operating multiple businesses simultaneously. 

Unlike other types of LLCs, a Series LLC uses a single company to operate several different separate businesses managed under one parent entity called a master LLC. 

This type of structure can be great for entrepreneurs who have multiple projects going on at once, as it makes it easier to handle accounting and liability concerns while still allowing each project to remain semi-autonomous. 

What is a Professional LLC?

A Professional Limited Liability Company or PLLC is formed by licensed professionals for the purpose of providing professional services. Any licensed professional such as doctors, engineers, accountants, lawyers, etc can form a professional LLC.

Hence, professional LLCs are strictly regulated but provide owners with an extra layer of credibility and protection that business owners prize. 

Series LLC vs Professional LLC – Similarities

Since both are types of a Limited Liability Company, the following features are similar to both professional LLCs and series LLCs:

Limited Liability Protection

Both the Series and Professional LLCs provide limited liability protection, meaning that owners are not held liable for debts or liabilities incurred by the company during its operations, making it the ideal legal structure for most businesses. 

Tax Flexibility

Both types of LLCs provide tax flexibility by allowing owners to choose from a wide variety of tax structures that best suits their business needs. It is up to the business to choose whether it wants to be taxed as an S corp, disregarded entity, or traditional corporation. 

Series LLC vs Professional LLC – Differences

The main difference between a Series LLC and Professional LLC is in how they are structured. Let’s dig deep into the differences

Entity Structure

In a Series LLC, businesses can be divided into multiple protected cells or series, with each one being treated as a separate entity. This allows the business to hold different assets and liabilities in each cell without putting the other cells at risk. 

On the other hand, Professional LLCs are designed for businesses that provide professional services such as Nurses, Doctors, Optometrists, Lawyers, Psychologists, Engineers, Physical Therapists, Veterinarians, etc.

In this case, all the members must be licensed professionals and each one is jointly liable for the actions of the other members.

Number of Business

In a professional LLC, only one type of professional service can be provided under one LLC. While in a series LLC, you can operate multiple businesses under one master LLC. 

For example, a PLLC registered by lawyers can not provide any service other than law-related service. On the other hand, in a series LLC, you can provide cleaning services, moving services, handyman, or any other service simultaneously. 

Formation Requirements

The basic formation requirements for both professional LLCs and series LLCs are the same as starting a traditional LLC. However, there are additional filing requirements for forming a professional LLC, such as providing proof of credentials and state licenses for individuals in certain occupations. 

In some states, all members of a PLLC are required to be licensed. Moreover, in PLLC, the LLC members must adhere to regulations regarding professional oversight, establish the qualifications for LLC management, and ensure ongoing compliance.

Advantages and Disadvantages of Forming a Series LLC

The main advantage of a Series LLC is that it allows businesses to operate without having to set up separate entities for each business. This saves both time and money. The major disadvantage of a series LLC is that only a few states allow this entity structure. 

Advantages and Disadvantages of Forming a Professional LLC

Professional LLCs have more credibility and trust than a series or traditional LLCs as only licensed professionals can form a PLLC and undergo strict regulations. The major disadvantage of PLLC is that in some states all members must be licensed professionals, making it difficult to bring in new members who don’t have a license in the related field.

Conclusion

Overall, when it comes to deciding between a Series LLC vs. Professional LLC, you should consider the type of business you’re running and your needs in terms of flexibility, liability protection, and taxes. With careful research and evaluation, you can make an informed decision that will help ensure that your business is set up to succeed.