LLC Management (Member vs Manager LLC)

LLC Management is an important thing to decide before you start an LLC. Whether you want it to be managed by members or managers. In a member-managed LLC, members are responsible for all the works of LLC. While, in a manager-managed LLC, members hire a manager to run their businesses. This is also an important decision on whom you trust for handing out all your documents and the business related contracts.

This management structure for your LLC is dependent on the size of your LLC, your members, your privacy issues and how much control you want to give to another person.

Member-Managed vs Manager-Managed LLC

Most states require you to disclose the ways you want your LLC to be managed. Do you want it to be managed by all the members? Some of your members? Or do you want to hire an outside manager for managing your LLC? But even if your state does not want you to disclose your LLC management style, you still need to choose the style of management for your LLC. It is necessary for your LLC’s Operating Agreement.

• If your LLC is managed by all members, this is a Member-Managed LLC.
• If an LLC is managed by some of the members, this is known as Manager-Managed LLC (internal management)
• If your LLC is managed by someone whom you have hired to run your business for you (but he is not the owner), then this is also a Manager-Managed LLC (external management)

When to have a Member-Managed LLC?

• If your LLC is small.
• When you want to keep the costs limited and low for your company.
• When you want to be in control over all the details of your business.
• If you want to work with some fellow members of your company.

When to have a Manager-Managed LLC?

• When your LLC is large.
• If you are trying to attract other investors for your company.
• If you do not want to be indulged in complex decision makings.
• When you have issues regarding the privacy of your company.

Titles for LLC Management

• At the time when you own the LLC and your LLC is member-managed. You can choose either ‘Member’ or ‘Managing Member’.
• If you some some of the LLC but it is running by a manager other than yourself. Then you should use the title ‘Member’.
• If you own some of the LLC but it is managed by an external manager. Then you should also use the term ‘Member’.
• If your LLC is being managed by you. And you own some of the LLC. Then you can use ‘Mananger’ or ‘Managing Member’.

Takeaways

LLC and their management style can be quite complicated. It depends on who owns your LLC and how it is managed is indicated by your title. Sometimes people own their LLCs by themselves or with some partners. Then the term ‘Managing Member’ is used for the titles. When people want their members to handle their LLC for them, the title ‘Member’ is used.