- Member-Managed vs. Manager-Managed Structure
- Process of Changing Management Structure
- Adding Members to an LLC
A member-managed LLC allows all members to participate in running the business, while a manager-managed LLC authorizes appointed members or nonmembers to operate the company. The operating agreement details the management structure.
To change from manager-managed to member-managed, hold a meeting to propose and vote on the resolution. If passed by majority vote, file an amendment with the state updating the management structure.
In most states, LLCs default to member-managed unless otherwise designated. Changing the selection involves amending the articles of organization, usually requiring a vote and potentially unanimous approval. Members can initiate changes following the operating agreement.
The process for adding an LLC member typically involves amending the operating agreement and obtaining current members’ vote, often needing unanimous approval. Disputes regarding a manager’s decisions or profit distribution can be resolved through member voting.
Can a Single-Member LLC be Manager-Managed?
Single-member LLCs commonly opt for a member-managed structure. However, situations may warrant a manager-managed approach, especially if the LLC has numerous members or if some prefer not to participate actively in daily operations.
The articles of organization outline basic LLC details and can be amended to change its management structure. State law may mandate unanimous decisions for such changes.
In a manager-managed LLC, appointed managers oversee day-to-day operations, suitable for LLCs with numerous members or desiring outside expertise in management.
If members manage the LLC, they have collective decision-making authority. Alternatively, in a manager-managed LLC, management authority lies with professional managers or elected members.
Every LLC must have a manager to make operational and strategic decisions. Changing an LLC’s management structure involves amending the operating agreement.
Regardless of the chosen management structure, amendments can be made by following the rules of the operating agreement and amending the articles of organization with the secretary of state.
California LLCs can elect member management or a single or multiple managers. Owners can select members, managers, or a combination of both to manage the LLC as per their operating agreement and state regulations.