Member-Managed LLC vs Manager-Managed LLC
In a member-managed LLC, all members participate equally in operating the company. In a manager-managed LLC, the members appoint one or more managers to handle daily operations and decisions.
You can be both a member and a manager. As a member, you have an ownership stake. As a manager, you oversee operations.
Member-Managed LLC Characteristics
- All members participate in the decision-making process
- Each member is an agent of the LLC and has a vote in business decisions
Manager-Managed LLC Characteristics
- Authority centralized with the manager(s)
- Managers may be members or outside hires
Choosing Between Manager or Member Role
- Member-managed LLCs involve all members in decision-making.
- Manager-managed LLCs delegate authority to the manager or managers.
LLC Manager Responsibilities
An LLC manager runs daily operations and makes decisions. Members are owners. All states allow single and multiple member LLCs.
Factors to Consider
- Member-managed LLCs involve daily involvement and control
- Manager-managed LLCs delegate authority and suit passive investors
Hiring Managers and Responsibilities
- Managers are responsible for day-to-day operations
- Document responsibilities if members handle management work
Passive Investors and Decision Making
- Manager-managed LLCs suit passive investors
- Members in member-managed LLCs have direct involvement
Consulting an Expert
Consulting an LLC formation expert can determine the most suitable structure for your business.