What is the Difference Between Member-Managed and Manager-Managed LLCs?

Learn about the differences between member-managed and manager-managed LLCs to decide which one is best for your business.

Save 90% on your legal bills

What is a Member-Managed LLC?

A member-managed LLC is a type of LLC where all members have an equal say in the management and decision-making process. In a member-managed LLC, all members are responsible for making decisions and taking actions on behalf of the company. This means that every member has a role in the day-to-day operations of the business and is responsible for ensuring that the company is run in accordance with the operating agreement.

What is a Manager-Managed LLC?

A manager-managed LLC, on the other hand, is a type of LLC where one or more managers are responsible for making decisions and taking actions on behalf of the company. In a manager-managed LLC, the members do not have a direct role in the day-to-day operations of the business and are not responsible for ensuring that the company is run in accordance with the operating agreement. Instead, the managers are responsible for making decisions and taking actions on behalf of the company.

Differences Between Member-Managed and Manager-Managed LLCs

There are several key differences between member-managed and manager-managed LLCs. Some of the main differences include:

  • Decision-Making Power: In a member-managed LLC, all members have an equal say in the decision-making process. In a manager-managed LLC, the managers have the power to make decisions and take actions on behalf of the company.
  • Responsibility: In a member-managed LLC, all members are responsible for ensuring that the company is run in accordance with the operating agreement. In a manager-managed LLC, the managers are responsible for ensuring that the company is run in accordance with the operating agreement.
  • Liability: In a member-managed LLC, all members have personal liability for the debts and obligations of the company. In a manager-managed LLC, the managers have personal liability for the debts and obligations of the company.
  • Taxation: In a member-managed LLC, the members are taxed on their share of the company's profits and losses. In a manager-managed LLC, the managers are taxed on their share of the company's profits and losses.

Which Type of LLC is Right for Your Business?

The choice between a member-managed and manager-managed LLC depends on the specific needs and goals of your business. If you want to have more control over the decision-making process and are willing to take on more responsibility, a member-managed LLC may be the better choice. On the other hand, if you want to have more flexibility and are willing to delegate decision-making power to managers, a manager-managed LLC may be the better choice.

It's also worth noting that some states have specific requirements for LLCs, so it's a good idea to check with your state's business registration office to see what types of LLCs are allowed and what the specific requirements are.

In conclusion, the choice between a member-managed and manager-managed LLC depends on the specific needs and goals of your business. Both types of LLCs have their advantages and disadvantages, and it's essential to carefully consider which one is best for your business before making a decision.

Legal help, anytime and anywhere

Join launch list and get access to Cimphony for a discounted early bird price, Cimphony goes live in 7 days
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Unlimited all-inclusive to achieve maximum returns
$399
$299
one time lifetime price
Access to all contract drafting
Unlimited user accounts
Unlimited contract analyze, review
Access to all editing blocks
e-Sign within seconds
Start 14 Days Free Trial
For a small company that wants to show what it's worth.
$29
$19
Per User / Per month
10 contracts drafting
5 User accounts
3 contracts analyze, review
Access to all editing blocks
e-Sign within seconds
Start 14 Days Free Trial
Free start for your project on our platform.
$19
$9
Per User / Per Month
1 contract draft
1 User account
3 contracts analyze, review
Access to all editing blocks
e-Sign within seconds
Start 14 Days Free Trial
Lifetime unlimited
Unlimited all-inclusive to achieve maximum returns
$999
$699
one time lifetime price

6 plans remaining at this price
Access to all legal document creation
Unlimited user accounts
Unlimited document analyze, review
Access to all editing blocks
e-Sign within seconds
Start 14 Days Free Trial
Monthly
For a company that wants to show what it's worth.
$99
$79
Per User / Per month
10 document drafting
5 User accounts
3 document analyze, review
Access to all editing blocks
e-Sign within seconds
Start 14 Days Free Trial
Base
Business owners starting on our platform.
$69
$49
Per User / Per Month
1 document draft
1 User account
3 document analyze, review
Access to all editing blocks
e-Sign within seconds
Start 14 Days Free Trial

Save 90% on your legal bills

Start Today