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Form a Member Managed LLC

A member managed LLC is run by the owners of the company. This is the usual structure. Another structure is the manager-managed type, which, as the name implies, has a separate manager responsible for daily operations.

The managers are named in the operating agreement, which all owners sign. Manager-managed LLCs set out certain rights and responsibilities for named managers that differ from other owners – note, a manager is usually one of the owners of the LLC. Mangers usually have voting rights and the ability to negotiate loans or handle other business financial and operational tasks. Non-managing members are still owners, but they are able to remove themselves from the direct operations of the business.

This works well if an LLC is started with investors who, by their nature (family members or silent partners) would prefer to sit back and reap the rewards of their investment without being directly involved. A less obvious advantage of the member-managed structure is that the LLC is more easily identified as a business separate from the owners if the LLC is sued and has to be recognized as a legal entity by a court.