Wondering what the difference is between a Member-Managed and Manager-Managed LLC? We can help…
In a Member-Managed LLC, members are like owners of the LLC. They are responsible for the day-to-day operations of the business.
In a Manager-Managed LLC, only certain designated members or even outside appointees, such as a Board of Directors, run the operations.
The main difference between the two is that manager-managed LLCs can have silent investors written into their business structure. They can act as a source of capital without worrying about the daily ins and outs. Larger LLCs see the benefit in having this setup as it would be impractical to have everyone in the organization chime in on business decisions. It also allows for more anonymity than member-managed organizations where all members must be listed within the Operating Agreement.
Member-Managed LLCs are great for startups with only a few members. They allow for an equal contribution from all of the owners and is the default type of LLC.
Which set-up is best for your new business?