LLC Management & LLC Officer Titles (Members vs Managers)

An LLC can be managed by Members, or by Managers.

We’ll explain LLC titles, like Member, Managing Member, and Manager, and then help you to understand the differences between a Member-Managed LLC and a Manager-Managed LLC.

Members, Managers, and Managing Members

Let’s define the the different titles that can be used for people involved in an LLC.

Member(s):

An LLC Member is an owner of an LLC.

Manager(s):

An LLC Manager is the person (or persons) responsible for running the day-to-day operations, makes business decisions, and has the authority to bind the LLC into contracts and agreements.

There are 2 types of LLC Managers:

• An Internal Manager is someone who runs the LLC, as well as owns it.
• An External Manager is someone who runs the LLC, but doesn’t own it.

Managing Member(s):

An LLC Managing Member is someone who both owns the LLC, as well as runs the day to day operations, makes business decisions, and has the authority to bind the LLC into contracts and agreements.

In short, a Managing Member is both a Member and a Manager.

LLC Management (Member-managed vs. Manager-managed)

Most states require you to report how your LLC will be “managed” in your LLC Formation paperwork.

For example:

• Will it be managed by the all of the Members?
• Will it be managed by some of the Members?
• Will it be managed by hiring outside Managers?

If an LLC is managed by all of the Members, this is called a “Member-Managed LLC“.

If an LLC is managed by some of the Members (but not all of the Members), this is called a “Manager-Managed LLC” (with internal management).

If an LLC is managed by people hired specifically to run the company, but they don’t own the LLC, this is also called a “Manager-Managed LLC” (with external management).

Additional reading: For more information on Member-Managed LLCs vs Manager-Managed LLCs, please see this article.

Which Title Should I Use?

Tip: This stuff can be confusing and often sounds like a riddle (the words all sound similar). We recommend reading the following section (and maybe even the whole article) twice.

If you own (some or all of) the LLC and the LLC is Manager-Managed by you, you can use the “Manager” or “Managing Member”.

If you own (some or all of) the LLC and the LLC is Member-Managed, you can choose the title “Member”, or “Managing Member”. The term “Managing Member” is more specific, as it communicates that you both own and manage the company.

If you own some of the LLC and the LLC is Manager-Managed by other Members besides yourself, you must use the title “Member“. You can’t use the title “Managing Member” or “Manager”.

If you own (some or all of) the LLC and the LLC is Manager-Managed by an external person or persons, or a 3rd party, you also must use the title “Member”. You can’t use the title “Managing Member” or “Manager”.

Most LLCs are Member-Managed (and therefore run by Managing Members)

Most of our readers are small business owners, where they either own their companies 100%, or they have a business partner or two (and they share ownership).

In the majority of these cases, the LLC Members all want to take part in running the day to day operating and making business decisions.

In this case, the LLC has a Member-Managed style of management and all the Members can use the title “Managing Member”. This is the simplest structure and the simplest form of management, and again, this is the most popular.

Takeaways

The world of LLCs and their style of management can get quite complex, and depending on who owns your LLC and how it is managed will dictate the title that you use.

Again, most people own their LLCs outright (or with partners) and are Member-Managed, so “Managing Member” is the most common, and the most appropriate LLC title to use for most people.

On the other hand, there are times when not all LLC owners want to manage a company. In some cases, some of the Members run the business while other Members don’t, and in other cases, none of the LLC Members run the business. In both of these examples, the Members just use the title “Member”.

We hope that helps you further understand LLC titles and management structures.