LLC Officer Titles Explained

Making The Decision – Member-Managed LLC Vs. Manager-Managed LLC

Understanding LLC titles of owners can be confusing. Learn more about each type of title and discover which one might suit your business best today. When starting an LLC, it is important to understand the title designations that are specifically for LLCs. This makes it easy to understand how they function in an LLC and make it possible for owners to make successful filing.

Are you trying to understand the LLC titles of owners? This can be difficult to get your head around. Learn more about your options, from Member-Managed LLC to Manager-Managed LLC, and decide which one is the best fit for your business. Get informed and make an informed decision today!

Within an LLC there are some titles that are specific for corporate officers, for example, treasurer or vice president. When you are clear about these titles and their functions it becomes easy to assign roles and responsibilities to each member within LLC.

There are some common titles and designations that every LLC has same across various States but some titles may differ from state to state. Understanding this state wise difference of various titles and designations in an LLC makes it easy to enter in any contract with other parties who are interested to do business with you.

What is an LLC member and LLC member titles members

An LLC owner is also called a member of the limited liability company LLC who particularly has a stake in the profitability of the business.

It is important to note that in the LLC operating agreement unless there is a particular specification about (manager-managed LLC) all the members are liable to play active role in the management of the company. without specific disclosure of a particular member within an LLC, all-authorized members have the authority to bind the company contractually.

When you are incorporating an LLC then its operating agreement must announce the specific powers and responsibilities of each member.

In this regard, you must be thinking that what kind of role corporate officers or employees do play in the process.

Well, an officer or an employee of the company can be a member in an LLC but it’s not necessary that all officers or employees are members. In order to become the member of an LLC it is important that the officer or an employee must have an ownership interest in the LLC.

What Is an LLC Manager?

In most of cases LLC is a (member-managed) entity but the case can also be reversed where a (manager-managed LLC) may also exist and looks like a better choice.

In a manager-managed LLC, there are managing members who actually monitor and regulate every operation of the LLC. This can also include delegation of management to a third-party manager or a group of individuals who are also called managing members.

In a manager-managed LLC the members who do not have any designation as managing members are not authorized to participate in the daily management activities of LLC. In addition to that, the unauthorized members in an LLC do not have the authority to bind the company contractually.

All the responsibilities of managing day to day affairs of an LLC are in the hands of the managing members of the LLC. In this regard, it is important to properly state the rights, responsibilities, and obligations of LLC managers and managing members in the operating agreement of an LLC.

Other Titles to Be Aware Of

There are some other popular designations and titles in the corporate world that you need to understand. It’s not necessary that these titles are commonly used in an LLC but you need to have a good idea about them so that you can easily distinguish their functions and titles easily,

Shareholders

In LLC these are called members rather than LLC shareholders. These are the individuals who hold stock or shares in any corporation of their interest. The shareholder is similar to an LLC member but actually, these are two different things. In a corporation, a shareholder has voting rights but as an LLC member, a person does not enjoy the voting rights to participate in the management of the company and is not authorized to bind the company contractually.

Directors

Director is a title that is mostly associated with a corporation because there are directors who are elected through a systematic process to run the affairs of the business. But in LLC there are members who manage and monitor every activity of the company as compared to the board of directors in corporations.

Corporate Officers

When you are establishing an LLC, you are also required to appoint a corporate officer which includes vice president, president or treasurer to handle certain jobs of the company. This clarity of separate titles and designations within an LLC makes it easy to assign roles and responsibilities to each member. It depends upon the structure of your LLC that how you assign management responsibilities to the managing members of your LLC.

Sole Proprietor

A sole proprietor is an individual who is the only owner and operator of a business. But an LLC is not a sole proprietorship because its structure is different from a normal business structure. However, an individual can register his LLC as a sole proprietorship.

Registered Agent

In the case of an LLC, a registered agent is someone who is responsible to receive official notices from the government or any kind of document related to the LLC. The registered agent acts as a third party who is registered as same as an LLC is established. Legally it’s not required in most states to have a registered agent but if you have one then you can reap the benefits of that registered agent in your LLC.

There are numerous titles associated with corporations and LLCs, which may differ from state to state and the structure of a company one is following. However, there are two most important designations that you as an owner of LLC need to remember: one is a member-managed LLC and the second one is a manager-managed LLC. Both of these titles are mainly indicators of who has the duties and obligations of management of the LLC and has the authority to bind the company.

Quick Guide:

Business Structure: The first step in deciding between a member-managed and manager-managed LLC is to consider the company’s business structure. A member-managed LLC allows the members of the LLC to be actively involved in the business decisions, while in a manager-managed LLC, a hired or elected manager makes the decisions. 2. Flexibility: The flexibility of either type of LLC can vary depending on how you structure it. A member-managed LLC has more flexibility because all members can work together to make decisions quickly, while a manager-managed LLC might be slower due to one decision maker making all of the decisions. 3. Time Commitment: The time commitment for each type of LLC is also different. A member-managed LLC requires each member to commit their available time and energy to make business decisions, while a manager-managed LLC requires the elected or appointed decision maker(s) to commit their time and energy to make decisions for everyone else associated with the company’s operations. 4. Limited Liability: With either type of LLC, limited liability protection is granted, so that if any debts are incurred during business operations all liability will remain solely with the respective members or managers involved with that particular debt, not involving any other parties outside of those responsible for incurring it in the first place. 5. Costs Of Operation: The cost of operation may also be an important factor when deciding between these two types of businesses as well. Typically, a member-managed LLC may have fewer operating costs than a manager-managed business since there won’t be additional costs associated with a separate management team, depending on your state laws, though there may be additional costs associated with filing taxes and any registration fees necessary for formation. 6 Resolution Timeframe: Resolution timeframe is another key consideration when trying to decide between these two types of businesses; typically resolution times can happen quicker with a member managed structure over having one central person choose every resolution leading up to approval which may cause delay depending on personal scheduling limits as well as adding in other personal considerations taken into account such as availability or expertise needed at times which don’t always marry up right away (especially if differing opinions are needing an agreement). 7 Disagreements: Lastly disagreements should also come into play when deciding between these two options since disagreements among members vs disagreement between one central authority would inherently lead to different results manner by taking longer or faster amounts were resolved within conflict-driven scenarios thereby creating an extra layer needed when weighing out this final option when comparing them both side by side before signing off officially!