{"id":4842,"date":"2021-08-09T15:27:25","date_gmt":"2021-08-09T20:27:25","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/incorporation-and-legal-structures\/llc-member-vs-manager.html"},"modified":"2025-10-30T23:25:00","modified_gmt":"2025-10-31T04:25:00","slug":"llc-member-vs-manager","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/llc-member-vs-manager.html","title":{"rendered":"LLC Member vs. Manager"},"content":{"rendered":"\n
\n

LLC Member vs. Manager<\/h1>\n\n
\n
\n By Linda Long, J.D.<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last updated\n
\n

Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n <\/div>\n \n

\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
\n

This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
\n

The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

\n

When forming a limited liability company<\/span> (LLC), you must decide if it is member-managed or manager-managed. This distinction determines who makes the day-to-day business decisions<\/span>, the members or the manager(s) who are elected by the members.<\/p>\n\n <\/div>\n\n\n\n

Creating a\u00a0limited liability company<\/span><\/a>\u00a0(LLC) is a great way to start your small business<\/span>, but you will face major decisions about its structure at the time it is formed. LLCs may be set up as member-managed or manager-managed and the structure you choose will significantly impact how much control you and the other owners will have over day-to-day operations<\/span>.<\/p>\n

Form your LLC with confidence.\u202fOur trusted partner LegalZoom has packages starting at $0 + filing fees.<\/a><\/i><\/b><\/p>\n

What to Consider for Your LLC <\/span>Management<\/span> Structure<\/span><\/h2>\n

LLCs must file their formation documents<\/a> with the secretary of state\u2019s office in your state. Formation documents are called an LLC\u2019s <\/span>articles of organization<\/span> or certificate of formation. Many states ask in the articles if the LLC is member-managed or manager-managed.<\/p>\n

Some states require LLCs to draft an operating agreement<\/a>. An operating agreement is an internal document that details how the LLC will be run, similar to corporate bylaws. The operating agreement will identify if the LLC is a member-managed LLC<\/span> or a manager-managed LLC<\/span>. If the management structure<\/span> is not specified, most states will treat a company as a member-managed LLC<\/span> by default.<\/p>\n

The LLC<\/a> members must also decide what other details to include in the operating agreement<\/a>, including the number of members.<\/p>\n

Member-Managed LLC<\/span><\/h2>\n

A member-managed LLC<\/span> is one where the owners\u00a0collectively manage\u00a0the company. The owners of an LLC<\/span> are called members and they control the day-to-day operations<\/span> of the member-managed company.<\/p>\n

In a member-managed LLC<\/span>, each member has an active role in the everyday decision making<\/span> for the business.<\/p>\n

A member-managed LLC<\/span> is an appropriate management structure<\/span> for a small business<\/span>. By operating as a member-managed LLC<\/span>, small businesses<\/span> with limited resources may carry on business without using resources from the business to pay a group of non-member<\/span> managers.<\/p>\n

There is no minimum number of people required to form an LLC and an LLC can have just one owner. An LLC that has only one owner is a\u00a0single member LLC<\/span><\/a>. Just like with a multi-member LLC, the owner of a single member LLC<\/span> has personal <\/span>liability<\/span> protection<\/span> from lawsuits against the business.<\/p>\n

Manager-Managed LLC<\/span><\/h2>\n

A manager-managed LLC<\/span> is a better choice for larger LLCs<\/span> or LLCs with many members. In a manager-managed LLC<\/span>, the members are usually passive investors<\/span> in the business.<\/p>\n

Business owners<\/span> can choose to hire a non-member<\/span> to work as a manager. Hiring a non-member<\/span> can reinforce the separation between the daily operations<\/span> of the business and the decision-making<\/span> processes<\/span>.<\/p>\n

Operating Agreement<\/h2>\n

The\u00a0operating agreement<\/a> will state whether the business will be a member-managed LLC<\/span> or a manager-managed LLC<\/span>. It should also describe the roles of the managers and members of the LLC.<\/p>\n

If the type of management structure<\/span> is not specified in the operating agreement, the law in most states will make the LLC member-managed by default.<\/p>\n

If you have questions about how you want to structure your LLC or get help with filing articles of organization<\/span> or drafting an LLC operating agreement<\/span>, find a local business lawyer<\/a> for help.<\/p>\n\n\n

\n \n Was this helpful?<\/span>\n \n Yes<\/span>\n \n \n \n <\/path>\n <\/g>\n \n \n <\/rect>\n <\/clipPath>\n <\/defs>\n <\/svg>\n <\/i>\n <\/button>\n \n No<\/span>\n \n \n \n \n <\/g>\n \n \n \n <\/clipPath>\n <\/defs>\n <\/svg>\n <\/i>\n <\/button>\n <\/div>\n <\/span>\n