Deal alert! Northwest will form your LLC for $39 (60% discount). See details.
When you start an LLC, you need to choose your LLC management structure.
At a high-level, LLC management is about:
- who is in charge of the day-to-day operations, and
- who can sign contracts for the company.
And there are 2 types of LLC management: Member-managed LLC and Manager-managed LLC.
This page will focus on Manager-managed LLCs.
Member-managed LLC: The Basics
A Member-managed LLC is the most common type of LLC management. In this setup, all of the owners (called “Members”) are in charge of running the business.
This means every LLC Member can:
- Run the day-to-day business
- Make decisions for the company
- Sign contracts and agreements
- Manage employees
- Handle finances
Think of it like a group project where everyone is involved and has a say.
Who can be an LLC Member?
An LLC Member can be a person or even another company.
Your LLC can have just 1 Member or an unlimited number of Members.
- If your LLC has 1 Member, it’s called a Single-Member LLC.
- If your LLC has 2 (or more) Members, it’s called a Multi-Member LLC.
How does a Member-managed LLC work?
In a Member-managed LLC:
- All Members share responsibility for the business.
- Each Member can bind the LLC in contracts and agreements.
- Members can open bank accounts, hire employees, and make important decisions.
This is different from a Manager-managed LLC, where only certain people (called LLC Managers) run the business, and the Members take a more passive, investor role.
Why choose a Member-managed LLC?
Most small businesses pick Member-managed because:
- It’s simple and straightforward
- Everyone gets to participate
- There’s no need to hire outside managers
When do I choose my LLC’s management structure?
You’ll choose your LLC’s management structure when you make your LLC Operating Agreement.
Some states also ask for this information when you file your LLC paperwork (called the Articles of Organization), but many just let you decide internally.
It’s good to know that your management structure isn’t set in stone. It can easily be changed.
How to change an LLC from Member-Managed to Manager-Managed?
To change an LLC from Member-Managed to Manager-Managed (or vice versa), the process is pretty straightforward:
- First, the LLC Members vote to change the management structure.
- And then they memorialize this change in the LLC Operating Agreement.
If your state requires that LLC Members (or LLC Managers) are listed in the Articles of Organization or LLC Annual Report, then you’ll need to update their names on your next Annual Report (or by filing an Amendment).
In Summary
A Member-managed LLC means all owners are involved in running the business. It’s the easiest and most popular choice for small business owners.
Want to learn more about the differences between Member-management and Manager-management for your Limited Liability Company? Check out our guide: Member-managed vs Manager-managed LLC
Manager-managed LLC FAQs
An LLC owner is called a Member, or LLC Member.
Yes, you can be both a Manager and a Member of an LLC.
This happens in a Manager-managed LLC when a Member (owner) is also a Manager. In this scenario, their LLC title is “Managing Member”.
Yes. A “Managing Member” is an LLC owner who is also a Manager in a Manager-managed LLC.
In order to determine how your LLC is managed, you can look in 2 places:
The first place to look is in your Articles of Organization. In some states, the LLC management structure is listed in this document.
The second place to check is in your LLC Operating Agreement.
Typically, the Operating Agreement will be titled “Member-managed LLC Operating Agreement” or “Manager-managed LLC Operating Agreement”. If not, the management structure will be listed somewhere within the document.
If you don’t like your current LLC management structure, you can change it (assuming you have the proper authority).
What if it’s not listed in my Articles of Organization and I can’t find my Operating Agreement?
If it’s not listed in your Articles of Organization and you can’t find your Operating Agreement, then you can simply make a new Operating Agreement and choose the LLC management structure that you want.
You can use our link to get a free LLC Operating Agreement template.
Matt holds a Bachelor's Degree in business from Drexel University with a concentration in business law. He performs extensive research and analysis to convert state laws into simple instructions anyone can follow to form their LLC - all for free! Read more about Matt Horwitz and LLC University.
