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Member-Managed Structure
- Description: All members participate in operations and management.
- Ownership and Decision-making: Owners have collective control over decisions.
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Manager-Managed Structure
- Description: Designated members or non-members have authority to run the business.
- Ownership and Decision-making: Management authority with a professional manager or elected member(s).
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Default Management Structure
- Most states default to member-managed LLCs if no structure is designated.
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Roles and Responsibilities
- Proper operating agreements are crucial for setting up LLCs for success.
- Disclosure of management structure is required by most states.
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Member-Managed LLCs
- Appropriate when all members seek involvement.
- Common decision-making by all members, or by the single owner if applicable.
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Manager-Managed LLCs
- Suitable for passive investors or businesses with professional management requirements.
- Less common due to owners’ desire for control.
- Designation Requirements
- Some states mandate designating between member or manager-managed LLCs.
- Passive investments often favor member-managed LLCs for enhanced anonymity.