LLC Management Structures
A member-managed LLC runs similarly to a general partnership. In a manager-managed LLC, managers make the day-to-day decisions. Members don’t have a say in these decisions, but they do have the power to vote out a manager.
Limited Liability Partnerships
A Limited Liability Partnership allows all partners to be involved in managing the business with limited personal liability. Some states restrict who can form an LLP. An LLP may continue to exist if partners leave or pass away.
LLC Management and Ownership
- The members of a multiple-member LLC decide on managing the company either by themselves (member-managed) or through a manager (manager-managed).
- LLCs are treated like partnerships for taxes. Profits are divided and distributed among members.
- A manager-managed LLC looks similar to a limited partnership. The manager may or may not be a member. The manager runs daily operations. Members decide how much authority to give the manager.
Detailed Insights
- Is a member-managed LLC the same as a partnership?
- Who is the owner of a member-managed LLC?
LLC Ownership and Taxation
- A limited liability company (LLC) combines corporate asset protection with partnership tax advantages.
- A partnership always has multiple owners (partners). Limited Liability Partnerships allow partners limited personal liability.
- Profits are divided and distributed among LLC members.
Final Points
- A multi-member LLC can have unlimited owners, unless it is an S corporation, which limits owners to 100.
- A partnership determines business management, operations, and profit sharing.
- Members have equal rights in a member-managed LLC. Most LLCs are member-managed by default.
Roles in Manager-Managed LLC
- In a manager-managed LLC, members appoint managers to handle operations and responsibilities. If a member is a manager, they are a managing member.
- A member-manager has shares based on ownership plus wages.