A managing partner is an owner in the business. A CEO may or may not own part of the business. A CEO can be fired. If a managing partner exits, that process follows the partnership agreement, leading to an ownership change.
Managing Partner vs. CEO
The managing partner is both an owner and a manager. They create strategies as an owner. They then manage operations, marketing, and teams as a manager.
The CEO reports to the board of directors. The managing partner reports to the partners. A CEO gets a salary and performance incentive. A managing partner earns through profit share.
A managing partner functions similarly to a CEO. They implement and manage strategies promoting the organization. However, they have ownership interest and work on behalf of the company.
Structure of LLCs
An LLC can be member or manager-managed. In a member-managed LLC, all members participate in the business and can act on its behalf. This works well for smaller, knowledgeable groups with time to devote.
Some partnerships have a managing partner handling day-to-day finances, legal matters, HR, and overall operations. They are given authority per the partnership agreement.
Understanding Ownership and Profit
The difference between a managing partner and owner is an owner passively collects income, while a managing partner actively earns it.
Frequently Asked Questions
Are partners considered owners?
A managing partner owns part of the business. The managing partner earns through profit share, while a CEO gets a salary and performance incentive.
What is the managing partner equivalent to?
A managing partner owns and manages. They create strategies and manage the business, similar to a CEO, but with the added element of ownership interest.