A Limited Liability Company (LLC) is a type of business entity that offers liability protection to the owners while also giving them the freedom to decide how their business will be run. An LLC may choose to be manager-managed, in which case one or more people are selected to oversee its operations. Can a manager-managed LLC have a single member, though? The article will explain why the answer is yes.
The owners (also known as members) of a manager-managed LLC appoint one or more managers to oversee the day-to-day operations of the company. When the owners lack the time or knowledge to run the business themselves, this management style is frequently adopted. A widespread fallacy, meanwhile, is that because there is only one owner, a lone member LLC cannot be manager-managed. That is untrue.
A single member LLC has the option of being manager-managed, and they are free to name themselves or another person as the management. Similar to a multi-member LLC, the LLC operating agreement may set forth the manager’s responsibilities, tasks, and salary. With this structure, the owner can concentrate on other facets of the company, such as marketing and sales, while delegating responsibility for day-to-day operations to the manager.
A solitary member LLC must first update its operating agreement to reflect the addition of a management. To amend their business registration, the member must also submit the required papers to their state’s Secretary of State office. It is simple to add a management to an LLC, and the new manager can start working as soon as the changes are accepted.
On the other hand, the procedure may be more challenging if a manager needs to be fired from a manager-managed LLC. The procedure for firing a management should be outlined in the LLC operating agreement, such as a member vote or a set tenure period. The member(s) may need to obtain legal counsel to identify the best course of action if the LLC operating agreement does not provide a procedure for dismissing a management.
A lone member LLC may change the managing member by altering its operating agreement and revising its business registration with the Secretary of State’s office in their state. The LLC operating agreement should outline the procedure for changing the managing member, along with any permissions or votes that may be required from other members.
Finally, it’s critical to comprehend that an LLC management is an agent of the LLC rather than its employee. This indicates that they have the power to represent the LLC in business-related concerns. To prevent future misunderstandings or legal problems, the operating agreement must specify the manager’s connection to the LLC.
In conclusion, a solitary member LLC can be managed by a manager, and the owner can designate either themselves or another person to oversee daily activities. An LLC’s operating agreement must be updated in order to add a manager, as well as the state’s business registration. While replacing a managing member entails modifying the operating agreement and updating the business registration, removing a manager can be more involved and may require legal counsel. Last but not least, the operating agreement must specify the management’s role within the LLC. The manager is an agent of the LLC, not its employee.