Understanding LLC Management Structures: Member-Managed and Manager-Managed

Limited Liability Companies (LLCs) are common business arrangements that provide their owners with liability protection. They are adaptable and let various management structures be used depending on the demands of the company. The management structure of your LLC—whether it is member-managed or manager-managed—will determine who has the power to make decisions and run the company.

How can I tell if my LLC is governed by its members? Whether an LLC is manager- or member-managed is determined by the operating agreement. The LLC is deemed member-managed by default if the operating agreement does not define the management structure. In a member-managed LLC, all members have the power to oversee operations and reach decisions.

How do I subsequently add a manager to my LLC? You must change the operating agreement if your LLC is member-managed and you wish to add a management. The amendment should specify the manager’s obligations, including their power to make decisions and compensation. The management can start running the LLC as soon as the change is accepted and submitted to the state.

What obligations do managers have in an LLC, then?

Depending on the operating agreement and the demands of the company, an LLC manager’s responsibilities change. In general, the manager is in charge of making business decisions, handling the finances of the organization, supervising the operations, and hiring and supervising staff. A fiduciary duty requires the manager to operate in the LLC’s and its members’ best interests.

A managing member is not a manager. The management of an LLC that is handled by a manager is not required to be an LLC member. A managing member, on the other hand, is a member who is in charge of running the company in a member-managed LLC. In an LLC that is administered by managers, the managing member has the same rights and obligations as a manager.

So, is it possible for an LLC management to obtain a bank account?

Yes, an LLC manager may open a bank account on the LLC’s behalf. The operating agreement, bylaws, and EIN (Employer Identification Number) for the LLC, as well as other pertinent paperwork, must be delivered to the bank by the management. The operating agreement shall specify the authority necessary for the management to establish and maintain the LLC’s bank account.

In conclusion, it is crucial to comprehend the management structure of your LLC in order to determine who has the power to decide and run the company. Go over the operating agreement or seek legal advice if you’re unsure of how your LLC is run. The operating agreement must be changed in order to add a manager to an LLC, and the tasks that a manager performs depend on the demands of the company. A manager of an LLC may open a bank account on behalf of the LLC if they are authorized to do so. A managing member is a member who is in charge of running the business in a member-managed LLC.