Understanding the Role of a Managing Member in an LLC

A limited liability company (LLC) is an adaptable corporate form that provides its owners, referred to as members, with limited liability protection. The members of an LLC have the option to choose a managing member to oversee day-to-day activities. Does the controlling member, however, now qualify as an LLC officer?

No, is the response. The managing member is not regarded as an officer, while having some duties and authority within the LLC. In a corporation, the board of directors normally appoints officers, while an LLC lacks a board of directors. The LLC is instead run by its members or by one or more managers that have been chosen by the members.

If the LLC contains more than one member, the manager’s passing won’t necessarily have an impact on the LLC’s continued existence. The remaining members have the option of choosing a new management or managing the LLC themselves. In contrast, if a single-member LLC’s owner/manager passes away, the LLC will often be dissolved unless the operating agreement contains a clause allowing a replacement to take over. What occurs if a single-member LLC passes away?

A single-member LLC may be dissolved upon the passing of the owner/manager, as was already mentioned. This indicates that the LLC’s assets will be dispersed in accordance with the owner’s estate plan to the owner’s heirs or beneficiaries.

Depending on the LLC’s operating agreement. If a member willingly withdraws, some operating agreements could stipulate that the LLC will dissolve itself automatically. Others might permit the other members to continue operating the LLC by purchasing the withdrawing member’s interest.

The Change of Address or Responsible Party – Business form, Form 8822-B, must be submitted to the IRS in order to change an LLC’s ownership. You can use this form to change the LLC’s mailing address or responsible party. This paperwork needs to be submitted within 60 days of the ownership change.

In conclusion, despite having some duties and authority within an LLC, a managing member is not regarded as an officer. If an LLC includes several members, the death of a manager may not have an impact on the LLC’s continued existence; nevertheless, a single-member LLC may be dissolved upon the death of the owner/manager. Depending on the operating agreement, the voluntary removal of a member may or may not result in the termination of the LLC. You must submit Form 8822-B to the IRS within 60 days of changing an LLC’s ownership.