A Member-Managed LLC is a type of limited liability company (LLC) where all members (owners) actively participate in the management of the business. In this structure, every member has the authority to make decisions and manage the day-to-day operations without needing to appoint a separate manager or management team.
In a Member-Managed LLC, each member’s rights and responsibilities are typically outlined in the company’s operating agreement, which governs how decisions are made, profits are distributed, and other operational aspects are handled. This arrangement encourages collaboration among members, as they must work together to manage the business effectively.
For example, if three individuals form a Member-Managed LLC for a consulting business, all three members can participate in making decisions regarding client acquisition, financial management, and marketing strategies. Each member can also bind the company to contracts, which emphasizes the importance of trust and communication among members.
This structure contrasts with a Manager-Managed LLC, where members may choose to appoint one or more managers to handle the business’s day-to-day operations, allowing non-managing members to take a more passive role.
Overall, a Member-Managed LLC is ideal for small businesses where all members want to be involved in management and decision-making processes, balancing active participation with the protection of personal assets that the LLC structure provides.