LLC Management Structure: Your Options Explained

LLC Management Structure: Your Options Explained

In a limited liability company, business owners are called “Members.” The number of Members impacts how distributions and contributions will be made as well as your available tax options. Florida LLCs are either managed by its Members (Member Managed) or by appointed managers (Manager Managed). Regardless of your choice of LLC management structure, you’ll still have more flexibility with how you can manage your business when compared to corporations. The main difference comes down to who’s on the ground giving the orders, so to speak. Let’s get into what that means below.

Member Managed & Managing Members

Not all of a Limited Liability Company’s Members are “Managing Members.” Instead, the LLC’s Operating Agreement appoints specific Members as Managing Members. Under this LLC management structure, Managing Members have the authority to enter into contractual obligations on behalf of the company. This means that, by using this LLC management structure, they can do business on the LLC’s behalf.

Managing Members aren’t passive owners, either; they actively involve themselves in day-to-day operations. They’re like executives in corporations. Managing Members pay taxes like any other Member of the LLC.

Manager Managed & Managing Managers

In a Manager Managed LLC, the Members hire Managers to oversee the business on their behalf. Like Managing Members, they can sign contracts for the LLC, too. Managers don’t have any ownership in the company and pay taxes like any other employee. This LLC management structure is much like the relationship between the shareholders and officers of a corporation.

There are some more complex but sometimes beneficial tax implications for Manager Managed Limited Liability Companies. Be sure to discuss these with a CPA experienced in these matters. Your business is too important to go it alone.

For more information on how ownership works in a Florida LLC, check out our blog on Membership Interest here.

When launching a business, it’s crucial that you have a solid foundation that will encourage growth. As a firm of entrepreneurs ourselves, we know how to start businesses off the right way. Hiring an attorney reduces the chance that your company will run into trouble down the line and helps ensure that you’re armed with the information and documents that you need for success. For assistance with starting your business or growing the one that you already have, visit our Service Page or contact us by calling (727) 279-5037.

Image: Three People Sitting Beside Table by Pixabay on Pexels.