Key Takeaways

  • Managing partners oversee day-to-day operations in manager-managed LLCs, often making key business decisions on behalf of the company.
  • Titles such as “Managing Partner” can imply ownership and leadership, but may also create legal ambiguity unless clarified in formation documents.
  • The role of managing partners includes strategic planning, financial oversight, and personnel management.
  • LLCs can designate more than one managing partner, but clear delineation of responsibilities is essential to avoid internal conflicts.
  • Choosing a suitable management structure and title helps ensure legal clarity and professional credibility.

An LLC managing partner has the authority to act on behalf of the company and handles management duties. An LLC can have as many managing partners as it wants, and they don't have to be members either. Owners in an LLC are referred to as members. They are not required to maintain an active role in day-to-day operations. Owners have the option to run the business themselves as managing partners. 

The LLC managing partner will have duties and responsibilities as defined in the business's Articles of Organization. He or she is responsible for a variety of day-to-day activities like hiring, firing, bringing on new vendors, unions, etc. To avoid conflicts down the line, consider adding all responsibilities of a managing partner to the LLC's organizational documents.

Limited Liability Companies, or LLCs, are great for people who want to start a business but limit their liability of any company debt. They are attractive to business owners because they offer flexibility in taxation, management, and ownership. They operate as a separate entity from the business's owners. This means there is limited liability for owners, while tax laws offer the ability to be taxed as a partnership. 

Forming an LLC 

To form an LLC, you are required to file the Articles of Organization with the Secretary of State office. Each state requires that all limited liability companies include the LLC name in the Articles of Organization. The company name needs to include limited liability, limited liability company, LLC, or L.L.C. 

Articles of Organization need to include:     

  • Business purpose     
  • Principal address      
  • Name and address of the LLC's registered agent    
  • Members' capital contributions     
  • Rules regarding adding additional members     
  • Names and address of managers of the LLC

Manager Versus Member-Managed LLCs

If you have an LLC, you can decide to have it be a member-managed business or manager-managed. When an LLC is member-managed, it means all members have a voice in the day-to-day operations. This is ideal for small groups of members who have time to devote to the company. 

If you have members who are passive investors and choose not to be involved in operations, you may opt for a manager-managed LLC. This is where you choose one or more managing partners who are authorized to act on the business's behalf. 

Responsibilities of Managing Partners

Managing partners are typically appointed in manager-managed LLCs and are entrusted with operational authority. Their responsibilities often include:

  • Developing and implementing business strategies
  • Hiring and managing employees
  • Entering into contracts on behalf of the LLC
  • Managing vendor and client relationships
  • Overseeing finances, including budgeting and accounting
  • Ensuring regulatory compliance

Unlike passive members, managing partners are actively involved in the day-to-day business operations. Their duties should be outlined in the operating agreement or Articles of Organization to avoid misunderstandings or liability issues.

Reasons to Choose Manager-Managed LLCs

There are some situations where manager-managed LLCs are a better choice. Some reasons to choose a manager-managed LLC include: 

  • When you have members who lack the management experience and/or want to remain passive investors.
  • There is a large number of owners, as sharing management duties amongst a large group of owners can be difficult at best. 

No matter whether you own the entire LLC or just a small part, you are known as a member.

Depending on the state, you may have been required to disclose whether your LLC will be member-managed or manager-managed. 

Pros and Cons of Having Managing Partners

Pros:

  • Efficiency: Centralizes decision-making, avoiding the delays of group consensus.
  • Expertise: Ideal when managing partners have industry or operational experience others lack.
  • Professionalism: Lends credibility when dealing with clients, vendors, or investors.

Cons:

  • Potential for conflict: If roles aren’t clearly defined, disputes may arise among members.
  • Perceived hierarchy: Can create tension if some members feel excluded from decisions.
  • Legal ambiguity: The term "partner" could be mistaken for a general partnership, causing confusion or affecting liability.

Clearly defined roles and documented authority help mitigate these downsides.

Choosing a Name for LLC Owners and Officers

Outside of the LLC itself, the word member doesn't carry much weight. In some people's eyes, it could be an employee or a manager. If you're running an LLC, you'll learn there are not any detailed rules on what to call your position. LLCs aren't required to call someone CEO or president, which is different than standard corporations. 

When deciding on a job title for LLC owners, keep these two things in mind: 

  • The name should tell outsiders who you are and that you have the authority to act on the LLC's behalf.
  • Names should not be misleading. Acceptable options include owner, managing member, CEO or president, or Managing Director or Principal. 

There are some names that can cause problems. These include:    

  • Managing Partner, or any other name involving the word "partner."
  • Proprietor — this is a popular option for single owner LLCs but could be confused with a sole proprietorship.
  • Titles that are made up, as they don't tell outsiders what you actually do.
  • Humorous titles like Fearless Leader. They may seem fun but aren't likely perceived well when negotiating a multi-million dollar contract. 

What is the LLC head called? It's really open to interpretation and what works best for your personal situation and company. 

Best Practices for Naming Managing Partners

When designating someone as a managing partner in an LLC, clarity is crucial. The term "managing partner" is not legally defined in LLC statutes and could suggest a partnership rather than an LLC, potentially leading to confusion in contracts or court.

To avoid misinterpretation:

  • Use “Managing Member” if the individual is also an owner.
  • Consider titles like Managing Director, CEO, or President for external communications.
  • Avoid using “Partner” unless explicitly explained in your LLC documents.
  • Clearly outline responsibilities and authority in the operating agreement to support the title with legal clarity.

Additionally, some companies provide job descriptions to clarify the managing partner’s scope of authority both internally and to third parties.

Frequently Asked Questions

  1. What does a managing partner do in an LLC?
    A managing partner oversees daily operations, makes executive decisions, and ensures compliance with laws and contracts, typically as part of a manager-managed LLC.
  2. Can an LLC have more than one managing partner?
    Yes, an LLC can appoint multiple managing partners. Their duties should be clearly defined to avoid conflicts and overlaps in responsibilities.
  3. Is a managing partner the same as a member?
    Not necessarily. While a managing partner can also be a member (owner), the title specifically refers to their managerial role, which may not apply to all members.
  4. Should “Managing Partner” be used as a formal title in an LLC?
    It can be used informally, but it’s safer to use legally recognized terms like “Managing Member” or clarify the title in your operating agreement to avoid liability issues.
  5. Does a managing partner have legal liability for business debts?
    In an LLC, managing partners (like all members and managers) are typically shielded from personal liability for company debts, unless they personally guarantee loans or engage in misconduct.

If you have questions regarding the process of appointing an LLC managing partner, you can post your legal need on UpCounsel's marketplace. UpCounsel only accepts the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.