LLC Officers

LLC officers manage the everyday affairs of a business. You can choose two structures within an LLC: member-managed or manager-managed. A member-managed LLC is typically run by multiple or all members, while a manager-managed LLC has a designated person or person who run the business. A member might hire officers to handle certain departments within the LLC.

Such managers are also called officers, and they can take on various roles. Managers may also become board members who make important management decisions. Members are rarely managers, but they may also operate the business in the same manner as managers. Managers are usually experienced personnel with a specialty in certain areas of business.  

For instance, chief executive officers (CEOs) run the daily operations of the company, while a chief financial officer (CFO) handles the financial matters.

Regardless of the structure, each officer has a designated responsibility based on his or her expertise. Officers usually manage the company on behalf of members, or members can be officers. It is for this reason that many owners choose the LLC structure, and it gives members room to hire officers and designate them with certain responsibilities.

States vary when it comes to creating and managing LLCs, but all states generally have the same guidelines.

Member Rights

Members have certain rights based on their percentage share in the LLC. They have a right to any losses or profits of the company and receive compensation distributions from the organization. Further, they also perform specific duties under a compensation plan.

Tiered members can also have a different set of rights based on their classification. For instance, one group of members may have rights to make important decisions, while another class has no decision-making power whatsoever. Compensation plans should be recorded in your company’s operating agreement.

Examples of LLC ownership structures include:

  • Multiple unrelated individuals coming together and forming a business
  • A single-managing member working with other members
  • A large equity investor, such as a real estate investor, contributing to the LLC

Members can own shares directly or indirectly. For indirect ownership, family members may own a piece of the LLC, but have no direct involvement in daily operations. Direct ownership entails full membership and an active stake in the LLC, hiring personnel or managing certain operations.

In addition, members can dive organization into various groups. Such groups may have the right to make executive decisions, and the group may appoint a single representative to act and speak on behalf other group’s interest.

Who Can Become a Manager?

Owners, managers, investors, and lenders may all be members. Members can hold various titles, including president, vice president, treasurer, and secretary, but these titles can be superficial.

It is worth noting that lenders, managers, and investors can hold certain titles, including:

  • President
  • Vice President
  • Secretary
  • Treasurer

With that, these titles can be superficial at best.

Passive members are people who choose to invest in the LLC, but do not take part in daily operations. However, they could still have the right to vote on important issues pertaining to the company, including the right to vote on or amend operating agreements.

If you are contending with multiple members, you may also establish a tiered membership based on the amount shares each group places in the company. Such information should be included in an operating agreement.

Operating Agreements

An operating agreement outlines roles, responsibilities, and payment systems to each member. Operating agreements are generally not mandatory in most states, but you should draft one anyway to ensure all members and staff personnel know their obligations within the company. With that, an operating agreement cannot make any person a member, as a member would have to purchase shares in the company to qualify as an official member.

Registered Agents

Regardless of your LLC structure, LLCs need to have a registered agent in place to accept any legal documents for your LLC. States vary, but registered agents should be an individual or entity that resides in the state where the LLC conducts business.

Further, the agent generally must be available during opening hours so he or she can accept any legal documents and forward them to your company. While not strictly a managerial, it is an important position and one that that’s required in most states.

To learn more about LLC officers, submit your legal inquiry to the UpCounsel marketplace. UpCounsel lawyers will answer any questions you have regarding the process and the best way to appoint reputable officers who will add value to your business. We will also help you with the LLC filing process and getd you on a fast track to success.