LLC Title: Everything You Need to Know
An LLC title refers to the title of someone within a limited liability company (LLC). A person's business title helps denote his or her authority to act on behalf of the company.3 min read
An LLC title refers to the title of someone within a limited liability company (LLC). A person's business title helps denote his or her authority to act on behalf of the company. If someone is considering entering into a contract with another person, the person's title might provide assurance of their role and authority within the LLC. In an LLC, the partners or owners might have various titles, depending on the original organization of the business.
The owners of an LLC are referred to as members. A member is basically the same as a partner in a partnership, with a voice in managerial and operational decisions. Members also have the right to receive a portion of the LLC's profits. Because LLCs offer more flexibility in how they are structured, the members of an LLC might choose different titles for the various people involved in the business.
Limited liability companies can be managed by the members or by designated managers. A manager-managed LLC's ownership is split between the members and the managers. The members can invest in the company and receive a portion of its profits, but they won't make managerial decisions for the business. In this type of LLC, the managers take care of the operations on a daily business and help shape how the business will run through the decisions they make.
Officers and Directors
The owners of a corporation, referred to as shareholders, will elect a board of directors. The board runs the business. Some of the members of the board of directors might be shareholders in the company, but this isn't a requirement. While the board of directors is responsible for running the business, it can also elect officers to handle certain tasks.
For example, an elected treasurer is typically responsible for financial matters. Although this is more common in corporations, LLCs can use a similar organizational structure. According to a California-based business law firm, Methven & Associates, it is not common for an LLC to structure itself with directors and officers, but it is certainly an option.
In an LLC, the ownership interest varies. Depending on the state and its laws:
- A single person can own an LLC.
- Other businesses can hold interests in the company.
- A corporation could have an ownership interest in an LLC. For example, if Jones' Consulting Corporation serves as a member of an LLC, Jones' Consulting Corporation's board of directors could be involved in the day-to-day operations of the LLC.
Make Sure Titles Have Authority
When choosing titles for those involved in an LLC, it's important to make sure each one offers authority and that it's clear what business responsibilities that person is responsible for. Instead of sticking to the traditional title of “member,” your LLC might choose to give each member a specific title, such as “Sales Director” or “Vice President of Business Development.”
As you choose titles, make sure to keep a description of each title and its roles and responsibilities in the operating agreement. By including the list in the agreement, you can make sure all members have proper legal authority to sign on behalf of the business with the designated title.
Something that sets LLCs apart from other business structures is each member's interest in the business. All members might have an equal interest in the company, although this isn't a requirement. Some LLCs choose to formulate membership interest based on the investment each member makes. When forming a multi-member LLC, make sure to include membership interests and ownership stakes in the operating agreement. The owner of a single-member LLC owns 100 percent of the business.
Official Names for LLC Owners and Managers
An owner of an LLC is referred to as a member. An LLC might have one or up to 100 members. Some LLCs are managed by the members, while other LLCs' members have no involvement in the day-to-day operations of the business. If the latter applies, the LLC is run by managers that have been selected by the members. During an LLC's formation, the members must specify whether the business is member-managed or manager-managed.
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