LLC Titles: Everything You Need to Know
It can be vital to your company to go with a company name that can be branded, whether you are providing services or selling products of some kind.7 min read
2. Good Choices for Titles vs. Titles to Avoid
3. Legal Title Issues
4. Business Cards and Communications
5. LLC Flexibility Benefits
6. Explanation of LLC Titles
7. Choose Titles With Authority
8. LLC Membership Interests
LLC titles are important as the title of your LLC can make or break your company. It can be vital to your company to go with a company name that can be branded, whether you are providing services or selling products of some kind. Regardless of what type of LLC you are running, it all starts with the name of your business. With that being said, you'll want to keep in mind some requirements when determining what the title of your LLC is going to be.
Official Names for LLC Owners and Managers
If you claim all or part of a LLC, you are known as a sole proprietor. While you haven't set up a sole proprietorship, you are still the single owner of the LLC itself. Therefore, you are at the top of the hierarchy. If you choose to hire employees or even directors, they will all report to you. LLCs can have only one person managing it or several individuals. In some LLCs, directors oversee the company. These directors are not managers but rather directors chosen by the manager (owner) of the LLC who assist in controlling the overall operations of the business.
If you are a member of an LLC who has management responsibilities in the company, your title would be member-manager. If you're the only member of your LLC, you could give yourself several titles, including manager, member, or member-manager.
While it's common to grant titles to various people within your LLC, these titles mean very little to people outside your company. For instance, even though an LLC member is actually a company owner, ‘member' sounds to many like a title you would give an employee. Similarly, managers of an LLC can actually be one of the heads of the company, but the title gives the impression of a midlevel employee.
Since those titles can be misleading to those outside your LLC, it can be a good decision to not give a title to the person running your company, especially if they regularly deal with the public.
Good Choices for Titles vs. Titles to Avoid
There are three important things you should remember when picking a title for LLC. To begin with, there are certain titles that are better than others. If you include something like ‘CEO,' ‘President,' or ‘Principal' in the title, this may show that you have more authority. Further, you'll have to indicate LLC or L.L.C. at the end of your title. Most importantly, you'll want to pick a name that is available to you! Before you start getting creative and jotting down title ideas, you'll want to run searches on the Secretary of State's website to ensure that the name ideas you have are free and available for use. While you're at it, look online and ensure that the domain name is free to use so that you can have a matching website address.
Some LLC titles that are unseemly or could cause you issues include:
- Titles with the word ‘accomplice'
- Titles that would otherwise steer potential clients and customers away, i.e., titles that are inappropriate, uninviting, and otherwise lack a sense of professionalism.
- Based on state law (in most states), you cannot have an LLC with certain words in it; this includes but is not limited to University, School, Bank, Insurance, etc. These types of names are generally restricted. You'll want to check with your respective Secretary of State's website to ensure that you are fully aware of what terms can and cannot be used.
- Additionally, remember that, if you are not a doctor, you cannot utilize the word ‘Doctor.' Similarly, if you are not a lawyer, you cannot utilize the term ‘Lawyer' or ‘Legal Services' in your title name.
Certain LLC titles, while they can be used, may cause problems for your business, and are probably best avoided. For example, you should refrain from using the word partner in any of your company titles.
LLC members could certainly consider themselves as partners, but it's important to remember that limited liability companies and partnerships are legally distinct business entities. With a general partnership, for example, no partners receive limited liability. If you use the word partner in an LLC title and sign a contract using this title, you could be exposing yourself to personal liability.
Proprietor is another word to avoid using in an LLC title, even if you are the only owner of your company. While you may like how the title sounds, calling yourself the proprietor may result in confusion, since a sole proprietorship is its own type of business entity. The better idea is to call yourself an owner.
You should never use made-up titles in your LLC. To avoid using dry corporate titles such as president, business owners sometimes create their own titles such as lead coordinator. The problem with made-up titles is that they often don't give the public any idea what you actually do within your company. If you are set on using an invented title, you should combine it with a title that people are likely to recognize. For example, you could call yourself the lead coordinator/president.
Finally, you should be cautious about using a humorous title. Although your customer base may appreciate humorous titles, they can be embarrassing when it comes time to negotiate a deal with another company. If you want to use a humorous title, do so internally, and stick to traditional titles for interacting with people outside your LLC.
As always, do your research beforehand. Take your time and understand the state requirements before creating your LLC title. This name will be with you for a long time, so you want to ensure that you not only follow the requirements of the law, but also choose a name that will work for you.
Legal Title Issues
When you file for state recognition of your new LLC, you typically must designate how your company will be managed: either member-managed when you have one or more members manage the company, or manager-managed when you hire a professional who is not a member to make operational decisions for your company. When your top executive signs legal documents, contracts or agreements, they must use their legal title to properly execute these documents.
Business Cards and Communications
With regard to business cards, be sure to keep it simple. If you are the sole proprietor in your LLC, you can call yourself whatever you like — CEO, President, etc. But be professional and, as always, remain consistent. If your business card indicates that you are the CEO, then make sure that you send emails with that title in your signature line so not to confuse your current or prospective clients.
LLC Flexibility Benefits
LLC regulations can differ depending on the state where you form your company. The laws regulating LLCs, however, were specifically designed to help small business owners structure their company in whatever way that they want or need. The flexibility provided by the LLC structure allows you to create an operating agreement that works best for your company.
In your operating agreement, you can describe the titles that you wish to use in your LLC. Unlike your operating agreement, which you can tailor to your needs, your LLC's Articles of Organization must follow a rigid format as determined by the rules in your state.
Explanation of LLC Titles
The terms ‘managing member' and ‘member' are the two most common titles for the owners of an LLC. While you can stick with these titles, there are other terms you can use to refer to your LLC owners if state laws allow them. Some of the other terms you could use for the owners of your company include:
If you are an LLC member that has no day-to-day role in the company, your title could simply be ‘investor.' Managing members can use titles that are easily understood by those outside the business, such as president or CEO. Before forming your LLC, it's a good idea to learn about some of the titles you can give to individuals within your company.
Many of the titles you will use in your LLC are meant to indicate your company's corporate officers. Titles such as treasurer, for example, indicate what a person does in your company. Corporate titles are often not a legal requirement, although most LLCs use them. Depending on your state's laws, there are some titles that you will be legally required to use. These titles are crucial if you want to agree to contracts with other businesses and individuals. Required LLC titles will be similar in most states, although you should check the rules in your state to make sure you are using the correct terms.
Choose Titles With Authority
In many cases, when you choose a title, you should use terms that describe what you do for your LLC. For example, you could use the title ‘sales director,' which means you are in charge of overseeing your company's sales. You should be certain that your title provides an accurate description of your role by fully describing all LLC titles and roles in your company's operating agreement.
By providing a full description of your title, and ensuring that the title reflects your responsibilities, you'll be guaranteeing that you have the legal authority to sign documents using your title on behalf of your company.
LLC Membership Interests
Although it is not a requirement for LLCs, you can give every member the same equitable interest in your company. If you wish, one LLC member may have a higher membership stake than the others.
When forming a multi-member LLC, you should make sure to write an operating agreement that describes each member's ownership stake in the company. This description should include how profits and losses will be distributed to company members. With a single-member LLC, you would have complete ownership of the company, as you are the only member. You will not need to write an operating agreement for this type of LLC.
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