Can an LLC have more than one managing member?

Yes. LLCs may appoint multiple managing members, but responsibilities should be clearly divided in the operating agreement to avoid disputes.

Do managing members get paid a salary?

Managing members usually receive profits as distributions, but they may also take a salary if specified in the operating agreement and tax structure.

Can a non-member serve as a manager instead of a managing member?

Yes. In a manager-managed LLC, members may hire an external manager who has no ownership interest but manages operations.

What fiduciary duties does a managing member owe to other members?

They must act in good faith, with loyalty, fairness, and due care, always prioritizing the company’s best interests.

Can members remove a managing member?

Yes, but removal procedures should be detailed in the operating agreement. Without such provisions, state law may control the process.

Managing Member in an LLC: Roles, Duties, and Risks

Learn what a managing member in an LLC is, their duties, authority, pros and cons, and how this role affects liability and daily business management. 4 min read updated on August 19, 2025

Key Takeaways

A managing member is both an LLC owner and an active participant in daily business operations, with authority to enter contracts and represent the company.
LLCs may choose a member-managed or manager-managed structure, depending on member expertise, involvement preferences, and business complexity.
The role of a managing member involves fiduciary duties, including acting in good faith, avoiding conflicts of interest, and protecting company assets.
Advantages of appointing a managing member include centralized decision-making, tax benefits, and operational efficiency, but disadvantages include higher liability exposure and self-employment taxes.
Operating agreements play a critical role in defining the scope, authority, and limits of managing member powers.
Understanding managing member responsibilities is crucial for compliance, risk management, and avoiding internal disputes.

Who Is a Managing Member?

A managing member is a person who is involved in the daily management of a company. The managing member has an interest in the business as an owner. This person is also in an authoritative position that allows him or her to represent the company in contract negotiations and agree to the terms of a binding contract.

Duties and Responsibilities of a Managing Member

A managing member has a dual role: part-owner of the LLC and hands-on operator of the business. Their responsibilities often include:

Operational Management: Overseeing day-to-day operations, supervising employees, and ensuring compliance with laws and regulations.
Financial Oversight: Managing budgets, approving expenditures, and making investment decisions.
Contracts and Transactions: Negotiating and signing binding agreements on behalf of the LLC.
Fiduciary Duties: Acting in the best interest of the company and its members, avoiding conflicts of interest, and exercising due care in all decisions.
Strategic Leadership: Guiding long-term goals, growth strategies, and business development initiatives.

Failure to uphold these duties may expose a managing member to personal liability, particularly in cases of fraud, negligence, or breach of fiduciary duty.

Pros for Choosing a Manager-Managed Operation

Choosing a manager-managed operation is a benefit for members who wish to be part of a company but prefer to maintain a low-key presence due to a lack of management experience or specific skills.
Unlike an LLC that is member-managed and allows all members to participate, a manager-managed LLC consists of a group of designated members or a non-member.
Another reason to choose a manager-managed structure is to avoid having multiple members at the helm serving as managing members and providing input that can affect the efficient operation of the company.

When Should You Choose a Managing Member?

Choosing a managing member structure works best in scenarios where:

Some Members Are Passive: Not all owners want to be involved in management. A managing member allows passive members to invest without handling daily operations.
Expertise Is Concentrated: One member has specialized skills (finance, operations, or industry knowledge) making them better suited to lead.
Business Size and Complexity: As businesses grow, designating a managing member ensures consistent decision-making and reduces disputes.
Outside Managers Are Unnecessary: Unlike hiring a non-member manager, using a managing member keeps management within ownership.

This arrangement balances operational efficiency with member involvement while preserving ownership control.

Pros of a Managing Member LLC

As a managing member, responsibilities include the direct operation of the business, purchasing and selling property owned by the company, agreeing to binding contracts, and the hiring and firing of employees.

Health insurance benefits for a managing member are exempt from income tax.

Legal Authority of a Managing Member

Managing members are typically recognized as agents of the LLC. This gives them authority to:

Bind the company in contracts and legal agreements.
Buy, sell, or lease property on behalf of the LLC.
Hire professional advisors or outside contractors.
Represent the LLC in disputes or negotiations.

However, the operating agreement should clearly define these powers to prevent misunderstandings or overreach. Without clear terms, state default laws may apply, which could either broaden or limit a managing member’s authority.

Cons of a Managing Member LLC

When managing members receive their share of distributed revenue from the business, they are responsible for paying self-employment tax. Currently, the self-employment tax is 15.3 percent.

Any earnings accrued by a managing member of an LLC is considered gross income. This income is subject to taxes.

Risks and Liability Considerations

While LLCs provide limited liability protection, managing members still face certain risks:

Personal Liability for Wrongdoing: They can be held personally liable for fraudulent, reckless, or negligent actions.
Increased Scrutiny: As decision-makers, managing members are often the first to face lawsuits, regulatory inquiries, or member disputes.
Conflict of Interest: Engaging in self-dealing transactions (such as personal use of company assets) may lead to legal disputes.
Fiduciary Breach Claims: Other members can sue a managing member if they believe the member acted in bad faith or failed to protect the LLC’s interests.

Strong operating agreements and proper business insurance can mitigate these risks.

Frequently Asked Questions

Can an LLC have more than one managing member? Yes. LLCs may appoint multiple managing members, but responsibilities should be clearly divided in the operating agreement to avoid disputes.
Do managing members get paid a salary? Managing members usually receive profits as distributions, but they may also take a salary if specified in the operating agreement and tax structure.
Can a non-member serve as a manager instead of a managing member? Yes. In a manager-managed LLC, members may hire an external manager who has no ownership interest but manages operations.
What fiduciary duties does a managing member owe to other members? They must act in good faith, with loyalty, fairness, and due care, always prioritizing the company’s best interests.
Can members remove a managing member? Yes, but removal procedures should be detailed in the operating agreement. Without such provisions, state law may control the process.

If you need help with a managing member, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only 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.