Officers of an LLC: Everything You Need to Know
The officers of an LLC are in charge of many important decisions of the company. 3 min read
The officers of an LLC are in charge of many important decisions of the company. The law requires a board of directors and officers to be present in corporations. However, the guidelines for LLCs aren't as strict. A limited liability company can choose to function like a corporation by having directors and officers, however, they can also choose to have no board and only one principal.
LLCs allow for a flexible business structure in both small and bigger businesses. The positions an LLC has will be determined by state law and its size. Small LLCs only need a few positions appointed, which even one person can cover. Larger corporations have many more employees and need a larger amount of positions filled to keep up with their administrative and legal responsibilities.
A limited liability company can choose to have officers in charge of everyday operations, but is not required to do so. Officers will serve under either members in the LLC or managers in the LLC. Managers or members can also be officers. There isn't a limit on how many officers there can be, and a single person can hold multiple offices. One person can even hold all of the offices if they choose.
If there is more than one person who will be officers, the secretary and president should be different people. The following extra officers may also be elected:
- Assistant Secretary
- Chief Administrative Officer
- Assistant Treasurer
- Chief Operating Officer
- Assistant Secretary
- Chief Technology Officer
- Vice President
Corporations have a requirement of appointing a minimum of one officer, such as a treasurer, president, or secretary. The majority of states don't make it a requirement for LLCs to have officers, however. Within some specific institutions, like banks, it is mandatory to appoint an officer in the LLC who will represent the company.
What Is a Member?
Understanding who owns the limited liability corporation is essential. Any person who creates an LLC is considered a member and has interest in the LLC's membership. A valid LLC is required to have some type of operating structure, which means ownership control will need to be designated.
Every member of the LLC will have an active part in the company's management unless it is manager-managed. They also will have the authority to contractually bind the LLC. The specific responsibilities and powers of the members should be written in the operating agreement.
Each state has different requirements for the structure of operation of a limited liability company. A majority of limited liability companies are smaller and only have a couple members. If there is just one person, they can have the title of President or CEO to show that they have the responsibility of the company. At least one person needs to be in charge of the operations of the company.
In a single-member LLC, that member can self-appoint themselves the organizational leader to show they're in a position of leadership. Limited liability companies that have more than one member need more structuring. Official agreements or contracts need to be created to clearly define what all members' roles are. It should also list their obligations, duties, and responsibilities. In a single-member limited liability company, there is freedom to pick the title the member wishes, such as Executive Manager, President, Principal, and so on.
A multi-member LLC does not need to designate someone with the title of President or CEO. However, the person who is chosen to be in charge needs to have control and authority to sign on behalf of the LLC. They will also need to be in charge of any agreements or contracts. Regardless of their title, at least one person needs to have signatory authority, which means they're authorized to sign agreements and documents on behalf of the company.
Each member must have a specific title attached to them as well as their assigned duties, and this should be in the organizational documents. The person with the authority to sign contracts will be binding the LLC to contracts in the future.
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