The main difference between a member-managed LLC and a manager-managed LLC is that they have vastly different management structures.
- Member-managed LLC –Member-managed LLCs are more common and good if you have few members and want each member to have significant input with the operations of the business. For a startup or small business with just one or three co-owners, it’s easiest to divide management powers among the owners with a member-managed LLC. Member management is also a wise choice if your business requires very specialized expertise.
- Manager-managed LLC – This is less common, but useful if you want your startup or small business to run more like a corporation. In a manager-managed LLC the control of the owners are voted on company issues instead of members being involved in the company’s day-to-day operations. If you have family investors or other investors, a manager-managed LLC is the better choice to centralize decision-making authority in a few key people. The same goes for a company with many owners. In a larger LLC with many members, manager-managed may be the better option because it can streamline business decisions.
In summary , with a member-managed LLC, all members (owners) are involved in decision-making. In a manager-managed LLCs, the elected members or owners are responsible for the day-to-day operations of the business, while certain designated members (or even outside appointees, like a board of directors) run the operations. Both management styles offer benefits depending on the nature of your LLC. Note: As a single-member LLC, you (the owner) are the manager.