If you are starting a new company, you likely have questions about choosing an entity, management structure, and many other legal issues that will impact and shape your new company. \u00a0One of the most common questions when starting a California limited liability company is whether a startup should be member-managed LLC or a manager-managed LLC. \u00a0A member is an equity owner of the LLC while a manager is a person (owner or not) who is empowered to make decisions on behalf of the LLC.\u00a0 The experienced corporate lawyers at Startup Company Counsel have advised many startups to determine which management structure is right for them.<\/p>\n
Member-Managed LLC<\/strong><\/p>\n In a member-managed LLC, each member has an equal say in the management of the company, unless otherwise stated in the operating agreement. \u00a0A member includes any person listed in the company\u2019s operating agreement for the business.\u00a0 In most states, when establishing an LLC, if it is not designated in the formation operating agreement, the LLC will become a member-managed LLC by default. In a properly formed member-managed LLC, the operating agreement would also include member voting rights, buy-out provisions, additional capital contributions, and other important management and operational proceedings.<\/p>\n Manager-Managed LLC<\/strong><\/p>\n In a manager-managed LLC, the members appoint managers in the operating agreement, and each are responsible for the daily operations of the business. \u00a0Depending on the business structure, members may retain rights to larger management decisions, or they may be relegated to the role of passive investors without any say in the management of the business.\u00a0 The LLC manager can either be an existing member of the LLC or it can be someone from outside the organization.<\/p>\n How To Choose?<\/strong><\/p>\n So how do you know which form of management is right for your LLC<\/a>? \u00a0It is important to clearly identify your goals.<\/p>\n By clearly identifying the goals of all members and the needs of the company, you can communicate effectively about which form of management offers your LLC the best chance of success.<\/p>\n Contact A Silicon Valley Corporate Lawyer Today<\/strong><\/p>\n Let the corporate lawyers at Startup Company Counsel ensure the success of your new limited liability company by helping you understand all aspects between member-managed and manager-managed, and help you build a successful LLC from the ground up. \u00a0Call the reputable Silicon Valley corporate lawyers at (408) 441-7555, or use our online contact form<\/a> to schedule your consultation today.\n
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