Does an LLC Have to Have a President or CEO?
Does an LLC Have to Have a President or CEO?
The operation and function of a limited liability company (LLC) rests primarily upon your choice and intended structure of your organization. While corporations, by law, are required to have a board of directors and to name officers, including a president and a treasurer, LLCs are fortunate to be much less stringently directed. LLC management (you) can choose to operate like a corporation, with officers and directors, if you so desire—but, you also are free to let your LLC function with less formality, naming no board and possessing only a single named principle. Therefore, it becomes your choice at set-up: what sort of LLC do you seek to establish?
What Is a Member?
First and foremost, it’s important to understand who owns the LLC. Anyone who establishes an LLC is called a "member" of the entity and that person possesses an interest in the membership. All valid LLC designations require some form of operating structure and with that structure comes the need for designating ownership control.
Single-Member LLCs – Name at Least One
While the specific structures of operation of your LLC are determined by the particular state in which your LLC is formed, many LLCs are small and have few member-participants. Those with only one person are allowed to name that sole person as the LLC CEO, LLC President, or to take any title that clearly indicates operational responsibility. Your LLC must have at least one person at the helm; otherwise, your entity will be like a boat without a rudder. A single-member limited liability company permits the only LLC member to be named as the organizational leader, using any title that effectively represents that position of control or leadership. LLCs that include more than one LLC member (multiple-member LLCs) require further and more detailed structuring. Official operating contracts or agreements, reduced to written formats, are necessary to clearly set out and to define the roles of the members, and, in this way, to specifically outline their key duties, obligations and responsibilities.
Multi-member LLCs – Designate Titles in the Operating Agreement
To be clear, you are not required to use the designation of CEO or President; however, whatever designation you choose, that person must be prepared to possess organizational authority and control to sign on behalf of your LLC and to bind the organization to any necessary contracts, agreements or business undertakings. In LLCs with multiple members, the structural agreement (operating agreement) must indicate who precisely has the signatory authority (the right to sign for your LLC). This document must be signed by all members of the limited liability company. It is important that a name (or title) be issued to each individual, with the specifically assigned duties outlined clearly within the organizational documents. Signed (or executed) by all LLC members, this list should indicate precisely which person possesses which authority and it should designate the name (title) issued to the person performing the assigned duties. This entry will also reflect which person in your LLC has the authority to sign for the organization, thereby binding your LLC to later contracts, agreements, and the like.
Choose Your Leadership Title
In a solo LLC (a single-member LLC), you possess the full freedom to select a name or title that suggests your leadership role; for example you may choose to be termed as: President, President and CEO, Principal, LLC Manager, Managing Partner, Executive Manager, Chief of Management, and so on. Other options exist for you as well; choices that more keenly set out your particular field of expertise. Instead, you may prefer to be called: Director of Operations, Chief of Technology or Founding Director. It is your choice!
Choose Titles of Other Leadership Positions
The same sort of designations hold true for multi-member LLCs. For example, operating agreements may include: Treasurer, Financial Manager, Budget Director, and the like; each are permissible designations. If the titles meet with the approval of the whole of the membership of your LLC responsible for setting up the structure, such designations are deemed acceptable for the LLC.
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