LLC Officer Titles Explained

LLC Officer Titles Explained

by Belle Wong, J.D., March 2015

If you've recently set up an LLC or are considering starting an LLC, now it’s time to take a look at the different titles given to individuals within your LLC. Some of the titles you might choose are corporate titles designating the roles of various corporate officers in the LLC—for example, treasurer or vice-president. These corporate titles can be helpful in establishing who does what, but they aren’t required under state law. Other titles are covered by your state’s laws and are particularly important when it comes time for your LLC to enter into contracts with other individuals or business entities. While the exact titles may differ from state to state, most states use similar terms for these titles.

LLC Member

A member of an LLC, or limited liability company, is an LLC owner—that is, anyone who has an ownership interest in the LLC. Generally speaking, unless the LLC is a manager-managed LLC or unless otherwise stated in the LLC operating agreement, all members of an LLC play an active role in the management of the company, and have the authority to bind the company contractually. Your LLC operating agreement should set out the specific powers and responsibilities of members.

What about corporate officers or employees? While an officer of the company or an employee may also be a member, not all officers or employees are members. In order to be a member, the officer or employee must hold an ownership interest in the LLC.

LLC Manager or Managing Members

While most LLCs are member-managed, in some cases a manager-managed LLC may be the more appropriate choice. In a manager-managed LLC, the management of the company is delegated to either a third-party manager, or to a member or group of members who are known as managing members.

When an LLC is a manager-managed LLC, members who have not been designated as managing members do not participate in the day-to-day management of the company, nor do they have the authority to bind the company contractually. These powers and responsibilities belong instead to the LLC managers or managing members. The rights and obligations of LLC managers or managing members should be documented in the LLC operating agreement.

Other Titles

You may also have come across some other titles which sound corporate or businesslike. Are these titles important to the running of your LLC?

  • Shareholders. LLCs have LLC members rather than LLC shareholders. A shareholder is someone who holds stock or shares in a corporation. At first glance a shareholder might seem very similar to an LLC member, but in reality the two are very different. While a shareholder may have voting rights—this will depend on the type of share held—unlike an LLC member, he or she won’t have a right to participate in the management of the company or the authority to bind the company contractually.
  • Directors. The title of director applies within the context of a corporation. Corporations are run by a board of directors who are elected by the shareholders. Within an LLC, however, either members (in a member-managed LLC) or managers or managing members (in a manager-managed LLC) are responsible for the management of the company, rather than a board of directors.
  • Corporate officers. As an LLC, your company may decide to appoint corporate officers such as president, vice-president, or treasurer to handle certain jobs or tasks within the company. These corporate titles can be useful in designating who does what within your LLC, but overall management and the authority to bind the company still rests with the LLC’s members or managing members (depending on the structure of your LLC).
  • Sole proprietor. A sole proprietor is someone who owns and operates his or her own business. An LLC cannot be a sole proprietorship, as they are two different business structures. However, an individual can decide to register as an LLC instead of running his or her business as a sole proprietor.
  • Registered agent. An LLC registered agent is a third-party, registered in the same state in which the LLC is established, who has been designated to receive official government notices or documents on the LLC’s behalf. Most states will require LLCs to have a registered agent, but even if one isn’t required by your state, there are many benefits to having a registered agent which you should consider.

The number of titles that can apply within the context of running a business can be confusing, especially for those new to LLCs. The two most important titles to keep in mind within the context of an LLC are members (in a member-managed LLC) and managers/managing members (in a manager-managed LLC), as these two titles indicate who has the duties and obligations of the management of the company as well as the authority to bind the company.

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