What is an LLC Manager?
For the most part, the formation process for a limited liability company is pretty basic. There are some elements, however, that can cause some confusion, like the role of an LLC manager. In fact, many LLCs don’t have managers at all! So, what is an LLC manager, what is their job, and which LLCs have them?
In this guide, we’ll answer these questions and more. By the end of this article, we’re confident that you’ll not only understand what the LLC manager’s role is, but also whether your business needs one or not. Read on to get all the details!
What Is a Manager of an LLC?
When you operate an LLC, you get to choose whether you want to be member-managed or manager-managed. With the first option, your business is managed by its owner/members, who oversee all the day-to-day happenings of the company. The second option is to hire a separate manager from outside the company, who joins your LLC solely to handle the managerial aspects.
When you form your business, your LLC is automatically designated as a member-managed company. Keep in mind though that you always have the option to change your designation to manager-managed if you want to down the line.
Why Should I Hire an LLC Manager?
There are a few major reasons why an LLC may want to hire a manager, and we’ll start with the simplest one of all. Some LLC owner/members just don’t want to handle the managerial side of things. For example, if you’re more of a big-picture person and you’re not interested (or skilled) at handling the day-to-day minutiae of running a company, it might be a good idea to hire a manager for your LLC.
Along those same lines, in some multi-member LLCs, some of the owner/members are what’s known as passive members. Maybe they’re investors brought in after formation, maybe they’re too busy to keep up with the daily grind of LLC management ― whatever the reason, if you have any passive members, there’s a good chance hiring a manager is the right move for your business.
Another instance where an LLC manager is advisable is if your business is a large company. In these circumstances, it might be more beneficial to have your members each handle their own area of expertise, and bring in a manager to oversee the more routine day-to-day decision-making.
Finally, family-run businesses often choose to designate an LLC manager. Family-owned LLCs are often passed down from generation to generation, and if the older generation doesn’t want to burden the younger generation with having to take full responsibility for the company’s daily operations quite yet, hiring a manager is a fairly common step.
Why Should I NOT Hire an LLC Manager?
Many limited liability companies ― especially those that are somewhat small businesses ― aren’t terribly complex, and they probably don’t need a separate manager brought in. Also, many LLC owner/members truly want to be involved in the daily decisions of the company’s operations.
For LLCs with a small ownership group, or one consisting of a close-knit group of owner/members, member-management may be preferable. Especially if your members want to take charge of managing the sale of your company’s goods and services, hiring employees, and other business functions, member-management is a solid choice.
Most LLCs choose the member-management route, because it’s not only the default selection, but it’s also not a terribly demanding job to expect your ownership group to be able to handle the role. Still, there are definitely plenty of businesses that can benefit from hiring an outside manager to take the reins. Either way, you can always change your mind later and try the other option, so there’s really no need to fret too much one way or the other.
Whether you choose to hire an LLC manager or not, we wish you the best of luck with your business!