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what's up y'all this is monday's mean business and today we're going to talk about what the difference between a manager managed versus a member managed llc check it out what's up y'all my name is saluto ube and i am the entrepreneur lawyer as well as the founder of the uber law group we're a law firm that specializes in business formation and intellectual property to help you protect your assets save money on taxes and attract quality clients um so today we're going to talk about the difference between a member managed versus a manager managed llc what that means and why it's relevant to you but to first understand that you're going to need to understand the breakdown between how llc's are organized and how they're filed so i can assume you can tell by the name of the video that there are two main types of llc's member managed and manager managed when we use the term member what we mean is an owner of an llc that's the language of llc's if you're the owner of an llc you are the member of that llc there's two ways that your company your llc can be governed you can have managers or you can have members now when you have a member manage llc that means everyone who is an owner has a authority to make decisions and to bind the llc if you are the member of a member managed llc that means you have authority to enter into agreements on behalf of the llc take on loans sign contracts you know create a bank account all these all these things that you can do with your company if you're a member of a member managed llc you have the authority to do that now on the flip side if you're in a manager managed llc only the managers have authority to bind the company so for instance if there are three owners in a manager managed llc but there's only one manager only that person in the role of manager has the ability to bind the company only the manager has the ability to enter into contracts or to take out a loan or to sign documents and so that's the main difference and so the reason why that a manager versus member manage llc was created is because there's some companies there's some people who will form an llc and have the intention that everybody who's a part of the company will be contributing and will be participating in the day-to-day interactions and workings of the company and those llc's everybody's got their hands in it everybody's involved and so it makes sense why you have multiple members and having a member manage llc however there are also companies where you might have a couple of people just really investing money but they're not interested in being involved in the day-to-day management and you might have another person that's running all of the affairs and who's running the show and so for that situation manager managed llc is very helpful because it makes everything clear makes everything easy and really streamlines the process and on top of that you have situations where if you're trying to open a bank account with the bank or get a loan or purchase real estate or do a number of things depending on how your llc is structured certain institutions might require that everybody who's a part of it if it's a member managed llc they might require everybody to come on board and sign off on documents and in some instances that can be tedious that can be burdensome that can slow down what you're trying to do so a manager managed llc is helpful in that it empowers the manager whether it's one person or two people or whomever empowers the people who are managers to make decisions and gives them the authority to bind the llc that that's a quick breakdown now what do you do if you're a member managed llc and you realize you need to become a manager manage llc you can always change your structure you can always amend your structure of your llc you'd find a certificate of amendment with your secretary of state and then you'd be able to change that and then you'd also update and a manager operating agreement so it's not a death blow if you realize that you've organized in the wrong way so just reach out to your attorney reach out to whoever helped you set it up and in determine whether or not you'd be best served as a member manager or a manager managed llc okay well that's it hopefully that was easy enough to explain i had to say member manager and manage llc a whole lot so i understand that can be a little bit confusing but watch the video again if you have any questions please feel free to drop them in the comments uh once again i believe you guys i trust y'all keep on grinding keep on pushing the end of q1 first quarter three more to go but don't forget mondays always mean business peace hey thank you so much for watching this video um if you like this content if it's bringing value to you if it's helping you understand your business even more do me a favor and hit that like button and subscribe so you don't miss out on any of our other videos we drop weekly videos about how to protect your business how to save money on taxes how to learn more and in unique different aspects that will give you a strategic advantage as an entrepreneur so be sure to hit that like button and subscribe we appreciate itpeace
Thanks for your comment Stevie Scholten, have a nice day.
- Jeromy Wehr, Staff Member
are you thinking about setting up an llc but aren't sure whether to choose manager managed or member managed for your management style well stay tuned because in today's video we're gonna break it all down for you everything you need to know to make the right choice for your llc let's do this hey there my name is jim hart i'm the founding attorney here at hawthorne law where we help you the online business owner get your legal house in order so you can focus on what you do best and that is building a business that truly matters today we're talking to you about the differences between member managed and manager managed llc's if you are an online business owner who is thinking about forming an llc or maybe you already have formed an llc then chances are you're a little mystified by the idea of forming a member managed versus a manager managed llc not quite sure what the differences are not quite sure if you made the right decision and are really wondering whether the choice that you made is right for your online business now this could be you could be an online coach you could be a course creator you could be an affiliate marketer you could be selling e-commerce products you could be a creator on youtube just like i am whatever it is that you might be doing this is a big serious decision that you need to make when it comes time to form your llc and why can't you figure this stuff out well it's pretty simple really it's because it's complicated it's hard to understand and for most people that aren't lawyers they really just don't know where to start in terms of getting this information other than spending hundreds or maybe thousands of dollars hiring a lawyer to help you and if you mess this step up then you run the risk of getting your corporate veil pierced and there's a whole bunch of bad stuff that can happen if that were to happen you put your personal assets at risk if you were to get sued or if your business were to get sued and it's just really something you don't want to ever deal with so in today's video i want to talk to you about the difference between a member managed llc and a manager managed llc and help you figure out which one might be better for you and your business structure for your online business assuming that you formed are thinking about forming an llc for your online business now before we get into the differences between a member managed llc on the one hand and a manager managed llc on the other i want to tell you that the choice you make when it comes to this decision is really going to depend in large part on the type of business you're running how many members you have in the llc and a lot of other factors that are somewhat beyond the scope of this video but in a nutshell here's the difference a member managed llc is exactly what it sounds like it is an llc that is managed by the members so whether you have one member or 50 members they're all going to have an equal say and equal vote in the management of the llc and what this means is that if you want to do anything with regards to your llc any types of decisions you want to make whether it means switching into a new business area or investing in some software or buying some property or assets for the business or moving to a new business location or anything like that you have to have consensus with all of the members of your llc now if it's just you and you're a single member llc this isn't going to be such a hard thing because you just have a meeting with yourself you decide that's what you want to do and you go ahead and make the change but if you have two three four five ten people that are all members of the same llc you have to get a consensus between everyone before making any major decisions related to the management of your llc on the other hand a manager managed llc means that you have one person or entity that serves as the manager of your llc and they're the ones that are going to make all the decisions so this is a really great option if you are forming an llc where you might be working with somebody else who's going to be providing a lot of capital for the llc but you're the one that's going to be doing all the sweat equity and controlling the operations of the business so the other person might just want to give you some money and have you manage the business and they might want to have a very passive role versus you're the one who's going to be taking that money investing it and building the business with existing systems that you might have from from your prior experience but maybe you just don't have the capital to build the business and in that situation you could serve as a member and the manager and you could control all the day-to-day operations of the business the other situation where a manager managed llc might make a lot of sense maybe you're a solopreneur right now but you intend to bring in a lot of other members for your llc in which case you want to still retain that control over the llc so you would want to be the manager or let's say for estate planning purposes you may want to give away some of the interest in the llc to your children or to a spouse or to someone else and you still want to retain control in those situations a manager managed llc is going to be the way to go now here in north carolina where i practice law the default provision in the llc act is a manager managed llc so you can be a solopreneur and you can be a manager managed llc or you can be a member managed llc it doesn't really matter if you're a solopreneur where it does matter is when you start to have partners and other people involved in the day-to-day operations of the llc if you're the one that wants to retain all the control over how the llc is managed on a day-to-day basis then a manager managed llc may be the right way to go now there are some other considerations that you need to be aware of when deciding between a member managed and a manager managed llc and some of them might be the fact if you're looking to form an llc that's going to provide some level of anonymity to you or to the members of your llc then a manager managed llc may be the way to go again that's somewhat beyond the scope of this video also if you want some more credibility when you're dealing with with other vendors or banks or people that you might be purchasing assets from in the name of the llc then maybe a manager managed llc might be the way to go in addition there's also liability considerations when it comes to choosing a member managed llc versus a manager managed llc and if if run correctly the manager managed llc may be more difficult to pierce that corporate veil than a member managed llc if you'd like to learn more about llc's and the different mistakes people make when forming their llc's here's another video i've done right here i'll look forward to seeing the next video have a great day folks we'll see you soon
Thanks IsibamboJ your participation is very much appreciated
- Jeromy Wehr
About the author
I've studied history of archaeology at Centenary University in Hackettstown and I am an expert in scientific classification. I usually feel bouncy. My previous job was executive secretary I held this position for 29 years, I love talking about larping and macrame. Huge fan of Larry David I practice equestrian and collect antique.
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