Any individual who has a share of ownership in a limited liability company (LLC) is known as a “member”. The owner or owners may have other titles as well.
An LLC is a business entity that offers liability protection for owners, as well as pass-through taxation, much like a sole proprietorship. To learn more about LLCs, read this Step By Step article.
There are two types of management structures:
- A Member-Managed LLC is managed by the members of the LLC. This is usually chosen by smaller LLCs with few members who will be involved in various management roles.
- A Manager-Managed LLC is managed by non-members who are employees of the business. This structure is often used when an LLC is larger and has multiple members.
If you have a member-managed LLC, you are a managing member or a member-manager. All members can be managing members, or just one member can be the managing member.
You should define the management structure of your LLC in your operating agreement. An operating agreement is not required in every state, but is highly recommended. The operating agreement should clearly define the following:
- The percentage of each member’s interests in the LLC
- How profits and losses will be allocated to each member
- Each member’s rights and responsibilities
- The management structure and management roles of members
- The voting rights of each member
- Rules for meetings and voting
- What happens when a member sells their interest, becomes disabled, or dies
To learn more about the operating agreement you can read this Step By Step Business article.
When the management structure is defined in the operating agreement, you can choose titles for your LLC managers, such as President, Chief Executive Officer (CEO), Chief Financial Officer (CFO), and Chief Operating Officer (COO).
In an LLC, you have control over how the management and their titles are structured. You can structure the management any way you choose within your operating agreement. You don’t have to answer to a board of directors or anyone else.
Perception and Your Title
Your title is all about how your customers, vendors, and other stakeholders will perceive you. Many people won’t understand what a member is, or a managing member. If you are the only member, you may want to call yourself simply the owner, or the president of the company.
You want a title that reflects your position and your authority to make decisions on behalf of the company. Certain titles may be ill-advised, such as partner or managing partner. While you and other members may consider yourself business partners, you are not in a partnership, which is a different type of business structure.
If you call yourself a partner, you may blur the lines of your type of business entity and risk the personal liability protection your LLC provides. The same is true of the title “proprietor”, which could be confused with a sole proprietorship.
One of the great things about having a limited liability company is that you have control over how your company is managed, who manages which functions, and what you call yourself for business purposes. You could call yourself “Chief Guru” if you want, although that may not be a good idea. It’s best to keep it professional so that customers and others perceive you as a person of authority.
To learn more about the benefits of forming an LLC, read this Step By Step article, or take the next step and start an LLC.