Member-Managed or Manager-Managed? What's the Difference?

A Member-Managed and a Manager-Managed LLC differ in the way that the company is run.

A member-managed structure is the most common approach. This approach is recommended for companies where the members plan to have an active role in the daily activity of the company. This grants the members authority to act on behalf of the business.

In a manager-managed LLC, the members act more like silent partners and leave the day-to-day management of the company to a member-appointed manager. This operating structure is applicable only if a single member will be involved in running the company - the manager appointed can be a member.

Whichever managing approach the LLC chooses for its operation, it is important that the agreed upon rules and processes are clearly outlined in the company's operating agreement. 

What if I need to change my directors or members? It is a simple internal process to change a director or member. The company would need to have a meeting to pass a resolution indicating the new members or directors. Meeting minutes would be kept to record this transaction of resolution being signed by the current directors or members. It is also allowable, although generally not required, to file an amendment with the state naming the new directors or members. This allows for more formal documentation since the amendment would become part of the company's public record.