Why should an LLC be manager managed
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There are two different types of LLCs. The LLC can be manager managed or member managed.
We have provided a free manager managed LLC operating agreement template below for you to use. You can also use the free member managed LLC operating agreement if you so desire.
Why should my LLC be manager managed?
The biggest benefit of being manager managed, is that a manager does not have to be an owner. So if someone looks up your LLC on the Secretary of State website, they will more than likely see your name as either a member or manager. (Unless you choose an anonymous LLC state like Wyoming or New Mexico.)
Most states you tell the state whether you are “member managed” or “manager managed.” You then have to list the members or managers. If you are manager managed, the odds are that you won’t have to publicly disclose the members on the articles and it won’t show up on the state Secretary of State website. If you are wondering how LLCs appear on the secretary of state website, you can look up your state of interest on our site. Just type in a generic name till you find a registered LLC and you’ll see what the public information looks like.
Now if you’re a small construction company, called something like “Joe’s Construction LLC.” and your name is Joe, and you’re the manager out doing the work meeting your clients, you’re probably going to be the only member. Listing your LLC as “manager managed” and listing yourself as a manager isn’t technically disclosing that you’re an owner (member) but most people are going to put two and two together.
Another reason to be manager managed:
If you have silent investors, or an investor that isn’t going to be a part of the day to day running of the LLC, you’ll want to be manager managed. If you’re starting an LLC, and it’s your idea, but you need 5 family members to chip in some cash to get it going, you’ll want to be the only manager, and list the 5 family members and yourself as members. That way the members (your family) won’t be in the way of you running your LLC. Members vote who is going to be the manager, so your members can always replace the manager, but as you’ll see on the operating agreement, the manager would have to be replaced by a vote of the members, formalized in writing, and signed by all the members. This creates a layer of formalities. If you and your 5 family members were all members and the LLC was member managed, you could very easily create disputes amongst yourselves. Let’s say you have an argument at Thanksgiving dinner and all of a sudden 2 of the members decide they are going to close the bank account… If you were member managed, they could do so, but if you’re manager managed, they would have to go through the manager, or have to vote someone else into a manager role, or replace you as the manager to make such a change.
Please enjoy using our free manager managed LLC operating agreement template.You’ll notice two versions. One with no editing needed. One, a more complicated version where you can edit as you desire.
When you're forming your LLC, you'll need a registered agent. We provide the most comprehensive registered agent service to maintain more privacy for you. We also only charge $100 to form your LLC for you, make initial resolutions, and provide you with an LLC operating agreement. We also talk to you before we make the filing for you to try to help you establish exactly what you need.