LLC Officer Titles
LLC officer titles—positions within the organization with defined roles and responsibilities—often throw business owners for a loop. Some LLC officer titles are optional. Others can change depending on how your LLC is structured. From members and managers to presidents and secretaries, we’ve compiled a glossary of terms below to help you understand who governs your LLC.
LLC Member vs Manager
In most cases, LLC members and LLC managers are the most crucial titles in a limited liability company. Understanding the purpose of these two designations can have significant implications for how you structure your business.
Members are the owners of the LLC.
Members contribute capital to the LLC in exchange for a percentage of ownership.
By default, LLC members are responsible for decision-making and day-to-day operations.
When all members share responsibility for running the LLC, the LLC is member-managed.
Because members manage the LLC by default, managers are optional.
If an LLC has managers, the managers run the business.
Any non-managing members forfeit day-to-day decision-making powers. They still have fiduciary duties and a few limited powers, such as voting for managers.
Managers can be chosen from among the members or hired externally.
When only some or none of the members share responsibility for running the LLC, the LLC is manager-managed.
Member vs Manager-Managed LLC
Now that you have a sense of what differentiates a member and a manager, let’s take a look at the advantages of each of these two management models:
Easier set up. LLCs are member-managed by default, and voting parameters can be spelled out in the operating agreement.
Shared authority. All members have a say in what the business does.
Straightforward finances. Members of a traditionally taxed LLC aren’t employees and receive distributions that are based on their ownership percentage. No need to deal with issues like payroll or withholding—like you would if you hired outside managers.
Easier investment. A manager-managed LLC is a major draw for investors because they can partake passively—even anonymously—in the business.
Fewer cooks in the kitchen. Ever try to get 40 people to agree on what pizzas to order? For larger LLCs, it’s often easier to operate quickly with a smaller group of people making decisions.
Clearly defined roles. Instead of putting all key decisions to votes, each manager can be given a specific role and responsibility in the decision-making hierarchy.
Once you’ve decided on a management structure that works best for your LLC, you might consider assigning LLC officer titles within that structure.
Who are LLC officers?
LLC officer titles are a completely optional designation meant to further clarify individual roles and responsibilities within the company.
You’re probably familiar with the titles of president, secretary, treasurer, and so on. In an LLC, you can choose to assign these titles to individuals who will attend to the daily duties of that office.
Why have LLC officer titles?
LLC officer titles can be used to specify the daily responsibilities of key people. Also, LLC officer titles can better communicate individual roles to an outside audience. Few people outside the LLC will understand the difference between member and manager—but you can choose titles for your officers that clearly represent their functions in the LLC.
What are some common LLC officer titles?
Some of the most common questions we hear are: Does an LLC have a CEO? Can an LLC have a president? The most frequently used titles are no different than the ones you would come across in any other organization. In fact, it is common practice to use the same terminology as a corporation would.
Chief Executive Officer (CEO): Usually the highest ranking member of an organization, the LLC CEO has general management powers and dictates the company’s vision.
President: The LLC president is usually the tactical arm of the CEO—the CEO sets out a vision, and the president takes the actions necessary to achieve that vision. Some LLCs instead choose to use this title for the highest ranking member with general managerial powers.
Vice President: Generally, the vice president acts in the event of the president’s absence or a vacancy in the president’s office. An LLC can have multiple vice presidents, each with specialized leadership responsibilities within specisefic departments (financial, hiring, and so on).
Secretary: Usually the secretary is responsible for taking LLC meeting minutes and record-keeping in general—this is your paperwork guru and a crucial part of documenting your LLC’s activities.
Treasurer or Chief Financial Officer: The treasurer or CFO is responsible for overseeing financial affairs, including bookkeeping and financial planning.
Keep in mind that these definitions are general—you can vary the language a bit, but you probably don’t want to appoint an LLC President whose sole responsibility is to take minutes at meetings.
And, it’s ultimately up to you whether you want LLC officer titles, what those titles should be, and what roles and responsibilities fall under each of those titles.
How do I appoint LLC officers?
When you’re forming your LLC, you can list officer titles and define officer responsibilities in the LLC operating agreement. If you choose to add LLC officer titles later, it’s common practice to have the members vote on the issue and amend the operating agreement accordingly.
Be careful, however, that you don’t assign roles that are at odds with your management structure. In a member-managed LLC, all members make decisions and generally have voting rights proportional to their investment. You don’t want to assign too much power to a select few members—or else your LLC will be member-managed in name only.
You also don’t want to assign titles to non-managing members in a manager-managed LLC. Typically, titles and powers go hand-in-hand. So, giving titles to those without key responsibilities would be misleading.
Who Are the Other Major Players in an LLC?
While not officers, here are a few other common roles people perform either within or on behalf of your LLC.
LLC Organizer or LLC Executor: The person or people who sign and submit articles to form the LLC with the state. Organizers (aka executors) can be members or someone outside the LLC, like a lawyer or formation company.
LLC Principal: Usually the member who has invested the most capital into the company, an LLC principal has the most at stake and a great deal of say in financial and managerial decisions unless the operating agreement dictates otherwise.
LLC Governor: Governors are responsible for overseeing the company’s major business affairs. In a member-managed organization, the governors would be the members. In a manager-managed organization, it would be the managers. DC, Idaho, and Washington all use this term on various state business filings.
LLC Registered Agent: An individual or business responsible for accepting legal documents on behalf of the LLC in the state where the LLC operates. A registered agent can be a member of the LLC or a third party, and is almost universally required—without a registered agent, you risk missing crucial, time-sensitive correspondence.
You might notice some potential overlaps already. For example, an LLC principal often can end up as the LLC president, especially in the case of a single-member LLC.
LLC Officer Title FAQ
Can an LLC have shareholders?
Unlike a corporation, an LLC does not issue shares of stock, so there are no shareholders. However, members of an LLC do share in the profits, typically according to each member’s financial contributions unless otherwise indicated in the LLC operating agreement.
What is your title if you own an LLC?
If you are among the owners or even the sole owner of an LLC, you are officially a member. Aside from that, you can choose to designate more specific or formal titles relative to your role within the LLC. Any additional titles should be outlined in your operating agreement.
Do LLC titles change when you are taxed as an S or C-corp?
Technically no—but in tax filing documents and instructions, the IRS may use different terminology to refer to the owners and managers of your LLC than you’re used to. This is because the IRS isn’t interested in entity types, like LLCs. The IRS is only interested in tax classifications.
For example, the IRS requires S-corps to pay reasonable salary to owners who provide services to the business. For the S-corp’s annual 1120-S filing, the instructions refer to this salary as compensation for “corporate officers. For LLCs, this would typically translate to all members of a member-managed LLC or managing members of a manager-managed LLC.
So in any case where the IRS refers to titles such as officers, shareholders or partners, LLCs will need to figure out who in their business structure matches the IRS’s definitions for these terms.
Does an LLC have a board of directors?
You do not need to have a board of directors for your LLC. In fact, one of the major advantages of an LLC is that it does not require such formalities, and most LLCs will not adopt a board of directors.
Some LLCs, however, might choose to put in place a board for the same reason that an LLC might choose to designate officer titles: because a “board” can give the company a sense of structure and provide a format that those unfamiliar with LLCs can understand.
To establish a board, you’ll need to indicate so in your operating agreement and outline the board’s structure and level of authority. You will also need to set up your LLC as manager-managed, and some states will require that you hold periodic meetings, keep meeting minutes, and hold regular elections.
Now that you know the roles within an LLC…