Will your LLC be Member Managed? Or Manager Managed?
In Arizona, Limited Liability Companies (LLCs) are either “member managed” or “manager managed.” You will need to decide how your LLC will be managed prior to filing the Articles of Organization.
- Member Managed: All of the LLC members are responsible for the management of the company. Generally, no one member can bind the company; all members are responsible for managing the LLC in accordance with the company Operating Agreement.
- Manager Managed: Only the designated manager or managers have the authority to manage the LLC. The members of the LLC can designate one or multiple managers to manage the LLC. The manager is not required to be a member of the LLC.
Note: The title “manager” can be misleading. Most people think of a “manager” as someone responsible for certain duties within a business (i.e. officer manager or marketing manager). In an LLC, however, the manager or managers are directly responsible for the management and control of the entire company. Therefore, the manager role is equivalent to a President or high level officer in a Corporation.
How do I decide whether my LLC should be member or manager managed? Member managed is the appropriate choice if all members want to be responsible for the management and control of the company. A manager managed structure is better suited if:
- some of the members are passive and not actively involved in daily operations
- new members may be added to the LLC and the company wants continuity of management and control
- the LLC wants to designate management authority among multiple individuals