Structuring Success > Management Structure
Setting up an effective management structure for your LLC.
Refer to this page when creating your operating agreement and filing the Articles of Organization. Note that a Member-Managed LLC is generally preferred for smaller businesses.
Types of Management Structures
LLCs can be managed in two main ways: by members or by managers.
- Member-Managed LLC: All members share the responsibility of running the business. This structure is common for small businesses and startups where owners are actively involved in daily operations and is generally preferred.
- Manager-Managed LLC: Members appoint one or more managers to handle daily operations. The managers can be members or external individuals. This structure is suitable for larger businesses or when members prefer a hands-off approach, but it is less common for small businesses or side hustles.
Don't worry too much about this decision; simply choose the structure that best fits your current needs. Remember, you can always change the management structure in the future if needed.
Choosing the Right Structure
Consider these factors when deciding on the management structure:
- Size and Complexity: Member-managed is ideal for small, simple businesses. Manager-managed works better for larger, complex businesses.
- Member Involvement: If all members want active roles, choose member-managed. For delegating responsibilities, go with manager-managed.
- Expertise: Leverage the skills and expertise of your members. If some members have strong management skills, manager-managed might be beneficial.