Does an LLC Have to Have a President or CEO?

by Salvatore Jackson
    An LLC does not need a president or CEO, but can elect to appoint one.

    An LLC does not need a president or CEO, but can elect to appoint one.

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    A limited liability company, or LLC, is a form of business organization popular among individuals looking to start a small business. Unlike a corporation, which requires the appointment of a board of directors, an LLC does not require managers, such as a president or CEO. The owners of an LLC are free to determine whether they will hire a president or CEO to run the LLC.

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    LLC Members

    The members of an LLC are the individuals who have an ownership stake in the company. LLC members generally will provide financial investment in the LLC, but may also provide professional services or land in exchange for membership status. LLC members typically receive compensation as a percentage of the profit earned by the LLC. An LLC is a very flexible form of business organization. Most state filing agencies require the individuals organizing an LLC to disclose whether the members of an LLC will be conducting the day-to-day management of the LLC.

    LLC Managers

    If the members of an LLC do not wish to conduct the day-to-day management of the LLC, they have the option of hiring managers to do this. Managers are employees of an LLC that do not have an ownership stake in the LLC. Managers of an LLC may carry the title president or CEO. Managers of an LLC typically receive compensation in the form of a salary, rather than a percentage of LLC profits. If an LLC chooses to hire managers to conduct the day-to-day management of the LLC, most states require the disclosure of the name, address and title of LLC managers.

    Organizing LLC Managers

    The flexibility of the LLC allows LLC members to determine how they want their LLC to be managed. If they elect to hire managers to operate their LLC, members may draft an operating agreement. An operating agreement is a contract that regulates how an LLC will be managed. By drafting an operating agreement, the members of an LLC are able to determine what types of business decisions will be made by LLC managers, such as a president or CEO, and what business decisions will be made by a vote of LLC members. Some states require an LLC to have an operating agreement.

    Hiring and Terminating LLC Managers

    In drafting an operating agreement, LLC members will typically devise a voting procedure for hiring and firing LLC managers, such as a president or CEO. If the members of an LLC do not draft a comprehensive operating agreement, state LLC statutes will provide a default procedure for hiring and firing LLC managers. Typically, LLC state statutes require a majority vote of LLC members to hire or fire LLC managers.

    About the Author

    Salvatore Jackson began writing professionally in 2010. He has experience with international travel, computers, sports and law. Jackson is a licensed attorney with experience in legal research. He received his Juris Doctor from Tulane University in 2010.

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