Does an LLC Have to Have a President or CEO?

By Salvatore Jackson

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.

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.

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.

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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.

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Operating Agreements for a Member-Managed LLC

References

Related articles

Does an LLC Entity Have to Have One Manager?

Lmited liability companies, or LLCs, need at least one registered manager. In single-member LLCs, the manager is usually the owner. However, it is not a requirement that the manager be the owner. Even single-member LLCs can hire a manager who is not an owner. Multimember LLCs can have one manager, who is also a member or an employee, with no ownership interest. These LLCs can also choose to be member-managed, with multiple owners responsible for managing the company.

Definitions of the Titles of LLC Officers

A limited liability company, or LLC, is a business entity often managed by various officers. Each officer typically has a different title and set of responsibilities. While the members of an LLC are free to develop any titles they choose, certain statutory designations apply to any person holding a specific position within the organization. The guidelines for forming and managing an LLC vary from state to state, so the particular titles for each designation may differ, although most states follow a similar structure.

Does an LLC Have to Have Officers?

A limited liability company is a state-regulated business organization that is a hybrid between a corporation and a partnership. Like a corporation, the owners, otherwise known as members, are generally not held personally liable for the business’s liabilities. However, the business is taxed like a partnership; the LLC is not taxed but the business’s profits and losses are included on the members’ returns. An LLC does not have to have officers like a corporation does, but some businesses may find it useful as it helps establish a clear hierarchy and the roles of each member of management.

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