Definitions of the Titles of LLC Officers

By Brette Sember, J.D.

Definitions of the Titles of LLC Officers

By Brette Sember, J.D.

A limited liability company (LLC) is a convenient way to organize your business. When you set up your LLC, you'll need to determine the roles and titles that all the involved parties will hold. People with titles in an LLC are called "officers." These officers have different responsibilities. Each state has its own titles and definitions, but in general they use the same basic categories. Learn about the different roles available in an LLC before you set yours up.

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Members

The most common title you'll come across in an LLC is that of "member." A member is anyone who owns (or holds) a vested interest in the LLC. Anyone who is an owner, an investor, or a lender can be a member. Corporate officers can also be members in an LLC owned by the corporation. Employees of the LLC are not automatically members, although an LLC can offer membership to employees if it chooses, so that they can become members.

LLC members can hold a variety of titles, but the titles may be superficial and without any real requirements. Such titles include:

  • President
  • Vice President
  • Treasurer
  • Secretary

The operating agreement sets out the rights and responsibilities of the members and determines how much authority and decision-making power they have. Members have the right to vote in major decisions affecting the LLC. Because they are owners, members have the right to access any of the LLC documents, records, or information at any time. Members also have the right to receive distributions of profit from the LLC.

Shareholders vs. Members

LLCs have members, while corporations have shareholders. Corporate shareholders own stock in the corporation, which means they are entitled to profits and also to vote for board members. Shareholders can bring lawsuits if they feel the company is being mismanaged, and they receive a portion of the company's value if it is dissolved. Members, on the other hand, are actual owners of the LLC and are involved in decisions and management. A person who owns a portion of an LLC is a member, not a shareholder. LLCs do not have stock.

Managers

A "manager" is someone who manages the LLC itself, supervising its internal practices and operations. A manager can be a member (LLCs with this kind of manager are called "member-managed LLCs"), although this is rare. A manager can also be a nonmember hired to fulfill the role (LLCs of this type are called "manager-managed LLCs").

Appointing an experienced outside person to work as a manager not only helps to ensure that someone who is skilled and experienced in this type work is overseeing the LLC, it also removes personal interest from the scenario—which can be an issue when the manager is also a member. Having detached professional oversight can help your LLC thrive. The responsibilities of a manager in an LLC often include:

  • Serving on an executive board for the LLC
  • Calling for votes on major decisions
  • Handling day-to-day legal and financial matters

It's important to note that managers—whether member-managers or nonmember-managers—have a fiduciary duty to the LLC. Managers are responsible for acting in the best interests of the LLC by always applying the duties of loyalty and care in their work.

Sole Proprietor

A "sole proprietor" is the sole owner of an LLC. Being the sole owner, the sole proprietor is also the only member and so works alone to manage and operate the business, taking on all possible roles within the company. Forming an LLC allows the owner of the business to protect themselves from personal liability, which they would be exposed to if they functioned instead as a sole proprietorship.

Registered Agent

An LLC is required to designate a person (or in some states, an entity) who will receive legal service on behalf of the LLC within the state where it is operating. The agent provides a legal point of contact between the state and the LLC. Many registered agents receive tax notices, renewal forms, and other state notifications on behalf of the LLC. Some may also take on the responsibility of notifying the LLC when there are changes in state laws that affect the LLC's operations. The agent also receives notice of service for the LLC when anyone files a claim against it. The registered agent must reside full-time in the state, but does not need to be a member of the LLC.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.