Does an LLC Have to Have Officers?

By Stephanie Kurose, J.D.

Does an LLC Have to Have Officers?

By Stephanie Kurose, J.D.

A limited liability company (LLC) is a common type of business structure that incorporates some of the most favorable features of both a corporation and a partnership. An LLC may, but is not required to, have officers who run the daily operations of the business. However, depending on the size of the company and its member make-up, employing officers may prove beneficial.

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LLC Basics

Similar to a corporation, an LLC provides its owners, referred to as members, with personal liability protection. This means a member's personal assets cannot be used to settle any of the company's debts or other obligations.

Like a partnership, LLC members have increased flexibility in how they manage the business. For instance, there is no requirement to hold annual shareholder or director meetings as there is for a corporation. These business entities also have the option of electing to be taxed either as a corporation or as a partnership for federal tax purposes. Because of these favorable characteristics, many entrepreneurs choose to form their company in this manner.

Members, Managers, and Officers

As stated above, an LLC is not required to have officers run the business. Typically, the people in charge of the business's daily operations are the members, making it a member-managed entity. Generally, each member has the authority to make decisions for the business and act on its behalf. The business's operating agreement should specifically address if this is the case or not.

For LLCs that have a lot of members or have members that wish to be more passive owners, there is the option of hiring managers and/or officers to run the daily operations of the business. Managers are generally nonmember individuals who the members hire to act on behalf of the company and oversee its operations, which makes it a manager-managed LLC. Members can alternatively or additionally hire officers, who may be members or managers, to take on those same responsibilities, and they often elect to use one of these structures instead of being member-managed to limit the number of people who can act on behalf of the business.

Officer Responsibilities

LLC members (if member-managed) or managers (if manager-managed) can hire officers. The specific powers and responsibilities of each officer should be described in the articles of organization. If they are not, the members must amend the articles, vote on the amendment, and refile the document with the state's Secretary of State, or equivalent agency in charge of regulating businesses. Each officer's specific responsibility depends on their title. Typical officer positions include chief executive officer (CEO) or president, chief operating officer (COO), chief financial officer (CFO), and secretary.

The size and complexity of an LLC may determine how many officers the members decide to hire. Larger businesses may require more officers, while smaller ones may decide they only need to hire one or two.

If you are considering forming an LLC or are thinking about hiring officers for your existing LLC, it may be a good idea to speak to a business attorney first. While this type of company doesn't have to have officers specifically, hiring other members is likely going to be a necessity. To make things easier when you decide to hire more members, make sure you have a section entailing the instructions for this in your operating agreement, or amend your current one if there aren't any directions.

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