Does an LLC Have a Board of Directors?

By Joe Stone

All state laws require a corporation to have a board of directors that is elected by the shareholders. This is a form of centralized management. Although an LLC, or limited liability company, shares some characteristics with a corporation, the requirement for a board of directors is not one of them. However, most state laws regarding an LLC's management structure are flexible enough that an LLC could have a board of directors if LLC members so choose.

Manager Members

State LLC laws refer to the owners of an LLC as members. An LLC can generally be formed with only a single member or have an unlimited number of members. Unless otherwise specified, the default provisions of state LLC laws typically vest management authority in all members in a percentage equal to the members' capital contributions to the LLC.

Designated Managers

If LLC members choose not accept the default management provisions of the state's LLC law, the members can designate one or more managers with the authority to act on behalf of the LLC and run its day-to-day operations. In most states, the document filed to create the LLC, typically called the certificate of organization or articles of organization, requires that the LLC organizer specify whether the LLC will be managed by all members or by a designated manager. A manager does not have to be an LLC member.

Ready to start your LLC? Start an LLC Online Now

Delegation of Authority

The flexibility provided in state LLC laws gives the designated manager or member-managers the authority to delegate responsibility, whether it is for day-to-day operations or a special project. In these situations, an LLC's management structure may begin to resemble that of a corporation by using titles such as vice-president or treasurer. If a group of company personnel are formed for a special project, this may be designated as a board or committee.

Operating Agreement

Although as of December 2010 only two states -- Missouri and New York -- require an LLC to have a written operating agreement, an LLC with multiple members that designates a manager or managers should consider having an operating agreement that clearly specifies the LLC's management structure. This can be important for several reasons. For example, a lender or government agency may require proof of authority to act on the LLC's behalf. Also, the operating agreement can be used to specify a plan of succession in the event that the manager is unable to carry out his duties.

Ready to start your LLC? Start an LLC Online Now
Does an LLC Entity Have to Have One Manager?

References

Related articles

How do I Remove LLC Board Members?

A limited liability company, or LLC, is a form of business organization that provides the benefits of pass-through federal taxation, limited liability and relaxed filing requirements. Unlike a corporation, the owners, or members, of an LLC do not need to appoint a board of directors. However, larger LLCs frequently appoint managers -- who do not have an ownership stake in the LLC -- to a board of directors to manage day-to-day operations. While the procedure varies among states, removing a board member from an LLC requires a vote by LLC members.

How do I Register an LLC for Multiple Members?

A limited liability company, or LLC, is a “hybrid” business organization that combines the limited liability benefits of a corporation with the pass-through federal taxation and easier filing requirements of a partnership. The owners of an LLC are called members. State laws uniformly permit the creation of LLC’s with multiple members. Creating an LLC with multiple members requires filing a document, called the articles of organization, with the state agency responsible for registering business organizations.

Management Structures in a Limited Liability Company

Before you start conducting business, you need to have a management structure in place. Otherwise, your operations may become disorganized chaos before you even get the new venture off the ground. If you’ve chosen to structure your business as a limited liability company, or LLC, it can be managed by the members, managers or appointed officers.

LLCs, Corporations, Patents, Attorney Help

Related articles

Can I Have a Partner With an LLC?

A Limited Liability Company is a common business entity that may be owned and managed by one or more individuals. LLCs, ...

Typical LLC Structures

Starting your own business involves choosing the right legal structure to operate it. A limited liability company, or ...

LLC President Vs. LLC Principal

Every limited liability company, or LLC, is created under state law in the state where the LLC is located. The general ...

How to Draft an LLC Agreement

State law regulates the operations of limited liability companies, or LLCs, far more loosely than it regulates ...

Browse by category
Ready to Begin? GET STARTED