LLC Operating Agreement: Manager Managed
A limited liability company (LLC) is a popular choice of business structure for many entrepreneurs and small business owners. This is due to the flexibility and tax benefits that it offers. One key aspect of forming an LLC is drafting an operating agreement. This agreement outlines how the company will be managed, how profits and losses will be distributed, and the rights and responsibilities of each member.
One of the most common types of LLC operating agreement is the manager-managed agreement. This means that the company is managed by one or more appointed managers, rather than by all members collectively. The key benefits of a manager-managed LLC are efficiency, clear chain of command, and streamlined decision-making.
In a manager-managed LLC, the managers have the authority to make business decisions and to act on behalf of the LLC. This can include making contracts, hiring and firing employees, and acquiring assets. However, the LLC members still have voting rights and can remove a manager or dissolve the LLC if necessary.
The operating agreement should clearly outline the roles and responsibilities of the managers and the members. The agreement should also include provisions for how the managers are appointed, how they are compensated, and how they can be removed. It is also important to include provisions for how profits and losses will be distributed.
A manager-managed LLC is ideal for businesses where the members want to have a more passive role in the management of the company. For instance, if you have investors who are not involved in the day-to-day operations of the business, a manager-managed LLC would be a good choice.
When drafting an operating agreement, it is important to consult with an experienced business attorney to ensure that your agreement is compliant with state laws and regulations. The attorney can also advise you on any specific provisions that may be necessary for your particular business.
In conclusion, a manager-managed LLC operating agreement provides a clear and efficient way to manage business operations. It allows for a clear chain of command and streamlined decision-making. However, it is important to ensure that the agreement is compliant with state laws and includes all necessary provisions. Consult with a business attorney to help you draft the best operating agreement for your business.
