How to Manage an LLC

The Limited Liability Company (LLC) is a popular business entity for small business owners, in part because it is easy to manage an LLC. Managing an LLC typically requires less compliance-related activities and no stock formalities, yet still offers the liability protection and tax benefits of a corporation. LLC owners are known as members (or managers), and manage an LLC according to the operating agreement, which is the foundational document of the company. The operating agreement is typically adopted after the LLC is formed so the members agree how the LLC is managed on a day-to-day basis according to the rules set forth in the operating agreement.

Instructions

1. Adopt the LLC operating agreement after you receive your official LLC filing from the state in which your LLC was formed. Determine the percentage of ownership of each member if there is more than one member who will manage an LLC. Include methods for adding or removing members, a plan for profit distribution, and rules to manage an LLC on a daily basis.

2. Establish the management structure of your LLC to be member-managed or manager-managed. The member-managed LLC is managed with each member participating in the daily activities of the business. The manager-managed LLC is operated by a designated manager or managers, who may or may not be LLC members, with the members typically involved only as investors. The most common way to manage an LLC is member-managed.

3. Schedule a members’ meeting at least yearly to discuss the current status of the LLC, and approve any changes to the LLC operating agreement.

References

• Matt Knee, Founder & CEO; MyNewCompany.com; Las Vegas, Nevada

Resources

• MyNewCompany.com: Limited Liability Company