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What is a Manager-Managed LLC?

Posted by Jonathan Krems | Oct 27, 2021 | 0 Comments

In this week's Freedom Friday blog and email newsletter, I want to talk about another frequent topic that comes up with prospective clients when they want to start an LLC, or restructure their LLC, and that is what is a manager-managed LLC.  In last week's Freedom Friday blog and email newsletter, I discussed what a member-managed LLC is.  This week I want to talk about what a manager-managed LLC is.

LLCs are either managed by their member(s) (members are the owners of the LLC), or by their manager(s).  If an LLC is member-managed, then all the members (owners) are involved in the daily business operations of the company.  However, if an LLC is manager-managed, then that means some (or all) of the members (or owners) can be investors only, and not have any management responsibilities in the LLC.  Also, the members of the LLC can also appoint a third party to manage the LLC.

Manager-managed LLCs are the right choice when one or more of the members (owners) are only investors providing financial support and do not wish to be involved in the daily management of the company.  Also, sometimes one or more of the members do not have the knowledge or experience in business to be involved in management, or simply do not want to be bothered with that role.  In this type of situation, the members of the LLC will need to select or appoint a manager or managers for the LLC, and this needs to be taken care of in the operating agreement for the LLC.  In some situations, the members of the LLC can appoint a board of directors to manage the LLC, as well.  More commonly, the members can or should appoint one or more of themselves to be the manager of the LLC, and any remaining members will not have any management responsibilities.  The members can also appoint an outside third-party person to be the manager of the LLC.  The main reason to form a manager-managed LLC is because at least some of the members who are not managers will not have the legal ability to bind the business.  This would allow the LLC to include investors without running the risk that an investor might make a poor business decision affecting the LLC and avoids legal issues down the road.

As always, its best to consult with a business attorney before making any of these kinds of decisions when starting your business.  Many attorneys, including myself at Liberty Legal Solutions, LLC, charge a reasonable flat fee to help set up your LLC and draft your Operating Agreement.  The costs of paying an attorney when starting your business will likely save you time and money and make sure your business gets started on the right foot.

If you are interested in starting a small business anywhere in Oklahoma, or if you have a small business and you're looking to grow, please contact me at [email protected] to schedule a FREE strategy session.

For more information about Liberty Legal Solutions, LLC, please visit our website at

About the Author

Jonathan Krems

Jonathan is the Founder and Managing Attorney of Liberty Legal Solutions, LLC, a law firm dedicated to building, protecting, and defending the business and personal interests of our clients in Oklahoma.  Jonathan's primary practice areas are business law, contracts and agreements, business liti...


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