managing member

by adam

can you have a manager and a managing member?

What is the difference between the two?

Answer by Simon

A manager, as used in the context of a "manager-managed LLC", is a person who is not a member of the LLC who nonetheless has the power to make decisions for the LLC.

It's equivalent to an officer at a corporation--the shareholders "own" the corporation, but the officers run it.

The other option for operating your LLC is to have it member-managed. That is, the members (owners) operate the LLC on a day-to-day basis and make decisions for it.

There are some advanced taxation topics with using a manager-managed LLC vs. a member-managed LLC. Specifically having to do with self-employment taxes and the ability for passive members to deduct losses from the LLC on their personal tax return.

I'll cover these advanced topics in my soon to be released book on operating and managing both multi and single member LLCs.

The target date for release is winter 2008. What better reading to curl up next to the fire with :)

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