Managers

What Is an LLC Manager?

In a Limited Liability Company (LLC), management and decision-making authority are structured differently depending on whether the LLC is member-managed or manager-managed. An LLC manager is an individual or entity appointed to oversee the operations of a manager-managed LLC. While members in a member-managed LLC handle daily business decisions themselves, a manager in a manager-managed LLC has the authority to act on behalf of the company and its members, making strategic and operational decisions.

The role of an LLC manager is similar to that of an executive in a corporation. They may be responsible for financial oversight, hiring employees, making contractual agreements, and ensuring regulatory compliance. However, their powers and responsibilities are generally outlined in the LLC’s operating agreement and subject to state laws.

Who Can Be an LLC Manager?

The operating agreement of an LLC determines who can be appointed as a manager. Most states allow the following entities to serve as an LLC manager:

• One or more members of the LLC

• A non-member individual (such as an outside professional or hired executive)

• Another business entity, such as a corporation or another LLC

LLC managers do not have to be members of the LLC, meaning business owners can appoint professional managers to run operations while they remain passive investors. In some cases, businesses opt to hire experienced executives who specialize in scaling companies, thereby allowing members to focus on high-level business strategies without being burdened by day-to-day management.

Key Responsibilities of an LLC Manager

The exact duties of an LLC manager depend on the operating agreement, but their responsibilities generally include:

1. Financial Oversight

   • Managing company funds, budgeting, and overseeing expenses

   • Approving financial transactions and capital investments

   • Ensuring that tax obligations and other financial reporting requirements are met

   • Setting up financial policies, payment schedules, and auditing internal transactions

2. Operational Management

   • Overseeing daily business operations, including supply chain management

   • Managing employees, contractors, and third-party service providers

   • Implementing strategic business plans and policies to drive company growth

   • Addressing operational bottlenecks and implementing workflow efficiencies

3. Legal and Compliance Obligations

   • Ensuring that the LLC meets state and federal regulations

   • Filing annual reports and maintaining good standing with state agencies

   • Handling contracts and ensuring business agreements align with legal requirements

   • Reviewing business insurance policies and ensuring adequate coverage

   • Managing intellectual property rights, trademarks, and business licensing

4. Decision-Making Authority

   • Acting on behalf of the LLC in negotiations and contractual agreements

   • Making high-level business decisions (within the scope of authority granted by the operating agreement)

   • Managing risk and ensuring the business operates efficiently

   • Assessing market trends and adapting business strategies accordingly

   • Overseeing major investments, acquisitions, and business partnerships

5. Stakeholder and Member Relations

   • Communicating with members about company performance, financial health, and strategic direction

   • Handling conflict resolution between members and stakeholders

   • Facilitating investor relations and funding strategies

Compliance Considerations for LLC Managers

LLC managers must comply with various legal and regulatory obligations to maintain the good standing of the business. Dappr provides tools to help LLCs and their managers stay compliant, ensuring they meet their legal requirements.

1. Operating Agreement Compliance

   • An LLC’s operating agreement should clearly define the role of the manager, their authority, and decision-making powers.

   • Managers must act within the limits of the authority granted in the operating agreement.

   • Dappr helps ensure businesses draft and maintain clear, enforceable operating agreements.

   • Regular review of the agreement ensures that it remains aligned with business needs and state regulations.

2. State Filing and Annual Reports

   • Most states require LLCs to file annual reports to remain in good standing.

   • Managers are often responsible for ensuring that required filings, such as annual reports or biennial filings, are submitted on time.

   • Dappr monitors deadlines and provides reminders to avoid lapses in compliance.

   • Certain states impose additional publication requirements for LLCs, which managers must be aware of.

3. Tax Responsibilities

   • Managers oversee tax filings, including state and federal tax compliance.

   • They may be responsible for handling employment taxes, sales taxes, and estimated quarterly taxes.

   • Dappr provides ongoing monitoring and resources to help LLCs meet their tax obligations.

   • Managers must also ensure that tax elections (e.g., S-corp election for tax purposes) are correctly filed if applicable.

4. Liability Protection

   • LLCs provide limited liability protection for members, but managers must act responsibly to maintain this protection.

   • Engaging in fraud, misconduct, or misrepresentation can result in personal liability for managers.

   • Keeping business and personal finances separate is crucial to maintaining the LLC’s liability shield.

   • Managers must document major decisions to demonstrate compliance with fiduciary responsibilities.

Appointing and Removing an LLC Manager

The process for appointing or removing an LLC manager is usually outlined in the operating agreement. If not specified, state law will govern the process.

1. Appointing a Manager

   • The operating agreement should specify the criteria for selecting a manager.

   • Managers can be appointed by a vote of the members, as outlined in the operating agreement.

   • If the LLC is expanding, members may decide to bring in an external manager with industry expertise.

2. Removing a Manager

   • The operating agreement should outline the procedure for removing a manager.

   • If the manager is also a member, their ownership stake may not be affected, but their managerial powers will be revoked.

   • Some LLCs require a majority or unanimous vote to remove a manager.

   • Grounds for removal may include breach of fiduciary duty, misconduct, or failure to meet performance standards.

3. Replacing a Manager

   • If a manager resigns or is removed, a new manager must be appointed.

   • The LLC’s operating agreement should specify how a successor is chosen.

   • Failure to appoint a new manager in a manager-managed LLC could lead to operational and compliance issues.

Final Thoughts

LLC managers play a crucial role in the success of a business. Their responsibilities span financial oversight, operational management, compliance, and strategic decision-making. Ensuring that a manager understands their role and legal obligations is vital for maintaining the integrity and stability of the LLC.

Dappr provides compliance monitoring, filing reminders, and operational support to help LLC managers keep their businesses in good standing. Whether drafting an operating agreement, appointing a new manager, or staying on top of tax filings, Dappr simplifies compliance so business owners can focus on growth.

A well-structured LLC with a capable manager is positioned for long-term success. By leveraging Dappr’s expertise, LLC owners can ensure they remain compliant, financially stable, and strategically driven in an ever-changing business landscape.