Difference Between Member and Manager in an LLC: Roles, Authority, and Key Differences Explained

When forming or running a Limited Liability Company (LLC), one of the most common sources of confusion is the difference between a member and a manager. While these roles may overlap in some businesses, they are legally distinct and carry different rights, responsibilities, and levels of authority.

This guide explains the difference between an LLC member and an LLC manager, how each role functions, and how to decide which structure is right for your business.

Quick Overview: Member vs. Manager

Feature	Member	Manager
Role	Owner of the LLC	Person who runs the LLC
Ownership	Yes	Not required
Decision Authority	Yes (member-managed LLC)	Yes (manager-managed LLC)
Day-to-Day Operations	Sometimes	Usually
Listed in Operating Agreement	Yes	Yes
Listed in State Filings	Often	Sometimes
Liability	Limited	Limited
Can Be Same Person?	Yes	Yes

What Is an LLC Member?

An LLC member is an owner of the company.

Members:

Own a percentage of the LLC
Contribute capital (money, property, or services)
Share in profits and losses
Have voting rights (unless restricted)

In a member-managed LLC, members run the business directly.

Key Responsibilities of Members

✔ Approving major decisions
✔ Voting on amendments
✔ Admitting or removing members
✔ Approving dissolution
✔ Sharing profits and losses

A single-member LLC has only one member, who is both owner and decision-maker.

What Is an LLC Manager?

An LLC manager is a person (or entity) appointed to manage the daily operations of the LLC.

Managers:

May or may not be owners
Are appointed by the members
Handle operational decisions
Act as agents of the LLC

In a manager-managed LLC, members act more like shareholders and managers act like executives.

Member-Managed LLC vs. Manager-Managed LLC

Understanding the management structure is essential.

Member-Managed LLC

How It Works

All members participate in management
Each member can bind the LLC
Common in small or single-member LLCs

Best For

✔ Small businesses
✔ Owner-operated companies
✔ Single-member LLCs
✔ Businesses without passive investors

Pros

✔ Simple structure
✔ Lower administrative burden
✔ Direct owner control

Cons

❌ Harder to manage with many members
❌ All members may have authority
❌ Potential for disputes

Manager-Managed LLC

How It Works

Members appoint one or more managers
Managers run daily operations
Members retain ownership but limited control

Best For

✔ LLCs with passive investors
✔ Multi-member businesses
✔ Real estate LLCs
✔ Businesses hiring professional managers

Pros

✔ Clear separation of ownership and control
✔ Efficient operations
✔ Easier to add passive investors

Cons

❌ More formal structure
❌ Managers must be monitored
❌ Slightly higher administrative complexity

Key Differences Between Members and Managers

1. Ownership

Members own the LLC
Managers do not have to be owners

A manager can be:

A member
An employee
A contractor
A third-party management company

2. Authority to Bind the LLC

Members can bind the LLC in member-managed structures
Managers bind the LLC in manager-managed structures

This distinction affects contracts, loans, and liability.

3. Voting Rights

Members usually vote on major decisions
Managers generally do not vote unless also members

Voting rules are defined in the Operating Agreement.

4. Day-to-Day Control

Members: Often hands-on
Managers: Primarily responsible

Managers typically handle:
✔ Hiring
✔ Vendor contracts
✔ Banking
✔ Daily operations

5. Fiduciary Duties

Both members and managers owe fiduciary duties to the LLC, including:

Duty of loyalty
Duty of care
Duty of good faith

However, managers are usually held to stricter operational standards.

6. Compensation

Members earn profits and distributions
Managers may receive:
- Salary
- Management fees
- Performance bonuses

A member-manager may receive both.

Can One Person Be Both a Member and a Manager?

✅ Yes.

This is very common.

Examples:

Single-member LLC: Owner = Member = Manager
Multi-member LLC: One member acts as managing manager

The Operating Agreement should clearly define dual roles.

How Members and Managers Are Listed in Documents

Operating Agreement

Lists all members
Defines managers
Outlines authority and duties

State Filings

Some states list managers publicly
Some list members
Others list neither

Requirements vary by state.

Which Role Has More Power?

It depends on the structure:

Member-managed LLC: Members have the most power
Manager-managed LLC: Managers control daily operations, but members retain ownership power

Ultimate authority always rests with members, unless restricted by agreement.

When Should You Choose a Manager-Managed LLC?

Choose manager-managed if:

✔ You have passive investors
✔ You want centralized control
✔ You operate real estate or investment entities
✔ You want to limit member authority
✔ You want to hire professional management

When Is a Member-Managed LLC Better?

Choose member-managed if:

✔ Owners are actively involved
✔ The business is small
✔ You want simple governance
✔ You don’t need outside managers

Common Mistakes to Avoid

❌ Confusing managers with owners
❌ Not specifying management structure in filings
❌ Failing to define authority clearly
❌ Allowing non-managers to bind the LLC
❌ Not updating the Operating Agreement

These mistakes can lead to disputes and liability issues.

Final Thoughts: Difference Between Member and Manager in an LLC

Member = Owner

Manager = Operator

They can be the same person—but they don’t have to be.

Choosing the right structure ensures:
✔ Clear authority
✔ Efficient management
✔ Reduced disputes
✔ Strong liability protection

Your Operating Agreement should always clearly define these roles.

Get Free Consultation with FormLLC