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2413307593_fe13aa3b80_bQUESTION: I’m starting a business with investors. Should I consider a “member-managed” or “manager-managed” limited liability company?

ANSWER: Your choice ultimately depends on who you want running your company.

The most popular choice is usually “member-managed,” which means all members of the LLC (i.e. the owners or in this case, you and your investors) pitch in and take responsibility for running the business – an all-hands-on-deck affair where all members of the LLC are helping out on a daily basis. By default, LLCs are usually designated as member-managed under state law unless specified otherwise in an operating agreement.

If you specify for a manager-managed LLC, this means responsibilities may be delegated to owners and non-owners alike. For instance, you may have an owner who is good at executing ideas but lacks expertise in managing a group. This helps balance out the duties and responsibilities to everyone. You may even delegate some leadership responsibilities to someone outside of the LLC who is especially skilled in that area.

Got a question for Deborah? Ask it in the comment section.

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Image credit: Flickr user @twowest

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