A multi-member limited liability company consists of more than one owner, or members. Unless the member elects otherwise, a multi-member limited liability company is taxed as a partnership. An Operating Agreement is an important legal document for a multi-member limited liability company, as it set forth the specific division of ownership and responsibilities between the various members.
There are two types of multi-member limited liability companies: a member-managed and a manager-managed.
All members share responsibilities for the operations of the company in a member-managed limited liability company. This is ideal for small businesses with limited resources where its operations does not require a separate management level.
In a manager-managed limited liability company, members elect an individual, a group of individuals or an entity to serve as the manager who generally makes the day-to-day management decisions with regard to the operations of the company. Commonly, a manager-managed limited liability company has an operating agreement, which details when the members must approve an action outside of the ordinary course of the company’s operations. A manager-managed limited liability company is ideal for when some members are only interested in being investors or when some members are not particularly skilled at management.